BILL ANALYSIS Ó SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION Senator Isadore Hall, III Chair 2015 - 2016 Regular Bill No: AB 2226 Hearing Date: 6/28/2016 ----------------------------------------------------------------- |Author: |Bigelow | |-----------+-----------------------------------------------------| |Version: |2/18/2016 Introduced | ----------------------------------------------------------------- ------------------------------------------------------------------ |Urgency: |No |Fiscal: |Yes | ------------------------------------------------------------------ ----------------------------------------------------------------- |Consultant:|Arthur Terzakis | | | | ----------------------------------------------------------------- SUBJECT: Horse racing: satellite wagering facilities: fairs DIGEST: This bill authorizes a fair to contract with two or more fairs that are licensed to conduct thoroughbred meetings within the northern zone for the operation and management of a satellite wagering facility. ANALYSIS: Existing law: 1)Article IV, Section 19(b) of the Constitution of the State of California provides that the Legislature may provide for the regulation of horse races and horse race meetings and wagering on the results. 2)Grants the California Horse Racing Board (CHRB) the authority to regulate the various forms of horse racing authorized in this state. 3)Authorizes the CHRB to permit licensed racing associations, fairs and mini-satellite licensees to operate satellite wagering facilities. 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 AB 2226 (Bigelow) Page 2 of ? of the CHRB, provided that the wagering occurs in an area that is restricted to those who are 21 years of age or older. 5)Specifies that no mini-satellite site may be located within 20 miles of a race track, a satellite wagering facility, or a tribal casino that has a satellite wagering facility without the consent of each facility within a 20-mile radius. This bill makes a minor change to the state's Horse Racing Law regarding the licensing and location of satellite wagering facilties by clarifying two fairs may enter into an agreement or partnership to establish a satellite facility within the northern zone. Background Brief history and background. California has allowed off-track betting in satellite wagering facilities located at fairs and racing associations throughout the state for over 30 years. Satellite wagering 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 expose and market horse racing to potential customers and also make it far more convenient for 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) was enacted to authorize the creation of 15 "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-satellite facilities have been licensed statewide. California's Horse Racing Law requires the CHRB to issue a license to a mini-satellite facility for two years, and then review the operation and the size of the handle, and determine AB 2226 (Bigelow) Page 3 of ? 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. If there are more than 15 applications for mini-satellite wagering facilities in any zone, the CHRB must determine which facilities will generate the largest handle, and give priority to the approval of those facilities. California's Horse Racing Law makes it explicit that no mini-satellite site may be located within 20 miles of a race track, a satellite wagering facility, or a tribal casino that has a satellite wagering facility without the consent of each facility within a 20-mile radius. Purpose of AB 2226. According to the author's office, there are a few locations in California where the 20-mile radius exclusion-zone of multiple fairs overlap. One such example is San Francisco and it falls within the exclusion zones of both the Alameda County Fair and the San Mateo County Fair. Under current law, fairs can partner with one or more racing associations that are licensed to conduct thoroughbred meetings within the northern zone for the operation of a satellite wagering facility. However, current law does not authorize two or more fairs to establish a partnership for the management of a satellite facility. This bill is intended to make it possible for Alameda and San Mateo to enter into such a joint-venture agreement for the purpose of establishing a CHRB licensed mini-satellite facility in San Francisco. Such a mini-satellite facility could be established in a restaurant, bar, club, etc. Prior/Related Legislation AB 270 (Perea, Chapter 393, Statutes of 2011) created an exception to Horse Racing Law by authorizing a fair satellite wagering facility 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 hearing, deems those requirements to be not economically feasible. SB 305 (Calderon, Chapter 334, Statutes of 2011) modified a provision of Horse Racing Law that requires the CHRB to license mini-satellite facilities for two years and instead directed the CHRB to license such facilities for up to five years. SB 1439 (Price, 2010) would have decreased the exclusion zone in AB 2226 (Bigelow) Page 4 of ? 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 race track 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. SB 16xx (Ashburn, Chapter 12, Statutes of 2009-10 Second Extraordinary Session) among other things, provided that beginning on July 1, 2009, and annually thereafter, $32 million shall be appropriated from the state's General Fund and paid into the Fair and Exposition Fund for the financial support of the network of California fairs. AB 246 (Price, Chapter 226, Statutes of 2009) authorized a quarter horse association and a harness racing association to deduct up to 2% more from the total amount wagered in the parimutuel pool for any type of wager, and, specified how the funds shall be distributed to eligible satellite wagering facilities, owner's purses and racetrack commissions AB 241 (Price, Chapter 594, Statutes of 2007) authorized all fairs to operate a satellite wagering facility off of the fair grounds. Also, authorized the establishment of up to 45 mini-satellite wagering sites to be operated by private industry throughout California. AB 1286 (Richardson, Chapter 202, Statutes of 2007) allowed the Alameda County Fair and the Los Angeles County Fair (Fairplex) to obtain authorization to operate new satellite wagering facilities off of their fair grounds under certain conditions. SB 677 (Murray, 2005) would have authorized the establishment of seven additional satellite wagering facilities. (Died Assembly Inactive File) SB 1096 (Dutton, Chapter 1096, Statutes of 2005) authorized the National Orange Show (San Bernardino County) to operate a second satellite wagering operation within its fair district boundaries. AB 2226 (Bigelow) Page 5 of ? AB 401 (J. Horton, Chapter 556, Statutes of 2003) permitted Cal-Expo, with the approval of the Department of Food and Agriculture and CHRB, to operate a satellite wagering facility within the boundaries of Cal-Expo in addition to any facility otherwise authorized under current law. SB 14 (Maddy, Chapter 1273, Statues of 1987) expanded satellite wagering statewide. FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No SUPPORT: California Authority of Racing Fairs (sponsor) OPPOSITION: None received