BILL ANALYSIS
AB 246
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 246 (Price)
As Amended June 26, 2009
2/3 vote. Urgency
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|ASSEMBLY: |79-0 |(May 4, 2009) |SENATE: |38-0 |(August 27, |
| | | | | |2009) |
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Original Committee Reference: G.O.
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)Authorize a quarter horse and harness racing association,
subject to approval by CHRB, to deduct from the total amount
handled in the pari-mutuel pool for any type of wager up to 2%
more of the total amount handled than was authorized on May 1,
2009, and would require any amount deducted under this
authority to be distributed as specified.
5)Contains urgency.
6)Makes legislative findings and declarations.
AB 246
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The Senate amendments :
1)Authorize a quarter horse and harness racing association,
subject to approval by CHRB, to deduct from the total amount
handled in the pari-mutuel pool for any type of wager up to 2%
more of the total amount handled than was authorized on May 1,
2009, and would require any amount deducted under this
authority to be distributed as specified.
2)Add an urgency clause, allowing this bill to take effect
immediately upon enactment.
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 : According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS :
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."
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The press release further stated, that after the meeting, CHRB
Chairman John 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
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.
Additionally, the sponsor states "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. Any
other additional funds from the takeout will be dedicated to
both purses and commissions on an equal basis."
Arguments in opposition : The Thoroughbred Owners of California
(TOC) oppose the provision in the bill that would increase the
takeout and use a portion of the additional funds to subsidize
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satellite-wagering facilities. TOC writes, "that increasing
"location fees" for some satellite facilities will only serve to
subsidize operational inefficiencies/losses without meaningful
accountability. Horse racing stakeholders have long requested a
complete accounting of the satellite wagering facilities'
operations in order to assess their effectiveness in the
marketplace and long-term profitability. These requests have
been met with delayed responses, incomplete information, and a
reluctance to take into account revenue streams from
non-traditional wagering sources." TOC adds, "that adopting
this subsidy for night industry races and using increased
takeout for this purpose sets a very poor precedent for day
races. TOC further adds, "we need to be extremely thoughtful
about any increase in takeout and make certain that related
funds are used to support initiatives that improve the
industry's overall health."
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531
FN: 0001982