Amended in Senate April 5, 2016

Senate Bill No. 1240

Introduced by Senator Hall

February 18, 2016

An act to amend Sections begin delete 19607 and 19607.1 end delete begin insert 19607, 19607.1, 19607.2, and 19607.3 end insert of the Business and Professions Code, relating to horse racing, and declaring the urgency thereof, to take effect immediately.

LEGISLATIVE COUNSEL’S DIGEST

SB 1240, as amended, Hall. Horse racing: thoroughbred racing: begin delete central end delete begin insert northern, central, end insert and southern zones: auxiliary offsite stabling, training, and vanning.

(1) The Horse Racing Law requires, when satellite wagering is conducted on thoroughbred races at associations or fairs in the begin delete central end delete begin insert northern, central, end insert or southern zone, that an amount not to exceed 1.25% of the total amount handled by all of those satellite wagering facilities be deducted from the funds otherwise allocated for distribution as commissions, purses, and owners’ premiums and instead distributed to an organization formed and operated by thoroughbred racing associations, fairs conducting thoroughbred racing, and the organization representing thoroughbred horsemen and horsewomen, to administer a fund to provide reimbursement for offsite stabling at California Horse Racing Board-approved auxiliary training facilities for additional stalls beyond the number of usable stalls the association or fair is required to make available and maintain, and for the vanning of starters from these additional stalls on racing days for thoroughbred horses.

This bill would increase the amount that is required to be deducted to an amount not to exceed begin delete 2%. end delete begin insert 2% in the northern, central, and southern zones, and would provide that this amount in the northern zone, if adjusted by the board, may be a different percentage of the handle for different associations and fairs, but only if all the associations and fairs agree to the differing percentages. end insert The bill would establish an auxiliary offsite stabling and training facility and vanning program for thoroughbred races in the begin delete central end delete begin insert northern, central, end insert and southern zones. The bill would revise and recast the provisions governing the organization formed and operated to administer the fund to include, among other things, a 50-50 percentage allocation of specified voting interests on the board of the organization, the use of funds to compensate the provider of a board-approved auxiliary facility for offsite stabling and training of thoroughbred horses in the begin delete central end delete begin insert northern, central, end insert and southern zones, and the requirement that the organization submit its proposed financial and operational plans for the upcoming calendar year to the board for review no later than November 1 of the preceding year. begin insert The bill would also require that the 2% of funds of the total amount handled, as specified, be used to pay the organization’s expenses in the northern zone. The bill would require, in the northern, central, and southern zones and at the request of the board, the organization to submit a report detailing all of its receipts and expenditures over the prior 2 fiscal years and, upon request of any party within the organization, that those receipts and expenditures be audited by an independent 3rd party selected by the board at the organization’s expense. end insert

The bill would also require that the funds be used to cover all or part of the cost of vanning thoroughbred horses in the begin delete central end delete begin insert northern, central, end insert or southern zone from a board-approved auxiliary offsite stabling and training facility and would authorize the organization to enter into multiyear contracts for auxiliary facilities in the begin delete central end delete begin insert northern, central, end insert or southern zone subject to specified conditions. The bill would authorize the organization to use the funds to pay back commissions, purses, and owners’ premiums to the extent that the deductions made exceed in any year the amount of the funds necessary to achieve the objectives of the organization. begin insert The bill would also authorize a thoroughbred racing association or fair in the northern zone to opt out of the auxiliary offsite stabling and training facility and vanning program, as specified. end insert The bill would provide that the board shall reserve the right to adjudicate any disputes that arise regarding costs or other matters relating to the furnishing of offsite stabling, training, or vanning.

By expanding the provisions of the Horse Racing Law, a violation of which is a crime, the bill would create new crimes and would thereby impose a state-mandated local program.

(2) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

(3) This bill would declare that it is to take effect immediately as an urgency statute.

Vote: ²⁄₃. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

SECTION 1.  

Section 19607 of the Business and Professions
Code is amended to read:

19607.  

(a) Notwithstanding Sections 19605.8 and 19605.9,
when satellite wagering is conducted on thoroughbred races at
associations or fairs in the central or southern zone, an amount not
to exceed 2 percent of the total amount handled by all of those
satellite wagering facilities shall be deducted from the funds
otherwise allocated for distribution as commissions, purses, and
owners’ premiums and instead distributed to an organization
formed and operated by one licensed association from each facility
in the central and southern zones at which a thoroughbred or fair
racing meeting is conducted, and the organization representing
thoroughbred horsemen and horsewomen, for use in accordance
with Section 19607.1.

