BILL ANALYSIS
AB 734
Page 1
Date of Hearing: April 30, 2009
ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
Curren Price, Chairman
AB 734 (Hill) - As Amended: April 23, 2009
SUBJECT : Horse racing: fair satellite wagering facilities.
SUMMARY : Expands the scope of how monies generated from an
extra 1% percent takeout on live fair racing can be used, as
defined, by the Secretary of Food and Agriculture to maintain
operations at any fair satellite wagering facility in the state.
Specifically, this bill :
1)Authorizes the Secretary of Food and Agriculture (Secretary)
to make money in the Inclosure Facilities Improvement Fund
available to maintain operations at any fair satellite
wagering facility regardless of whether the fair, or the
association conducting racing at the fair, contributed to that
fund.
EXISTING LAW :
1)Provides that California Horse Racing Board (CHRB) regulate
the various forms of horse racing authorized in this state.
2)Authorizes CHRB to permit licensed racing associations and
fairs to operate satellite-wagering facilities under specified
conditions.
3)Authorizes a fair, a combination of fairs, or an association
conducting racing at a fair, after approval from the CHRB, to
contribute 1% of the total amount handled daily in
conventional and exotic pools for facilities maintenance and
improvements at a fair's racetrack inclosure, for those fairs
that contribute or those fairs where an association conducting
racing at that fair contributes.
4)Provides that the money raised is required to be deposited
into the Inclosure Facilities Improvement Fund, which is
created as a special fund in the State Treasury, and that
money is required to be available upon appropriation by the
Legislature in the annual Budget Act. Requires the Secretary
to appoint a committee to advise on the administration of the
funds, and requires the secretary to report any allocations,
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as specified.
FISCAL EFFECT : Unknown
COMMENTS :
Under current law, satellite-wagering facilities in California
allow patrons to watch and wager on live horse racing from
in-state and out-of-state locations. A satellite wagering
facility receives two percent on every dollar wagered at the
location each day. This commission has been the standard since
satellite wagering was authorized in 1985. According to the
author, the current satellite commission is not sufficient and
has caused an increasing number of fair satellite wagering
facilities to lay off workers, reduce hours, or simply cease
business operations because of increased costs and a general
downturn in wagering on horse racing in California.
The author states that additional factors have also negatively
impacted satellite-wagering facilities at county and state fairs
over the last decade including on-line gambling both legal and
illegal, an increase in regulated gambling facilities throughout
the state, and the recent economic downturn. The combination of
these factors has driven a number of smaller satellite
facilities to the brink of closure.
Many of California's fairs are faced with the decision to close
or reduce operations at their satellite facilities (Anderson,
Eureka, Lake Perris, Santa Maria, Santa Barbara, Tulare and
Victorville). Some fairs, even after initiating cost-cutting
steps have been forced to cease or restrict its wagering
opportunities for their nighttime patrons (Santa Barbara, Santa
Maria, Tulare and Victorville).
The above-mentioned closures have affected the California State
Fair (harness) and Los Alamitos Racing Association (quarter
horse) who conduct live horse racing operations at night. Horse
owners, trainers and employees at these racing associations are
impacted because less money is being wagered which generates
less revenue for the track and purse monies for the horsemen.
AB 765 (Evans) of 2008, allowed a racing fair to deduct an
additional 1% from its handle to be paid into the Inclosure
Facilities Improvement Fund for maintenance and improvements at
a fair's racetrack inclosure, as specified. This bill will
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allow the Secretary of Food and Agriculture to make money in the
Inclosure Facilities Improvement Fund available to maintain
operations at any fair satellite wagering facility regardless of
whether the fair, or the association conducting racing at the
fair, contributed to that fund. In essence, monies generated
from live horse racing at fairs will be used to offset and/or
subsidize other fairs that are facing significant economic
declines in satellite wagering operations.
The author states this bill is a necessary because not only will
it assist fairs who conduct satellite wagering operations in
California but it will allow them to continue to generate much
needed revenue for tracks, horsemen, breeders', and the network
of California fairs.
