BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 2011|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
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THIRD READING
Bill No: AB 2011
Author: Cooper (D)
Amended: 8/19/16 in Senate
Vote: 27 - Urgency
SENATE GOVERNMENTAL ORG. COMMITTEE: 12-0, 6/14/16
AYES: Hall, Bates, Block, Gaines, Galgiani, Glazer, Hernandez,
Hill, Hueso, Lara, McGuire, Vidak
NO VOTE RECORDED: Berryhill
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
ASSEMBLY FLOOR: 76-0, 4/28/16 (Consent) - See last page for
vote
SUBJECT: Thoroughbred racing: northern, central, and southern
zones: auxiliary offsite stabling, training, and
vanning
SOURCE: Author
DIGEST: This bill makes modifications to existing provisions
in Horse Racing Law pertaining to the Stabling and Vanning Fund
(S&V Fund) to help horsemen and horsewomen in the northern,
central, and southern zone defray the costs of having to
transport and stable their race horses at auxiliary training
facilities. Specifically, this bill increases the amount that
is required to be deducted by a racing association or racing
fair in the northern, central, and southern zones for the S&V
Fund from an amount not to exceed 1.25% of handle on wagers made
on thoroughbred races at satellite wagering facilities to an
amount not to exceed 2% of the handle. This bill also makes
changes to provisions governing the organization formed to
administer the S&V Fund.
AB 2011
Page 2
Senate Floor Amendments of 8/19/16 add an urgency clause and
incorporate nearly identical modifications to the S&V Fund for
the central and southern racing zones as proposed in this bill
for the northern zone.
ANALYSIS:
Existing law:
1)Stipulates, pursuant to Article IV, Section 19(b) of the
Constitution of the State of California, the Legislature may
provide for the regulation of horse races and horse race
meetings and wagering on the results.
2)Provides that the California Horse Racing Board (CHRB) shall
regulate the various forms of horse racing authorized in this
state.
3)Divides the state into three geographical zones for purposes
of regulating horse racing - northern zone, central zone and
southern zone.
4)Provides that, when satellite wagering is conducted on
thoroughbred races at associations or fairs in the northern,
central, or southern zone, an amount equal to 1.25% of the
total amount handled by all of those satellite wagering
facilities must be deducted from the take-out for the benefit
of the S&V Fund. Proceeds therein are distributed to the
organization representing the racing associations and horsemen
and horsewomen for the purpose of providing reimbursement for
off-site stabling and vanning at CHRB-approved auxiliary
training facilities of licensed racing associations. This is
to compensate for the additional stalls beyond the number of
usable stalls the association is required to provide under
existing law.
This bill:
1)Increases the amount that is required to be deducted by a
racing association or racing fair in the northern, central,
and southern zones from 1.25% to 2% and provides that this
AB 2011
Page 3
amount in the northern zone, if adjusted by the CHRB, may be a
different percentage of the handle for different associations
and fairs, but only if all the associations and fairs agree to
the differing percentages.
2)Establishes an auxiliary offsite stabling and training
facility and vanning program for thoroughbred races in the
northern, central, and southern zones.
3)Revises and recasts provisions governing the organization
formed and operated to administer the S&V Fund to include,
among other things, a 50-50% allocation of specified voting
interests on the board of the organization, the use of funds
to compensate the provider of a CHRB approved auxiliary
facility for offsite stabling and training of thoroughbred
horses in the northern, central, and southern zones, and the
requirement that the organization submit its proposed
financial and operational plans for the upcoming calendar year
to the CHRB for review no later than November 1 of the
preceding year.
4)Requires, at the request of the CHRB, the organization to
submit a report detailing all of its receipts and expenditures
over the prior two fiscal years and, upon request of any party
within the organization, that those receipts and expenditures
be audited by an independent third party selected by the CHRB
at the organization's expense.
5)Requires that the funds be used to cover all or part of the
cost of vanning thoroughbred horses in the northern, central,
or southern zone from a CHRB approved auxiliary offsite
stabling and training facility. Also, authorizes the
organization to enter into multiyear contracts for auxiliary
facilities in the northern, central, or southern zone, subject
to specified conditions.
6)Authorizes the governing organization to use the funds to pay
back commissions, purses, and owners' premiums to the extent
the deductions made exceed in any year the amount of the funds
necessary to achieve the objectives of the organization.
7)Authorizes a thoroughbred racing association or fair in the
AB 2011
Page 4
northern zone to opt out of the auxiliary offsite stabling and
training facility and vanning program, as specified.
8)Provides that the CHRB shall reserve the right to adjudicate
any disputes that arise regarding costs, or other matters,
relating to the furnishing of offsite stabling or vanning.
9)Contains an urgency clause to take effect immediately.
