BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 2226


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          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:












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          Support


          California Authority of Racing Fairs




          Opposition


          None on file




          Analysis Prepared by:Eric Johnson / G.O. / (916) 319-2531