BILL ANALYSIS Ó
AB 2011
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB
2011 (Cooper)
As Amended August 19, 2016
2/3 vote. Urgency
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|ASSEMBLY: |76-0 |(April 28, |SENATE: |39-0 |(August 23, |
| | |2016) | | |2016) |
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Original Committee Reference: G.O.
SUMMARY: Makes detailed 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 zones defray the costs of having to
transport and stable their race horses at auxiliary training
facilities in California.
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
amount in the northern zone, if adjusted by the California
Horse Racing Board (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.
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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
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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.
The Senate amendments:
1)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.
2)Add an urgency clause.
EXISTING LAW:
1)Provides, under existing law, California Constitution Article
IV, Section 19(b), which the Legislature may provide for the
regulation of horse races and horse race meetings and wagering
on the results.
2)Authorizes the CHRB to regulate the various forms of horse
racing authorized in this state.
3)Defines "pari-mutuel wagering" as a form of wagering in which
bettors purchase tickets of various denominations on the
outcome of one or more horse races.
4)Requires, when satellite wagering is conducted on thoroughbred
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races at associations or fairs in the northern zone, that an
amount not to exceed 1.25% of the total amount handled by all
of those satellite wagering facilities be deducted from the
funds otherwise allocated for distribution as commissions,
purses, and owners' premiums.
5)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. This deduction is to compensate for the
additional stalls beyond the number of usable stalls the
association is required to provide under existing law and for
the vanning of starters from these additional stalls on racing
days for thoroughbred horses.
6)Provides an organization formed and operated by thoroughbred
racing associations, fairs conducting thoroughbred racing, and
the organization representing thoroughbred horsemen and
horsewomen, to administer the fund to provide reimbursement
for offsite stabling at sanctioned auxiliary training
facilities and for the vanning of starters from these
additional stalls on racing days for thoroughbred horses.
7)Divides the state into three geographical zones for regulating
horse racing (northern zone, central zone and southern zone)
and with respect to racing meetings conducted in the northern
zone, requires the association or fair conducting the meeting
to provide all stabling required by the CHRB without cost to
participating horsemen.
FISCAL EFFECT: According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
AS PASSED BY THE ASSEMBLY, this bill would increase the amount
that may be deducted by a racing association or racing fair in
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the northern zone for the S & V Fund from 1.25% to 2.0% of the
total amount handled by satellite wagering facilities.
COMMENTS: This bill, as amended in the Senate is consistent
with Assembly actions.
Horse racing law provides for the Stabling and Vanning Fund (S&V
Fund) to help horsemen and horsewomen defray the costs of having
to transport and stable their races horses at auxiliary training
facilities. These statutes date back to the late 1980s and
early 1990s when wagering at satellite facilities located on
fairgrounds and racetracks was the only form of off-track
pari-mutuel 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 pari-mutuel 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 racetrack 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
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
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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.
In addition, for more than a decade, horse racing has been a
declining industry in California. Some argue that the decline
stems from increased competition from expanded gaming in
California to the inability of the industry to attract new fans.
Further exasperating the problem is the downturn in the
economy, which has significantly affected the amount, wagered
(the handle).
Purpose of the bill: 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) of the current
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legislative session 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.
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."
Related legislation: SB 2011 (Hall) of the current legislative
session. Would make detailed and extensive 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 zones defray
the costs of having to transport and stable their race horses at
auxiliary training facilities in California. (Pending on
Assembly Floor)
Prior legislation: AB 650 (Low) of the current legislative
session. Originally 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
satellite facilities to 2% of handle. Also, restructures the
organization that governs the S&V Fund. (Amended and changed
subject matter).
SB 766 (Negrete McLeod), Chapter 616, Statutes of 2009.
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.
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SB 1805 (Florez), Chapter 883, Statutes of 2006. Provides that
any funds that are not used to defray the cost of workers'
compensation insurance from the supplemental "takeout" may be
used for reimbursing racing organizations for safety
improvements to racing and training surfaces.
AB 701 (Horton), Chapter 40, Statutes of 2004. Provided a
framework for the deduction from pari-mutuel pools in order to
address increased costs in workers compensation insurance in the
horse racing industry. Required Thoroughbred racing
associations to deduct an additional one-half percent of the
total amount handled in exotic pari-mutuel pools to be used to
defray workers' compensation costs in the horse racing industry.
AB 2931 (Horton), Chapter 922, Statutes of 2002. Authorized
racing associations to use existing industry funds (stabling and
vanning and promotion funds) for use in developing a program to
offset workers' compensation rates for horse trainers in the
state.
Analysis Prepared by:
Eric Johnson / G.O. / (916) 319-2531 FN:
0004849