BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 1240|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
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CONSENT
Bill No: SB 1240
Author: Hall (D)
Amended: 4/5/16
Vote: 27 - Urgency
SENATE GOVERNMENTAL ORG. COMMITTEE: 12-0, 4/12/16
AYES: Hall, Berryhill, Block, Gaines, Galgiani, Glazer,
Hernandez, Hill, Hueso, Lara, McGuire, Vidak
NO VOTE RECORDED: Runner
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
SUBJECT: Horse racing: thoroughbred racing: northern,
central, and southern zones: auxiliary offsite
stabling, training, and vanning
SOURCE: Author
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:
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Page 2
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
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.
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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
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 two fiscal years and, upon request of any party
within the organization, that those receipts and expenditures
be audited by an independent third 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.
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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
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 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
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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.
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 the
Senate Governmental Organization 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.
FISCAL EFFECT: Appropriation: No Fiscal
Com.: Yes Local: Yes
SUPPORT: (Verified 5/3/16)
SB 1240
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California Thoroughbred Breeders Association
Del Mar Thoroughbred Club
Oak Tree Racing Association
Thoroughbred Owners of California
OPPOSITION: (Verified 5/3/16)
None received
Prepared by:Arthur Terzakis / G.O. / (916) 651-1530
5/4/16 14:58:12
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