BILL ANALYSIS
AB 1289
Page 1
Date of Hearing: May 16, 2007
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mark Leno, Chair
AB 1289 (Price) - As Amended: April 9, 2007
Policy Committee: Governmental
Organization Vote: 13 - 1
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill makes various changes to advance deposit wagering
(ADW) for horse racing. Specifically, this bill:
1)Requires that any multi-jurisdictional advance deposit horse
racing wagering hubs for California be located within the
state
2)Requires that represented employees be employed at a ratio of
one employee for every $20,000 in wagers handled by licensees,
betting systems, and multi-jurisdictional hubs.
3)Requires that a portion of the proceeds from all ADW be placed
in a retirement fund for professional jockeys.
4)Requires the California Horse Racing Board (CHRB) to work with
a designated jockeys' association to develop the retirement
fund.
5)Expands the sunset provision for ADW from January 1, 2008 to
January 1, 2011.
FISCAL EFFECT
1)Cost for CHRB to develop and administer the retirement fund
for jockeys would be in excess of $500,000 in the first year
with annual, on-going costs of approximately $300,000.
2)Potential increase in state license fee revenues from
AB 1289
Page 2
increased wagering opportunities.
COMMENTS
1)Rationale . According to the sponsor, the Service Employees
International Union, one of the primary intentions of the
Legislature in enacting AB 471, which legalized ADW in the
state, was to provide jobs with good wages and benefits to
California residents at these newly created wagering hubs.
However, the legislation did not explicitly state that the
wagering hub needed to be located in California. The waging
hub is currently located in Oregon. This bill would require
that hub be relocated somewhere within the state.
2)Advance Deposit Wagering (ADW) . The California horse racing
industry entered into a new era in 2002 with the advent of
ADW, which allows customers to deposit funds into an account
in order to wager online and over the telephone. These wagers
are commingled into pools at the host track where the races
are run, and within the pari-mutuel wagering system regulated
by CHRB. Currently, CHRB has approved three companies to
provide ADW services to California customers. One of the
ongoing questions about ADW is whether it generates new
revenue or cannibalizes the money that would usually go to
existing wagering venues. No conclusive assessment has been
reached by the industry relating to cannibalization. This
authorization expires on January 1, 2008.
3)Related Legislation . AB 471 (Hertzberg; Chapter 198, Statutes
of 2001), allows a California resident to wager on races
(including most out-of-state racetracks) using the phone,
Internet or other electronic media.
AB 813 (Portantino) removes the "sunset" provision for ADW in
California. That bill is currently pending in this committee.
Analysis Prepared by : Julie Salley-Gray / APPR. / (916)
319-2081