BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Isadore Hall, III
Chair
2015 - 2016 Regular
Bill No: SB 1240 Hearing Date: 4/12/2016
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|Author: |Hall |
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|Version: |4/5/2016 Amended |
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|Urgency: |Yes |Fiscal: |Yes |
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|Consultant:|Arthur Terzakis |
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SUBJECT: Horse racing: thoroughbred racing: northern, central,
and southern zones: auxiliary offsite stabling, training, and
vanning
DIGEST: This bill makes extensive modifications to existing
provisions in Horse Racing Law pertaining to the Stabling and
Vanning Fund (S&V Fund) to help horsemen and horsewomen in the
northern, central, and southern zones defray the costs of having
to transport and stable their race horses at auxiliary training
facilities. Specifically, this bill increases the amount that
is required to be deducted by a racing association or racing
fair in the northern, central, and southern zones from an amount
not to exceed 1.25% to an amount not to exceed 2% of the total
amount handled by satellite wagering facilities and also makes
changes to provisions governing the organization formed to
administer the S&V Fund.
ANALYSIS:
Existing law:
1)Stipulates, pursuant to Article IV, Section 19(b) of the
Constitution of the State of California, the Legislature may
provide for the regulation of horse races and horse race
meetings and wagering on the results.
2)Provides that the California Horse Racing Board (CHRB) shall
regulate the various forms of horse racing authorized in this
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state.
3)Divides the state into three geographical zones for purposes
of regulating horse racing - northern zone, central zone and
southern zone.
4)Provides that, when satellite wagering is conducted on
thoroughbred races at associations or fairs in the northern,
central, or southern zone, an amount equal to 1.25% of the
total amount handled by all of those satellite wagering
facilities must be deducted from the take-out for the benefit
of the S&V Fund. Proceeds therein are distributed to the
organization representing the racing associations and horsemen
and horsewomen for the purpose of providing reimbursement for
off-site stabling and vanning at CHRB-approved auxiliary
training facilities of licensed racing associations. This is
to compensate for the additional stalls beyond the number of
usable stalls the association is required to provide under
existing law.
This bill:
1)Increases the amount that is required to be deducted by a
racing association or racing fair in the northern, central,
and southern zones from 1.25% to 2% and provides that this
amount in the northern zone, if adjusted by the CHRB, 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.
2)Establishes an auxiliary offsite stabling and training
facility and vanning program for thoroughbred races in the
northern, central, and southern zones.
3)Revises and recasts provisions governing the organization
formed and operated to administer the S&V Fund to include,
among other things, a 50-50% allocation of specified voting
interests on the board of the organization, the use of funds
to compensate the provider of a CHRB approved auxiliary
facility for offsite stabling and training of thoroughbred
horses in the northern, central, and southern zones, and the
requirement that the organization submit its proposed
financial and operational plans for the upcoming calendar year
to the CHRB for review no later than November 1 of the
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preceding year.
4)Requires that the 2% of funds of the total amount handled, as
specified, be used to pay the organization's expenses in the
northern zone.
5)Requires, in the northern, central, and southern zones and at
the request of the CHRB, 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 CHRB at the
organization's expense.
6)Requires that the funds be used to cover all or part of the
cost of vanning thoroughbred horses in the northern, central,
or southern zone from a CHRB approved auxiliary offsite
stabling and training facility. Also, authorizes the
organization to enter into multiyear contracts for auxiliary
facilities in the northern, central, or southern zone, subject
to specified conditions.
7)Authorizes 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.
8)Authorizes 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.
9)Provides that the CHRB 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.
10) Contains an urgency clause to take effect immediately.
Background
In 2013, Hollywood Park race track announced the discontinuance
of racing which created a severe stabling and training problem
for the horse racing industry. The CHRB and the racing industry
were able to negotiate an agreement for Hollywood Park to remain
open for stabling and training through the first quarter of
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2014, but had to find other stabling and training facilities to
replace Hollywood Park immediately thereafter.
Industry stakeholders and the CHRB came together to reach
agreements and the necessary commitments were made to preserve
thoroughbred racing in southern California. Specifically, Los
Alamitos race track built 500 new stalls to accommodate
thoroughbred training on a year-round basis; the San Luis Rey
Training Center, located in Bonsall (San Diego County) was
upgraded with an improved track and renovated barns to play a
major stabling role; Fairplex Park, located in Pomona, agreed to
provide stabling and training for a limited time; and, Santa
Anita race track and Del Mar race track continued to operate
race meets and stabling programs.
More recently, due to the decision by Fairplex to discontinue
training and racing, the CHRB granted Galway Downs training
center in Temecula a conditional license to begin providing
stalls and training. The CHRB and the industry are hopeful that
a new training center will eventually be built somewhere in
southern California to accommodate the horse racing industry
which plays a vital role in the state's economy.
Horse racing law provides for the Stabling and Vanning Fund (S&V
Fund) to help horsemen and horsewomen defray the costs of having
to transport and stable their races horses at auxiliary training
facilities. These statutes date back to the late 1980s and
early 1990s when wagering at satellite facilities located on
fairgrounds and race tracks was the only form of off-track
parimutuel wagering available. The S&V Fund was financed
exclusively from revenue generated at satellite wagering
facilities in this state. With the advent of advance deposit
wagering (ADW), the parimutuel handle began to migrate from
satellite wagering facilities to online ADW sources. The
subsequent decline in handle at satellite facilities has
resulted in a significant depletion of revenue to the S&V Fund.
Purpose of SB 1240. According to the author's office, this bill
is intended to address vanning and stabling issues for the
racing industry in California. The author's office notes that
current statutory language limits available funding and
decision-making flexibility. This bill gives the CHRB and the
organization governing the S&V Fund more flexibility in
governance and decision-making. Furthermore, it provides for
additional money from purses and commissions to help stabilize
the S&V Fund.
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Prior/Related Legislation
AB 2011 (Cooper, 2016) among other things, increases the amount
that is required to be deducted by a racing association or
racing fair in the northern zone for the S&V Fund from an amount
not to exceed 1.25% to 2% of the total amount handled by
satellite wagering facilities, as defined. (Pending in Assembly
Appropriations Committee)
AB 650 (Perea, 2015) increases the portion of the take-out used
to fund the S&V Fund from 1.25% of handle on wagers made on
thoroughbred races at northern California satellite facilities
to 2% of handle. Also, restructures the organization that
governs the S&V Fund. (Pending in Senate Rules Committee).
SB 766 (Negrete McLeod, Chapter 616, Statutes of 2009), among
other things, authorized the CHRB to shift money around from
various funds dedicated for specific purposes within horse
racing that are in surplus, such as the promotions fund and
workers' compensation fund, to others that are in deficit, such
as the S&V Fund.
SB 1805 (Florez, Chapter 883, Statutes of 2006) provided that
any funds that are not used to defray the cost of workers'
compensation insurance from the supplemental "take-out" may be
used for reimbursing racing organizations for safety
improvements to racing and training surfaces.
AB 2931 (J. Horton, Chapter 922, Statutes of 2002), among other
things, authorized the racing associations to use existing
industry funds (stabling and vanning and promotion funds) to
develop a program to off-set workers' compensation rates for
horse trainers in the state.
FISCAL EFFECT: Appropriation: No Fiscal
Com.: Yes Local: Yes
SUPPORT:
California Thoroughbred Breeders Association
Del Mar Thoroughbred Club
Oak Tree Racing Association
Thoroughbred Owners of California
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OPPOSITION:
None received