Background . Satellite wagering via an off-track facility has
been legal in California since 1985. It was authorized at a
time when California racetracks were beginning to experience
declining attendance and handle figures. The industry believed
that making the product easier to access not only would expose
and market horse racing to potential customers, but also would
make it more convenient for the existing patrons to wager more
often. Under existing law, satellite wagering may only be
conducted on the grounds at racetracks and fairs throughout the
state (there are a few statutory exceptions).
Currently, there are 32 satellite-wagering facilities in
California. Six of the facilities are at privately owned
racetracks, eight at fairs that conduct live racing, 15 at
county fairs and district agricultural associations, and 3 on
Indian lands. Simulcast-only facilities do not have live
racing; those facilities accept wagers on races broadcast via
simulcast from in-state and out-of-state racetracks.
Since the mid-1990's, seven state-designated or county fairs
have received the statutory authority to locate additional
satellite-wagering facilities off the respective fairgrounds but
within the boundaries of the fair district. To date, only the
Fresno County Fair has exercised this authority by leasing space
in a card club in downtown Fresno.
California's county fairs, and agricultural associations receive
a great deal of their revenue from satellite
wagering, so it is in their interests to ensure that satellite
wagering remains a viable facet of the business.
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Simulcasting wagering . Simulcasting is the process of
transmitting the audio and video signal of a live racing
performance from one facility to a satellite for retransmission
to other locations or venues where pari-mutuel wagering is
permitted. Simulcasting provides racetracks with the
opportunity to increase revenues by exporting their live racing
content to as many wagering locations as possible, such as other
racetracks, fair satellite facilities and Indian casinos.
Revenues are increased because simulcasting provides racetracks
that export their live content with additional customers in
multiple locations who would not have otherwise been able to
place wagers on the live racing event.
Advanced 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 handle or
cannibalizes the money that would usually go to existing
wagering venues. No conclusive assessment has been reached by
the industry relating to cannibalization.
Attendance declines . There has been a general decline in the
number of people attending and wagering at live horse racetracks
in California due to a number of factors, including increased
competition from other forms of gaming, unwillingness of
customers to travel a significant distance to racetracks and the
availability of off-track wagering. The declining attendance at
live horse racing events has prompted racetracks to rely on
revenues from in-state and out-of-state satellite wagering and
account wagering.
Prior legislation . AB 241 (Price), Chapter 594, Statutes of
2007, allowed up to 45 mini-satellite wagering sites throughout
the State, as defined, that would be able to offer wagering on
horse racing via satellite wagering in the northern, central and
southern racing zones, as specified. The bill authorized any
fair to operate a satellite wagering facility on leased premises
within the boundaries of that fair, as specified. The bill also
allowed satellite-wagering operations to be conducted at
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racetracks that have closed in the central zone, under certain
conditions.
AB 765 (Evans), Chapter 613, Statutes of 2007, reauthorized
horse racing's ADW law, which would have "sunset" on January 1,
2008. In addition , the bill allows a fair, combination of
fairs, or an association-conducting racing at a fair, to deduct
an additional 1% from its handle, to be used for maintenance and
improvements at a fair's racetrack inclosure, with CHRB
approval, as specified.
REGISTERED SUPPORT / OPPOSITION :
Support
Alameda County Fairgrounds
Amador County Fair
Antelope Valley Fairgrounds
Cal Expo
California Authority of Racing Fairs
California Fairs Alliance
California Teamsters Public Affairs Council
Earl Warren Showgrounds
Fresno Fair
Kern County Fair
Lake Perris Fairgrounds
Monterey County Fair
Redwood Acres
Riverside County Economic Development Agency
San Joaquin County Fair
San Mateo County Event Center
Santa Clara County Fairgrounds
Shasta District Fair
Solano County Fair
Stanislaus County Fair
The National Orange Show Sports Center
Tulare County Fair
Ventura County Fairgrounds
Western Fairs Association
Opposition
None on file
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Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531