BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 246|
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THIRD READING
Bill No: AB 246
Author: Price (D)
Amended: 6/26/09 in Senate
Vote: 27 - Urgency
SENATE GOVERNMENTAL ORG. COMMITTEE : 12-0, 6/23/09
AYES: Wright, Harman, Benoit, Denham, Florez, Negrete
McLeod, Oropeza, Padilla, Price, Wiggins, Wyland, Yee
NO VOTE RECORDED: Calderon
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 79-0, 5/4/09 (Consent) - See last page for
vote
SUBJECT : Horse racing: deductions and distributions:
trust funds
SOURCE : Author
DIGEST : This bill adds two new sections to Horse Racing
Law to: (1) requires a person licensed to conduct a horse
racing meeting to hold in trust the distributions required
to be made pursuant to law until the funds are paid to the
various statutorily designated distributees, and, (2)
authorizes a quarter horse association, subject to approval
by the California Horse Racing Board, and a harness racing
association to deduct up to two percent more from the total
amount wagered in the parimutuel pool for any type of
wager, and, specifies how the funds shall be distributed to
CONTINUED
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eligible satellite wagering facilities, owners purses and
racetrack commissions.
ANALYSIS : Existing law provides California Horse Racing
Board (CHRB) shall regulate the various forms of horse
racing authorized in this state and also requires various
deductions and distributions to be made from pari-mutuel
pools, as specified.
This bill:
1. Adds Section 19597.5 to the Business and Professions
Code to provide that:
A. A person licensed to conduct a horse racing
meeting shall hold in trust the distributions
required to be made pursuant to law until the funds
are paid to the various statutorily designated
distributees.
B. The required deductions, except for those that
ensure 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 various distributees as directed by law.
C. The deductions are not the property of the
racing association, but are merely held in trust
for the benefit of the various distributees until
the funds are distributed to the distributees in
accordance with law. These funds shall be held in
a separate depository account until they are
actually distributed.
2. Adds Section 19601.3 to the Business and Professions
Code to provide that:
A. A quarter horse racing association may, subject
to approval by the CHRB, deduct from the total
amount handled in the parimutuel pool for any type
of wager up to 2 percent more of the total amount
handled than was authorized on May 1, 2009. Funds
deducted pursuant to this additional authority
shall be distributed as follows:
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(1) All of the funds, up to one percent on
the first $50,000 per day handled, to
eligible satellite wagering facilities that
are in compliance with Article 9.2
(commencing with Section 19605), based on the
wagers they accept, and provided further that
they accept all available signals from the
quarter horse racing association.
(2) The remainder of the funds shall be
distributed with 50 percent going to the
quarter horse horsemen's organization for
purses and the other 50 percent being
retained by the racing association.
B. A harness racing association may, subject to
approval by the CHRB, deduct from the total amount
handled in the parimutuel pool for any type of
wager up to two percent more of the total amount
handled than was authorized on May 1, 2009. Funds
deducted pursuant to this additional authority
shall be distributed as follows:
(1) All of the funds, up to one percent on
the first $50,000 per day handled, to
eligible satellite wagering facilities that
are in compliance with Article 9.2
(commencing with Section 19605), based on the
wagers they accept, and provided further that
they accept all available signals from the
quarter horse racing association.
(2) The remainder of the funds shall be
distributed with 50 percent going to the
quarter horse horsemen's organization for
purses and the other 50 percent being
retained by the racing association.
3. Makes legislative findings and declarations.
Background
According to the author's office, it has long been
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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 California Horse Racing Law.
The author's office further states, it has always been
known that the funds due the various designated
beneficiaries 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.
Additionally, the author's office states that "there are a
number of satellite wagering facilities that find it
difficult to stay open and accept the night signal because
they do not make a profit. One percent of the increased
takeout proposed by the bill (for the first $50,000
handled) will be dedicated to increasing the commission for
those who operate satellite facilities and take the harness
and quarter horse signal. The additional funds from the
takeout will be dedicated to both purses and commissions on
an equal basis.
NOTE: Please refer to the Senate Governmental
Organization Committee analysis for further
background information.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 7/15/09)
California Harness Horsemen
Hollywood Park Casino
Los Alamitos Race Course
Pacific Coast Quarter Horse Racing Association
ARGUMENTS IN SUPPORT : Supporters contend that this bill
seeks to clarify existing law to indicate that the
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deductions from wagers are held in trust by the race
tracks, and are not the property of the race tracks. The
racing industry always believed that these funds were, in
fact, held in trust, however, the recent bankruptcy
proceedings of Magna Entertainment has cast doubt on
whether or not these funds are in fact trust funds.
Additionally, this bill will increase the takeout for both
the quarter horse industry and the harness industry.
Currently, there are a number of satellite wagering
facilities that find it difficult to stay open and accept
the night signal because they do not make a profit. One
percent of this takeout increase will be dedicated to
increasing the commission for those who operate satellite
facilities and take the harness and quarter horse signal.
The additional funds from the takeout will be dedicated to
both purses and commissions on an equal basis.
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Anderson, Arambula, Beall, Bill
Berryhill, Tom Berryhill, Blakeslee, Block, Blumenfield,
Brownley, Buchanan, Caballero, Charles Calderon, Carter,
Chesbro, Conway, Cook, Coto, Davis, De La Torre, De Leon,
DeVore, Duvall, Emmerson, Eng, Evans, Feuer, Fletcher,
Fong, Fuentes, Fuller, Furutani, Gaines, Galgiani,
Garrick, Gilmore, Hagman, Hall, Harkey, Hayashi,
Hernandez, Hill, Huber, Jeffries, Jones, Knight,
Krekorian, Lieu, Logue, Bonnie Lowenthal, Ma, Mendoza,
Miller, Monning, Nava, Nestande, Niello, Nielsen, John A.
Perez, V. Manuel Perez, Portantino, Price, Ruskin, Salas,
Saldana, Silva, Skinner, Smyth, Solorio, Audra
Strickland, Swanson, Torlakson, Torres, Torrico, Tran,
Villines, Yamada, Bass
NO VOTE RECORDED: Huffman
TSM:do 7/15/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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