Background
Horse racing law provides for the S&V Fund to help horsemen and
horsewomen defray the costs of having to transport and stable
their race horses at auxiliary training facilities. The S&V
Fund is divided into northern and southern California accounts,
both of which are administered by similar organizations and
governing boards. These statutes date back to the late 1980s
and early 1990s when wagering at satellite facilities located on
fairgrounds and race tracks was the only form of off-track
parimutuel wagering available. The S&V Fund was financed
exclusively from revenue generated at satellite wagering
facilities in this state. With the advent of advance deposit
wagering (ADW), the parimutuel handle began to migrate from
satellite wagering facilities to online ADW sources. The
subsequent decline in handle at satellite facilities has
resulted in a significant depletion of revenue to the S&V Fund.
In 2013, Hollywood Park race track announced the discontinuance
of racing which created a severe stabling and training problem
for the horse racing industry. The CHRB and the racing industry
were able to negotiate an agreement for Hollywood Park to remain
open for stabling and training through the first quarter of
2014, but had to find other stabling and training facilities to
replace Hollywood Park immediately thereafter.
Industry stakeholders and the CHRB came together to reach
agreements and the necessary commitments were made to preserve
thoroughbred racing in southern California. Specifically, Los
Alamitos race track built 500 new stalls to accommodate
thoroughbred training on a year-round basis; the San Luis Rey
Training Center, located in Bonsall (San Diego County) was
upgraded with an improved track and renovated barns to play a
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Page 5
major stabling role; Fairplex Park, located in Pomona, agreed to
provide stabling and training for a limited time; and, Santa
Anita race track and Del Mar race track continued to operate
race meets and stabling programs.
More recently, due to the decision by Fairplex to discontinue
training and racing, the CHRB granted Galway Downs training
center in Temecula a conditional license to begin providing
stalls and training. The CHRB and the industry are hopeful that
a new training center will eventually be built somewhere in
southern California to accommodate the horse racing industry
which plays a vital role in the state's economy.
In northern California, the two licensed auxiliary offsite
stabling facilities, Alameda County Fair and Golden Gate Fields,
have been operating with deficient balances. In 2014, the
Alameda County Fair lost approximately $300,000 in off-track
stabling operations.
Purpose of AB 2011. According to the author's office, this bill
is intended to address vanning and stabling issues for the
racing industry in California.
The author's office notes that current statutory language limits
available funding and decision-making flexibility. This bill
gives the CHRB and the organization governing the S&V Fund more
flexibility in governance and decision-making. Furthermore, it
provides for additional money from purses and commissions to
help stabilize the S&V Fund.
It should be noted that SB 1240 (Hall, 2016) was intended to be
the vehicle to address vanning and stabling issues statewide and
incorporates nearly identical changes to the S&V Fund as found
in this bill. Both authors came to an agreement that only one
bill is necessary to address the problem - thus, SB 1240 (Hall)
will be held on the Assembly floor.
Related/Prior Legislation
AB 650 (Perea, 2015) would have increased the portion of the
take-out used to fund the S&V Fund from 1.25% of handle on
wagers made on thoroughbred races at northern California
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Page 6
satellite facilities to 2% of handle. Also, would have
restructured the organization that governs the S&V Fund.
(Gutted and amended in the Senate on April 14, 2016 to become a
bill relating to regulation of taxicabs.)
SB 766 (Negrete McLeod, Chapter 616, Statutes of 2009), among
other things, authorized the CHRB to shift money around from
various funds dedicated for specific purposes within horse
racing that are in surplus, such as the promotions fund and
workers' compensation fund, to others that are in deficit, such
as the S&V Fund.
FISCAL EFFECT: Appropriation: No Fiscal
Com.: Yes Local: Yes
SUPPORT: (Verified 8/22/16)California Authority of Racing
Fairs
California Thoroughbred Breeders Association
Golden Gate Fields
Santa Anita Racetrack
Thoroughbred Owners of California
OPPOSITION: (Verified 8/22/16)
None received
ARGUMENTS IN SUPPORT: Writing in support, the California
Authority of Racing Fairs states, "AB 2011 will give affected
parties more flexibility in governance and decision-making and
allow money from purses and commissions to stabilize the S&V
Fund. Without these changes, the fund will continue to operate
in the red. As a consequence, the two licensed auxiliary
offsite stabling facilities in Northern California, Alameda
County Fair and Golden Gate Fields, will continue to lose
money."
ASSEMBLY FLOOR: 76-0, 4/28/16
AB 2011
Page 7
AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker,
Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke,
Calderon, Campos, Chang, Chau, Chiu, Chu, Cooley, Cooper,
Dababneh, Dahle, Dodd, Eggman, Frazier, Beth Gaines,
Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson,
Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger
Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey,
Levine, Linder, Lopez, Low, Maienschein, Mayes, McCarty,
Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell,
Patterson, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago,
Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber,
Wilk, Williams, Wood, Rendon
NO VOTE RECORDED: Chávez, Daly, Mathis, Olsen
Prepared by:Arthur Terzakis / G.O. / (916) 651-1530
8/22/16 22:59:21
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