BILL ANALYSIS
AB 246
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Date of Hearing: April 1, 2009
ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
Curren Price, Chairman
AB 246 (Price) - As Amended: March 25, 2009
SUBJECT : Horse racing: deductions and distributions: trust
funds.
SUMMARY : Requires a person licensed to conduct a horse racing
meeting to hold in trust the distributions required to be made
pursuant to the Horse Racing Law until the funds are paid to the
various distributees. Specifically, this bill :
1)Provides a person licensed under this chapter to conduct a
horse racing meeting shall hold in trust the distributions
required to be made pursuant to this chapter until the funds
are paid to the various distributees.
2)States these required deductions, except for those that enure
to the benefit of the racing association, are trust funds and
shall not be used by the racing association for any purpose
other than for payment to those distributees as directed by
this chapter.
3)Provides these funds are not the property of the racing
association, but are merely held in trust for the benefit of
the statutory distributees until the funds are distributed to
them in accordance with this chapter. These funds shall be
held in a separate depository account until they are actually
distributed as provided for in this chapter.
4)Makes legislative findings and declarations.
EXISTING LAW :
1)Provides CHRB shall regulate the various forms of horse racing
authorized in this state.
2)Requires various deductions and distributions to be made from
pari-mutuel pools as specified.
FISCAL EFFECT : Unknown
COMMENTS :
AB 246
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Background . According to the author, this bill relates to the
prevailing economic condition of horse racing in California and
takes into consideration the recent Chapter 11 bankruptcy
protection filing by Magna Entertainment Corp (MEC), the largest
operator of horse racing tracks in the country, including Golden
Gate Fields and Santa Anita which operate live racing activities
in California. The author states, this bill is necessary to
ensure that all of California' licensed racing participants and
entities receive their apt revenue share of the takeout which is
generated each time a wager is placed per statute.
At a CHRB meeting on Thursday, March 19, according to a CHRB
press release, "a representative of Magna Entertainment
Corporation (MEC) provided an update on MEC's Chapter 11
bankruptcy filing, including motions concerning the sale of
Santa Anita, Golden Gate Fields, and other MEC-owned properties,
and the status of funds due to various industry programs
considered vital to on-going racing operations.
The press release further stated, that after the meeting, CHRB
Chairman Harris "stressed that several persons in the racing
industry expressed concerns about delays in the distribution of
funds that MEC held in trust for various programs and operations
that are not believed to be general creditors, including the
Stabling and Vanning Fund and satellite location fees. He noted
their fear that these programs might be forced to close down -
to the detriment of Santa Anita and Golden Gate's continuing
operations and the overall industry - if payments are not made
soon. Chairman Harris said that although all pari-mutuel
tickets have been and will be paid, the bankruptcy filing has
delayed the distribution of millions of dollars from pari-mutuel
wagering due to other beneficiaries, including $1.2 million in
license fees due the State of California."
Purpose of the bill . According to the author, it has long been
established in California that a licensed racing association and
its pari-mutuel operation is actually a stakes holder. The
funds wagered are not the property of the specific licensed
racing association. The licensed racing association merely
holds the funds wagered until the results of the race are known,
and then the association pays the winning wagers, and holds
funds for others pursuant to the California Horse Racing Law.
The author further states, it has always been known that the
AB 246
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funds due the various distributes are not the property of the
licensed racing association. The racing association is merely
acting as a trustee until the funds are paid to those as
provided for in statute. Therefore, the intent of this bill is
to codify this trustee relationship in statute.
REGISTERED SUPPORT / OPPOSITION :
Support
California Harness Horsemen
Hollywood Park Casino
Los Alamitos Race Course
Pacific Coast Quarter Horse Racing Association
Thoroughbred Owners of California
Opposition
None on file.
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531