BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 2226|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
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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.
AB 2226
Page 2
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
AB 2226
Page 3
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.
AB 2226
Page 4
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
AB 2226
Page 5
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.
AB 2226
Page 6
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
AB 2226
Page 7
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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