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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|COMMITTEE VOTE: |15-0 |(September 9, 2009) |RECOMMENDATION: |concur |
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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
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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.
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.
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."
The press release further stated, that after the meeting, CHRB
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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."
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531
FN: 0003125