BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
AB 2808 (Gipson) - Horse racing: exchange wagering: operative
extension
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|Version: April 13, 2016 |Policy Vote: G.O. 13 - 0 |
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|Urgency: No |Mandate: Yes |
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|Hearing Date: August 1, 2016 |Consultant: Debra Cooper |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: AB 2808 would the extend sunset date on the exchange
wagering provisions for Horse Racing Law by four years, from
January 1, 2017, to January 1, 2021.
Fiscal
Impact:
Estimated ongoing costs of $500,000 per year for obtaining and
managing advanced software which is designed to track
suspicious betting patterns and identify possible connections
between bettors and industry licensees. (Horse Racing Fund)
Unknown but likely significant costs for additional resources
to license, monitor, and regulate exchange wagering. (Horse
Racing Fund)
AB 2808 (Gipson) Page 1 of
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An annual assessment fee of $500,000 to operate exchange
wagering, to be equally apportioned amongst the approved
applicants of an exchange wagering license. This fee will be
paid to CHRB on a per month basis for the duration of the
license. (Horse Racing Fund)
Background: Wagering on horse races in California is conducted using the
"pari-mutuel method" in which bettors are betting against each
other and select the horse to wager on based on an outcome.
Exchange wagering is a relatively new form of parimutuel
wagering in which two or more persons place identically opposing
wagers in a given market, and account holders may buy, sell, or
back the outcome of horse races much like day trading.
Exchange wagering was first introduced in England, and New
Jersey became the first U.S. state to legalize horse racing
exchange wagering. New Jersey issued its first horse racing
exchange wagering license in November 2015.
According to Betfair, an internet betting exchange that
pioneered exchange wagering, there was a double-digit increase
in wagering handle when exchange wagering was introduced in
Europe. New Jersey has not yet disclosed the impact that
exchange wagering has had on their wagering handle. Critics
note, however, that an increase in wagering does not necessarily
correspond to increased revenue for the racing industry. The
revenue impact of exchange wagering may depend on whether this
new form of wagering brings in additional wagers rather than
replacing the existing forms of wagering.
Proposed Law:
This bill would extend the inoperative and repeal dates of
Horse Racing Law's exchange wagering provisions to May 1, 2020,
and January 1, 2021, respectively.
Related
Legislation: SB 1072 (Calderon, Chapter 283, Statutes of 2010),
AB 2808 (Gipson) Page 2 of
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among other provisions, authorizes exchange wagering and grants
the CHRB the authority to license entities to operate exchange
wagering systems that accept exchange wagers from individuals
residing either within or outside of this state on horse races
run in California or other states. It also authorizes CHRB to
recover any costs associated with the licensing or regulation of
exchange wagering by imposing an assessment on the exchange
wagering licensee in an amount that does not exceed the
reasonable costs associated with the licensing or regulation of
exchange wagering.
Staff
Comments:
CHRB has adopted regulations for exchange wagering in
California, but since becoming legal in California in 2010, an
exchange wagering license has not yet been granted to any
operator in California due to industry opposition and startup
costs.
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