BILL ANALYSIS Ó
AB 2226
Page 1
Date of Hearing: April 6, 2016
ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
Adam Gray, Chair
AB 2226
(Bigelow) - As Introduced February 18, 2016
SUBJECT: Horse racing: satellite wagering facilities: fairs
SUMMARY: Authorizes a fair to contract with 2 or more fairs
that are licensed to conduct thoroughbred meetings within the
northern zone for the operation and management of a satellite
wagering facility. Specifically, this bill:
1) Provides the fairs may contract for the operation and
management of a satellite wagering facility with an individual
racing association or a partnership, joint venture, or other
affiliation of two or more racing associations or fairs that are
licensed to conduct thoroughbred meetings within the northern
zone that are licensed jointly to the 1a District Agricultural
Association and the 5th District Agricultural Association and
that are located on the fairgrounds of the 1a District
Agricultural Association or within the boundaries of the City
and County of San Francisco.
2) Makes technical changes.
EXISTING LAW:
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1) Authorizes the California Horse Racing Board (CHRB) to
regulate the various forms of horse racing authorized in this
state.
2) Authorizes an association licensed to conduct a racing
meeting to also operate a satellite wagering facility at its
racetrack inclosure, under specified conditions that differ
between the northern zone and the central and southern zones,
and provides specific guidelines for the operation and location
of these facilities.
3) Authorizes fairs to contract for the operation and
management of not more than three satellite wagering facilities
that are licensed jointly to the 1a District Agricultural
Association and the 5th District Agricultural Association and
that are located on the fairgrounds of the 1a District
Agricultural Association or within the boundaries of the City
and County of San Francisco with an individual racing
association or a partnership, joint venture, or other
affiliation of 2 or more racing associations that are licensed
to conduct thoroughbred meetings within the northern zone.
4) Authorizes the CHRB to approve the establishment of 15
mini-satellite wagering sites in each zone (for a total of 45)
and defines "mini-satellite wagering site" to mean a location
where satellite wagering may be conducted, with the approval of
the CHRB, provided that the wagering occurs in an area that is
restricted to those who are 21 years of age or older. Requires
the CHRB to issue a license to a mini-satellite facility for
five years, and then review the operation and the size of the
handle, and determine if it is in the best interest of horse
racing to relicense the facility or, in the alternative, license
another mini-satellite facility that might generate a greater
handle.
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5) Provides that if there are more than 15 applications for
mini-satellite wagering facilities in any zone, the CHRB shall
determine which facilities will generate the largest handle, and
give priority to the approval of those facilities. Specifies
that no mini-satellite site may be located within 20 miles of a
racetrack, a satellite wagering facility, or a tribal casino
that has a satellite wagering facility without the consent of
each facility within that 20-mile radius.
FISCAL EFFECT: Unknown
COMMENTS:
Purpose of the bill . According to the sponsor, the California
Authority of Racing Fairs this bill would allow two county fairs
to enter into a partnership or joint venture with one another to
open a mini-satellite within the area they share. Currently,
there are a few locations in the state where the 20-mile radius
of multiple fairs overlap, i.e. San Francisco. With the passage
of AB 2226, the Alameda County Fair and the San Mateo County
Fair could enter into a partnership or joint venture with one
another to open a mini-satellite within the area they share.
California's off-track wagering system : California has allowed
off-track betting in satellite wagering facilities located at
fairs and racing associations throughout the state for 30 years.
It was authorized at a time when California racetracks were
beginning to experience declining attendance and handle figures.
The industry believed that making the product easier to access
would not only expose and market horse racing to potential
customers, but also would make it more convenient for the
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existing patrons to wager more often.
Currently, there are 28 satellite-wagering facilities in
California. Five of the facilities are at privately operated
racetracks, five at fairs that conduct live racing, fourteen at
county fairs and district agricultural associations, and four on
Indian lands. Simulcast-only facilities do not have live
racing; those facilities accept wagers on races broadcast via
simulcast from in-state and out-of-state racetracks.
