BILL ANALYSIS
AB 734
Page 1
Date of Hearing: May 13, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
AB 734 (Hill) - As Amended: April 23, 2009
Policy Committee: Governmental
Organization Vote: 16 - 0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill expands the allowable uses for the money in the
Inclosure Facilities Improvement fund by authorizing the
Secretary of the California Department of Food and Agriculture
(CDFA) to allow money in the fund to be used to maintain
operations at any fair satellite wagering facility, regardless
of whether or not the fair, or association conducting the fair,
contributed to the fund.
FISCAL EFFECT
The Inclosure Facilities Improvement Fund has not been
authorized by the California Horse Racing Board (CHRB),
therefore there are no funds available.
COMMENTS
1)Purpose . The intent of this bill is to make money in the
Inclosure Facilities Improvement Fund available to offset
and/or subsidize fairs that are facing significant declines in
satellite wagering facilities. According to the author, the
current satellite commission of 2% of the amount wagered 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
AB 734
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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.
2)Inclosure Facilities Improvement Fund . AB 765 (Evans; Chapter
613, Statutes of 2008) allowed a racing fair to deduct an
additional 1% from its handle to be paid into the newly
created Inclosure Facilities Improvement Fund for maintenance
and improvements at a fair's raceing inclosure. The
legislation further required the California Horse Racing Board
to approve the takeout and provided the Secretary of CDFA with
jurisdiction over the expenditure of the funds. To date,
there is no money available in the fund because CHRB has not
authorized the 1% takeout.
During its May 20, 2008 CHRB board meeting, the board
considered a request to approve the 1% deduction from the
handle. The board did not grant the request. Among the
concerns expressed was the fact that the 1% taken from the
handle would not be controlled by the CHRB, which has
jurisdiction over horse racing in the state, but would instead
be controlled by the CDFA secretary, upon appropriation by the
Legislature in the annual budget act.
3)Racing Inclosure is defined for purposes of wagering on horse
races as all areas of the racing association's or fair's
grounds and locations, as designated by the racing association
or fair licensed to conduct a live racing meeting and approved
by the board, excluding the public parking lot. This bill
would eliminate the parking lot exclusion.
4)Racetrack Attendance . 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.
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5)Satellite Wagering . 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.
6)Advance 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.
Analysis Prepared by : Julie Salley-Gray / APPR. / (916)
319-2081