BILL ANALYSIS                                                                                                                                                                                                    Ó




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                                    THIRD READING


          Bill No:  AB 2226
          Author:   Bigelow (R)
          Amended:  8/19/16 in Senate
          Vote:     27  

           SENATE GOVERNMENTAL ORG. COMMITTEE:  13-0, 6/28/16
           AYES: Hall, Berryhill, Bates, Block, Gaines, Galgiani, Glazer,  
            Hernandez, Hill, Hueso, Lara, McGuire, Vidak

          SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

           ASSEMBLY FLOOR:  76-0, 5/19/16 (Consent) - See last page for  
            vote

           SUBJECT:   Horse racing: fairs


          SOURCE:    California Authority of Racing 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.  Additionally, this bill specifies  
          that any unallocated balance of revenues derived from license  
          fees from satellite wagering and distribution of handle from  
          live racing at fairs is continuously appropriated for allocation  
          by the Secretary of Food and Agriculture to California fairs for  
          specified purposes.

          Senate Floor Amendments of 8/19/16 make several substantive and  
          clarifying changes to existing provisions of law relating to the  
          Fair and Exposition Fund which are intended to restore the  
          authority the Secretary of Food and Agriculture had over monies  
          appropriated by the Legislature to California fairs for  
          specified purposes.








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          ANALYSIS:
          
          Existing law:
          
          1)Provides, pursuant to Article IV, Section 19(b) of the  
            Constitution of the State of California, 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  
            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.

          6)Provides that any unallocated balance from the total revenue  
            received by the Department of Food and Agriculture pursuant to  
            Horse Racing Law, except as specified, is hereby appropriated  
            without regard to fiscal years for allocation by the Secretary  
            of Food and Agriculture for capital outlay to California fairs  
            for, among other things, fair projects involving public health  
            and safety and projects that are required to protect fair  
            property.  Horse Racing Law also provides that a portion of  
            these funds may be allocated to California fairs for general  
            support.

          7)Provides that all funds appropriated for California fairs and  








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            expositions pursuant to specified provisions of law shall not  
            be utilized for the purposes specified in those provisions but  
            shall instead be utilized for the construction or operation of  
            recreational and cultural facilities of general public  
            interest and may be allocated by the Secretary of Food and  
            Agriculture to all state designated fairs for those purposes.

          This bill:

          1)Makes a minor change to the state's Horse Racing Law regarding  
            the licensing and location of satellite wagering facilities by  
            clarifying two fairs may enter into an agreement or  
            partnership to establish a satellite facility within the  
            northern zone.

          2)Specifies that any unallocated balance of revenues derived  
            from satellite wagering license fees and the distribution of  
            handle from live racing at fairs (excluding satellite) is  
            continuously appropriated for allocation by the Secretary of  
            Food and Agriculture to California fairs for specified  
            purposes.

          3)Deletes reference to certain obsolete Business & Professions  
            Code Sections that appear in Section 3200 of the Food and  
            Agriculture Code relating to the Fair and Exposition Fund and  
            specifies that all funds appropriated or designated for  
            California fairs and expositions shall be deposited in the  
            Fair and Exposition Fund and be continuously appropriated as  
            specified in Horse Racing Law. 
          
          Background

          Satellite wagering.  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.









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          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 "mini-satellites" in  
          each racing zone for a total of 45.  The stated intent of AB 241  
          (Price) 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  
          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.

          California network of fairs.  Over the past 75 years, a  
          designated funding source has existed for fairs from which the  
          state has made significant investments in promoting the business  
          operations and improving the infrastructure of California's  
          fairs.

          Prior to 2009, license fees imposed on horse racing wagers were  
          deposited into the Fair and Exposition Fund which, in addition  
          to supporting the annual budget of the California Horse Racing  








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          Board, also provided financial support for the network of  
          California fairs.  

          SBX2-16 (Ashburn, Chapter 12, Statutes of 2009) shifted the  
          horse racing industry's obligation to fund fairs through license  
          fees imposed on wagers to the General Fund.  Specifically,  
          SBX2-16 provided an annual continuous appropriation of $32  
          million from the General Fund to support the network of  
          California fairs.  This change was done as part of a package of  
          measures designed to provide economic stimulus for the horse  
          racing industry.  

          In fiscal year 2011-12, fair funding at the state level was  
          eliminated as part of a package of budget cuts designed to  
          address the state's ongoing financial crisis.  The 2016-17 state  
          budget contained a $3 million appropriation to support the  
          network of California fairs and a $4 million allocation for  
          infrastructure needs at fairgrounds.     

          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.

          This bill is also intended to restore language relating to the  
          continuous appropriation of Fair and Exposition Fund monies  
          regardless of source which had been the law prior to elimination  
          of fair funding in the 2011-12 budget bill referenced above.









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          Related/Prior Legislation
          
          SB 1439 (Price, 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 race track from a 20 to  
          15 mile radius. (Failed passage on Senate floor)

          SBX2-16 (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 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 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 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 law. 
           
           SB 14 (Maddy, Chapter 1273, Statues of 1987) expanded satellite  
          wagering statewide.  

          FISCAL EFFECT:                 Appropriation:  No    Fiscal  
          Com.:             Yes          Local:          No








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          SUPPORT:  (Verified 8/22/16)

          California Authority of Racing Fairs (source)

          OPPOSITION:  (Verified 8/22/16)

          None received



           ASSEMBLY FLOOR:  76-0, 5/19/16
           AYES:  Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker,  
            Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke,  
            Calderon, Campos, Chau, Chávez, Chiu, Chu, Cooley, Cooper,  
            Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines,  
            Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson,  
            Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger  
            Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey,  
            Levine, Linder, Lopez, Low, Maienschein, Mayes, Medina,  
            Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen,  
            Patterson, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago,  
            Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber,  
            Wilk, Wood, Rendon
           NO VOTE RECORDED:  Chang, Mathis, McCarty, Williams



          Prepared by:  Arthur Terzakis / G.O. / (916) 651-1530
          8/22/16 20:37:52


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