BILL NUMBER: SB 517	CHAPTERED  07/26/99

	CHAPTER   170
	FILED WITH SECRETARY OF STATE   JULY 26, 1999
	APPROVED BY GOVERNOR   JULY 23, 1999
	PASSED THE ASSEMBLY   JULY 8, 1999
	PASSED THE SENATE   MAY 10, 1999
	AMENDED IN SENATE   APRIL 7, 1999

INTRODUCED BY   Senator Johnson

                        FEBRUARY 18, 1999

   An act to amend Sections 19554 and 19556 of the Business and
Professions Code, relating to horse racing.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 517, Johnson.  Horse racing:  charity days distributions.
   Existing law requires each licensed racing association to
designate a certain number of racing days to be conducted as charity
days for the purpose of the distribution of the net proceeds
therefrom to beneficiaries.  Existing law also requires that
distributing agents for, and beneficiaries of, these proceeds be
exempt or entitled to exemption from state and federal income taxes,
but allows a racing association, whose board of trustees or directors
is precluded by its articles of incorporation, bylaws, or by
contract from receiving compensation for services in the capacity of
trustee or director, to act as its own distributing agent , upon
approval of the California Horse Racing Board.
   This bill would  allow any racing association to act as its own
distributing agent upon approval of the board, if it meets minimum
allocation and distribution requirements, as specified.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 19554 of the Business and Professions Code is
amended to read:
   19554.  Except as provided elsewhere in this section, the
distributing agent for charity distributions shall be a nonprofit
organization or corporation, or nonprofit organizations or
corporations, selected by the licensee of the meeting and approved by
the board.
   (a) Each distributing agent to be qualified hereunder shall
conform to the then existing laws and regulations of this state and
the United States, so as to be exempt or be entitled to exemption
from the payment of any tax measured by income.
   (b) Each distributing agent shall have not less than five trustees
or directors.  None of the individuals constituting the governing
board of trustees or directors of the distributing agent shall be
directly connected with, be a stockholder, or have any interest in
the racing association that is the licensee of the race meeting.
Each of the individual trustees or directors shall be a person who
is, at the time, both a resident of this state, and an executive,
officer, director, trustee, or member of the governing body or board,
by whatever name the governing body or board may be known, of an
organization engaged in civic, religious, charitable, educational, or
veteran activities in this state.
   (c) Each distributing agent shall adopt bylaws, shall provide for
election to fill vacancies in the board of directors or trustees, and
shall hold at least one meeting each year.
   (d) Notwithstanding any other provision of this section, with the
approval of the board, a racing association whose board of trustees
or directors is precluded by its articles of incorporation, bylaws,
or by contract from receiving compensation for services in the
capacity of trustee or director may act as its own distributing
agent.
   (e) Notwithstanding any other provision of this section, with the
approval of the board, a racing association may act as its own
distributing agent provided it allocates and distributes for
charitable purposes an amount at least equal to that specified in
subdivision (b) of Section 19550 in accordance with Section 19555 and
subdivision (b) of Section 19556.
  SEC. 2.  Section 19556 of the Business and Professions Code is
amended to read:
   19556.  (a) The distribution shall be made by the distributing
agent to beneficiaries qualified under this article.  For the
purposes of this article, a beneficiary shall be all of the
following:
   (1) A nonprofit corporation or organization entitled by law to
receive a distribution made by a distributing agent.
   (2) Exempt or entitled to an exemption from taxes measured by
income imposed by this state and the United States.
   (3) Engaged in charitable, benevolent, civic, religious,
educational, or veterans' work similar to that of agencies recognized
by an organized community chest in the State of California, except
that the funds so distributed may be used by the beneficiary for
capital expenditures.
   (4) Approved by the board.
   (b) At least 20 percent of the distribution shall be made to
charities associated with the horse racing industry.  No beneficiary
otherwise qualified under this section to receive charity day net
proceeds shall be excluded on the basis that the beneficiary provides
charitable benefits to persons connected with the care, training,
and running of racehorses, except that type of beneficiary shall make
an accounting to the board within one calendar year of the date of
receipt of any distribution.