(b) A vote of the organization representing thoroughbred
horsemen and horsewomen shall constitute 50 percent of all voting
interests on the board of the organization formed and operated to
administer the fund. The other 50 percent of all voting interests
shall be allocated among begin delete thoroughbred racing associations and
fairs conducting thoroughbred racing end delete begin insert the other members of the
organization end insert in proportion to the number of racing weeks allocated
to each thoroughbred racing association or fair in the central or
southern zone. Any use of funds by the organization shall be
approved by the affirmative vote of both (1) the organization
representing thoroughbred horsemen and horsewomen, and (2) at
least two of the licensed thoroughbred racing associations that are
part of the organization formed pursuant to this begin delete section. end delete begin insert section,
provided, however, that, if there are only two licensed
thoroughbred racing associations that are part of the organization
formed pursuant to this section, the vote of at least one of those
two licensed thoroughbred racing associations shall be sufficient. end insert

SEC. 2.  

Section 19607.1 of the Business and Professions Code
is amended to read:

19607.1.  

(a) Notwithstanding Section 19535, begin insert the end insert funds
distributed to the organization formed pursuant to Section 19607
shall be used to compensate the provider of a board-approved
auxiliary facility for offsite stabling and training of thoroughbred
horses in the central or southern zone. The organization
administering the offsite stabling and vanning program shall submit
its proposed financial and operational plans for the upcoming
calendar year to the board for review and approval no later than
November 1 of the preceding year. Neither the organization
administering the offsite stabling and vanning program nor any of
the entities forming and operating the organization, except an entity
operating the auxiliary offsite stabling facility where the injury
occurred, shall be liable for any injury to any jockey, exercise
person, owner, trainer, or any employee or agent thereof, or any
horse occurring at any offsite stabling facility.

(b) The funds shall also be used to cover all or part of the cost
of vanning thoroughbred horses from a board-approved auxiliary
offsite stabling and training facility to start in a thoroughbred race
at a thoroughbred or fair racing meeting in the central or southern
zone. The organization shall determine the extent of and manner
in which compensation will be paid for thoroughbred horses that
are vanned from the auxiliary facility to the track conducting the
thoroughbred or fair racing meeting, but the vanning shall be made
available on a consistent and uniform basis for all thoroughbred
and fair racing meetings in a given year. Neither the organization
administering the offsite stabling and vanning program nor any of
the entities that form and operate the organization, except an entity
actually engaged in vanning horses, is liable for any injury
occurring to any individual or horse during vanning from an offsite
stabling facility.

(c) The auxiliary offsite stabling facilities and amenities
provided for offsite stabling and training purposes shall be
substantially equivalent in character to those provided by the
thoroughbred racing association or fair conducting the racing
meeting.

(d) In order to ensure the long-term availability of facilities for
offsite stabling and training, the organization may enter into
multiyear contracts for auxiliary facilities in either the central or
southern zone. The organization shall submit to the board for its
approval multiyear contracts it enters into with providers of
auxiliary facilities for the offsite stabling and begin delete training period. end delete
begin insert training. end insert Contracts not disapproved by the board within 60 days
of submittal to the board shall be deemed to have been approved
by the board. Once a multiyear contract has been approved by the
board, it shall be considered to have been approved for its duration.

(e) At the request of the board, the organization shall submit a
report detailing all of its receipts and expenditures over the prior
two fiscal years begin delete and end delete begin insert and, end insert upon request of any party within the
organization, those receipts and expenditures shall be audited begin insert by
an independent third party selected end insert by the begin delete board. end delete begin insert board at the
expense of the organization. end insert

(f) In addition to the uses of begin insert the end insert funds described in subdivisions
(a) and (b), the organization may use begin delete the end delete begin insert those end insert funds begin delete for end delete begin insert to do end insert both
of the following:

(1)  begin delete The organization may maintain end delete begin insert Maintain end insert a reserve fund of
up to 10 percent of the total estimated annual vanning and auxiliary
offsite stabling costs. In addition to the reserve fund, if the funds
generated for the auxiliary offsite stabling facilities and vanning
are insufficient to fully cover the expenses incurred, the
organization may, in the future, accumulate sufficient funds to
fully cover those expenses.

(2) Pay back commissions, purses, and owners’ premiums to
the extent the deductions made pursuant to Section 19607 exceed
in any year the amount of funds necessary to achieve the objectives
of the organization.

(g) The amount initially deducted and distributed to the
organization shall be 2 percent of the total amount handled by
satellite wagering facilities authorized under this article in the
central or southern zone on thoroughbred racing, but that allocation
may be adjusted by the board, in its discretion. However, the
adjusted amount may not exceed 2 percent of the total amount
handled by satellite wagering facilities.

(h) The board shall reserve the right to adjudicate any disputes
that arise regarding costs or other matters relating to the furnishing
of offsite stabling or vanning. Notwithstanding any other law, the
board shall maintain all powers necessary and proper to ensure
that offsite stabling and vanning, as provided for in this chapter,
is conducted in a manner that protects the public and serves the
best interests of horse racing.

begin insert

begin insert SEC. 3. end insert   

end insert

begin insert Section 19607.2 of the end insert begin insert Business and Professions Code end insert

begin insert is amended to read: end insert

19607.2.  