In 2007, AB 241 (Price), Chapter 594, Statutes of 2007, was
enacted to authorize the creation of 15 additional
"mini-satellites" in each racing zone for a total of 45. The
stated intent of this legislation was to make the sport of horse
racing even more accessible to potential California bettors and
to increase the handle - the amount wagered on horse races. To
date, ten mini-satellites have been opened statewide.
Current law states that if a proposed site is located within a
20-mile radius of a racetrack or satellite wagering facility,
including any tribal casino that has a satellite wagering
facility, then the consent of each facility within the 20-mile
radius of the proposed facility must be given before the new
application can be approved by the CHRB. Currently, two
mini-satellites are operating within the 20-mile radius. The
operator of a mini-satellite receives 2% from all wagers made at
the facility from those patrons in attendance.
In the past, the CHRB has expressed their concern that the
20-mile radius restriction may impede the development of
additional mini-satellite wagering facilities in California.
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In addition, since the mid-1990s, seven state-designated or
county fairs have received the statutory authority to locate
additional satellite-wagering facilities off the respective
fairgrounds but within the boundaries of the fair district. To
date, only the Fresno County Fair has exercised this authority
by leasing space in a card-club in downtown Fresno.
Simulcasting wagering : Simulcasting is the process of
transmitting the audio and video signal of a live racing
performance from one facility to a satellite for retransmission
to other locations or venues where pari-mutuel wagering is
permitted. Simulcasting provides racetracks with the
opportunity to increase revenues by exporting their live racing
content to as many wagering locations as possible, such as other
racetracks, fair satellite facilities and Indian casinos.
Revenues are increased because simulcasting provides racetracks
that export their live content with additional customers in
multiple locations who would not have otherwise been able to
place wagers on the live racing event.
Attendance declines : There has been a general decline in the
number of people attending and wagering at live horse racetracks
in California due to a number of factors, including increased
competition from other forms of gaming, unwillingness of
customers to travel a significant distance to racetracks and the
availability of off-track wagering. The declining attendance at
live horse racing events has prompted racetracks to rely on
revenues from in-state and out-of-state satellite wagering and
account wagering.
Prior legislation : AB 270 (Perea), Chapter 393, Statutes of
2011. Created an exception in law by authorizing a satellite
wagering facility, located on a fairground, to elect not to be
subject to the requirements related to a satellite facility
supervisor if the board of directors of the fair, after a public
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hearing, deems those requirements to be not economically
feasible. (Pending on the Senate Floor)
SB 305 (Ron Calderon), Chapter 334, Statutes of 2011. Modified
a provision that required the CHRB to license mini-satellite
facilities for two years and instead directs the board to
license such facilities for up to five years.
SB 1439 (Price) of 2010. Would have decreased the exclusion
zone in which a "mini-satellite" horse racing wagering facility
can be situated in proximity to an existing horse racing
satellite wagering facility or live horse racing racetrack from
a 20 to 15 mile radius. (Failed passage on Senate Floor)
AB 2215 (Fuentes), Chapter 255, Statutes of 2010. Among other
things, authorized a mini-satellite wagering facility to enter
into an agreement with an advance deposit wagering (ADW)
provider to accept and facilitate the placement of any wager at
its facility that a California resident could make through that
ADW provider.
AB 241 (Price), Chapter 594, Statutes of 2007. Increased up to
45 mini-satellite wagering sites throughout the State, as
defined, that would be able to offer wagering on horse racing
via satellite wagering in the northern, central and southern
racing zones, as specified. This bill authorized any fair to
operate a satellite wagering facility on leased premises within
the boundaries of that fair, as specified.
REGISTERED SUPPORT / OPPOSITION:
AB 2226
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Support
California Authority of Racing Fairs
Opposition
None on file
Analysis Prepared by:Eric Johnson / G.O. / (916) 319-2531