BILL ANALYSIS Ó
AB 2808
Page 1
Date of Hearing: April 27, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
AB
2808 (Gipson) - As Amended April 13, 2016
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|Policy |Governmental Organization |Vote:|17 - 0 |
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Urgency: No State Mandated Local Program: YesReimbursable:
No
SUMMARY:
This bill extends the sunset date on exchange wagering
provisions in Horse Racing Law from January 1, 2017, to January
1, 2021.
FISCAL EFFECT:
AB 2808
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1)Ongoing administrative costs associated with exchange
wagering, offset by license fees. Current regulations state
that a total $500,000 must be assessed in the first fiscal
year to operate exchange wagering.
2)Because exchange wagering has not yet been fully implemented,
the fiscal impact is unknown. However, exchange wagering may
result in substantial fiscal costs. Specifically:
a) The revenue impact of exchange wagering depends on
whether or not this new form of wagering brings in
additional wagers rather than replacing the existing forms
of wagering. While supporters argue that exchange wagering
will bring in additional bettors and reinvigorate the
industry, opponents have argued that this new form of
betting will simply "cannibalize" traditional wagering.
b) The fiscal impact of allowing exchange wagering to take
place depends on whether this new form of betting replaces
or augments traditional wagers. This is because exchange
wagering licensees are not required by law to contribute to
the traditional takeout, which is used to support CHRB
operations and maintain the horseracing industry. The
traditional takeout supports track maintenance and safety,
workers compensation, retirement, and health insurance for
jockeys and backstretch workers, equine research through
the Kenneth L. Maddy Equine Analytical Chemistry Laboratory
at the University of California, Davis. If exchange
wagering does indeed cannibalize traditional forms of
betting, then these programs will see a reduction in funds.
COMMENTS:
1)Purpose. This bill aims to support the implementation of
exchange wagering on horseracing in California.
AB 2808
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2)Background. Exchange wagering is a relatively new form of
wagering where account holders may buy, sell, or back the
outcome of horse races in a manner much like day trading on
the stock exchange. The statute defines exchange wagering as a
form of parimutuel wagering in which two or more persons place
identically opposing wagers in a given market. New Jersey
became the first state to legalize horse racing exchange
wagering, but implementation just began last year.
3)Legal, but not implemented. Since becoming legal in 2010, a
license for exchange wagering has not yet been granted to any
operator in California due to industry opposition and the
start up costs. While the California Horse Racing Board (CHRB)
may recover any costs associated with exchange wagering, the
startup costs to allow this form of wagering are high. Current
rules state that a total $500,000 must be assessed in the
first fiscal year to operate exchange wagering. CHRB staff
report the need for completely new software and infrastructure
to accommodate this new form of wagering.
Analysis Prepared by:Luke Reidenbach / APPR. / (916)
319-2081