Notwithstanding Section 19605.8, when satellite
wagering is conducted on thoroughbred races at associations or
fairs in the northern zone, an amount not to exceed begin delete 1.25 end delete begin insert 2 end insert percent
of the total amount handled by all of those satellite wagering
begin delete facilities, end delete begin insert facilities end insert shall be deducted from the funds otherwise
allocated for distribution as commissions, purses, and owners’
premiums and instead begin insert be end insert distributed to an organization formed
and operated by thoroughbred racing associations, fairs conducting
thoroughbred racing, and the organization representing
thoroughbred begin delete horsemen, with each party having meaningful
representation end delete begin insert horsemen and horsewomen, for use pursuant to
Section 19607.3. A vote of the organization representing
thoroughbred horsemen and horsewomen shall constitute 50
percent of all voting interests end insert on the board of the begin delete organization, to
administer, pursuant to supervision of the board, a fund to provide
reimbursement for offsite stabling at board-approved auxiliary
training facilities of end delete begin insert organization formed and operated to
administer the fund. The other 50 percent of all voting interests
shall be allocated among thoroughbred end insert racing associations begin delete or fairs
for additional stalls beyond the number of usable stalls the
association is required to make available and maintain pursuant
to Section 19535, for starter fees and for the vanning of starters
from these additional stalls on race days for thoroughbred horses. end delete

begin insert and fairs conducting thoroughbred racing in a manner that
provides meaningful representation on the governing board of the
organization for thoroughbred racing associations and fairs
conducting thoroughbred racing, except as provided in subdivision
(h) of Section 19607.3. end insert

begin insert

begin insert SEC. 4. end insert   

end insert

begin insert Section 19607.3 of the end insert begin insert Business and Professions Code end insert

begin insert is amended to read: end insert

19607.3.  

(a)  begin delete The end delete begin insert Notwithstanding Section 19535, the end insert funds
distributed to the organization formed pursuant to Section 19607.2
shall be used to begin delete reimburse racing associations that are operating end delete
begin insert pay the expenses of the organization and compensate the provider
of a board-approved auxiliary offsite facility for stabling, training,
and vanning of thoroughbred horses in the northern zone. The
organization administering the auxiliary end insert offsite stabling begin delete providing
additional stalls end delete begin insert end insert begin insert and training facility and vanning program shall
submit its proposed financial and operational plans end insert for the
begin delete incremental increase in operating costs directly resulting from
providing the stabling. end delete begin insert end insert begin insert upcoming calendar year to the board for
review no later than November 1 of the preceding year. end insert Neither
the organization administering the begin insert auxiliary end insert offsite stabling and
begin insert training facility and end insert vanning program nor any of the entities
forming and operating the organization, except the entity operating
the begin insert auxiliary end insert offsite stabling begin insert and training end insert facility where the injury
occurred, shall be liable for any injury to any jockey, exercise
person, owner, trainer, or any employee or agent thereof, or any
horse occurring at any begin insert auxiliary end insert offsite stabling begin insert and training end insert
facility.

(b) The funds shall also be used to begin delete reimburse horsemen for end delete begin insert cover
all or part of end insert the cost of vanning begin delete starting end delete begin insert thoroughbred end insert horses
from a board-approved auxiliary begin delete training facility operated by a
racing association or fair end delete begin insert offsite stabling and training facility end insert to
the track begin delete conducting the racing meeting. Horsemen may use carriers
of their own choice, except that the amount of reimbursement to
horsemen is limited to the amount that the organization determines
is generally charged by carriers for vanning end delete begin insert to start in a
thoroughbred race at a thoroughbred or fair racing meeting in
the northern zone. The organization shall determine the extent of
and manner in which compensation will be paid for thoroughbred
horses that are vanned end insert from the auxiliary begin delete training end delete facility to the
track begin insert or the fair end insert conducting the begin insert thoroughbred or fair end insert racing
meeting. Neither the organization administering the begin insert auxiliary end insert
offsite stabling and begin insert training facility and end insert vanning program nor any
of the entities forming and operating the organization, except begin delete the end delete
begin insert an end insert entity actually engaged in vanning horses, is liable for any
injury occurring to any individual or horse during vanning from
an offsite stabling begin insert and training end insert facility.

