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