(c) The begin insert auxiliary offsite stabling and end insert training facilities and begin insert the end insert
amenities provided for offsite stabling and training purposes shall
be begin insert substantially end insert equivalent in character to those provided begin delete during
racing meetings of the association. end delete begin insert by the thoroughbred racing
association or fair conducting the racing meeting. end insert

begin delete

(d) Upon the request of any party within the organization, the
board shall adjudicate any dispute regarding costs, or other matters
relating to the furnishing of offsite stabling or vanning. The board
may, if necessary, appoint an independent auditor to assist in the
resolution of disputes. The auditor shall be reimbursed from the
funds of the organization.

(e) The organization may maintain a reserve fund of up to 10
percent of the total estimated annual vanning and stabling costs.
In addition to the reserve fund, if the funds generated for offsite
stabling and vanning are insufficient to fully reimburse racing
associations or fairs for expenses incurred during the offsite
vanning and stabling program, the organization may accumulate
sufficient funds to fully reimburse those associations or fairs for
those expenses.

end delete begin insert

(d) In order to ensure the long-term availability of facilities for
offsite stabling and training, the organization may enter into
multiyear contracts for auxiliary facilities in the northern zone.
The organization shall submit to the board for its approval the
multiyear contracts that it enters into with providers of auxiliary
facilities for offsite stabling and training. Contracts not
disapproved by the board within 60 days of submittal to the board
shall be deemed to have been approved by the board.

end insert begin insert

(e) At the request of the board, the organization shall submit a
report detailing all of its receipts and expenditures over the prior
two fiscal years and, upon request of any party within the
organization, those receipts and expenditures shall be audited by
an independent third party selected by the board at the expense
of the organization.

end insert begin insert

(f) In addition to the uses of the funds described in subdivisions
(a) and (b), the organization may use the funds for both of the
following:

end insert begin insert

(1) Maintain a reserve fund of up to 10 percent of the total
estimated annual vanning and auxiliary offsite stabling and
training facility costs. In addition to the reserve fund, if the funds
generated for the auxiliary offsite stabling and training facilities
and vanning are insufficient to fully cover the expenses incurred,
the organization may, in the future, accumulate sufficient funds to
fully cover those expenses.

end insert begin insert

(2) Pay back commissions, purses, and owners’ premiums to
the extent the deductions made pursuant to Section 19607.2 exceed
in any year the amount of funds necessary to achieve the objectives
of the organization.

end insert begin delete

(f)

end delete

begin insert (g) end insert  The amount initially deducted and distributed to the
organization begin delete shall be 0.5 percent of the total amount handled by
satellite wagering facilities authorized under this article in the
northern zone on thoroughbred racing, but that allocation may end delete begin insert end insert
begin insert pursuant to Section 19607.2 may end insert be adjusted by the board, in its
discretion. However, the adjusted amount begin delete may end delete begin insert shall end insert not exceed
begin delete 1.25 end delete begin insert 2 end insert percent of the total amount handled by satellite wagering

begin delete facilities, to pay expenses and maintain the reserve fund for the
continuing support of the program. end delete begin insert facilities. The amount deducted
and distributed to the organization as adjusted by the board may
be a different percentage of the handle for different associations
and fairs conducting thoroughbred racing meetings in the northern
zone, but only if all the associations and fairs agree to the differing
percentages. end insert

begin insert

(h) A thoroughbred racing association or fair in the northern
zone that the board determines is able to provide the minimum
number of stalls required by its racing meeting license without the
use of any auxiliary offsite stabling and training facility and
vanning program may opt out of that program, in which case the
deduction described in Section 19607.2 shall not apply during the
live racing meeting conducted by the association or fair until such
time as the association or fair opts back into the auxiliary offsite
stabling and training facility and vanning program. Any
thoroughbred racing association or fair in the northern zone that
opts out of the auxiliary offsite stabling and training facility and
vanning program shall not have any voting interest therein until
such time as the association or fair opts back into the program.
The organization shall establish reasonable procedures and
timelines for the giving of notice to the organization by a
thoroughbred racing association or fair that elects to opt out of
the auxiliary offsite stabling and training facility and vanning
program.

end insert begin insert

(i) The board shall reserve the right to adjudicate any disputes
that arise regarding costs, or other matters, relating to the
furnishing of offsite stabling, training, or vanning. Notwithstanding
any other law, the board shall maintain all powers necessary and
proper to ensure that offsite stabling, training, and vanning, as
provided for in this article, is conducted in a manner that protects
the public and serves the best interests of horse racing.

end insert

begin delete SEC. 3. end delete

begin insert SEC. 5. end insert   

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.

begin delete SEC. 4. end delete

begin insert SEC. 6. end insert   

This act is an urgency statute necessary for the
immediate preservation of the public peace, health, or safety within
the meaning of Article IV of the Constitution and shall go into
immediate effect. The facts constituting the necessity are:

In order to ensure that the horse racing industry may continue,
uninterrupted, to provide auxiliary offsite stabling and vanning in
an effective manner that protects the public safety, it is necessary
that this act take effect immediately.