BILL ANALYSIS
AB 734
Page 1
ASSEMBLY THIRD READING
AB 734 (Hill)
As Amended April 23, 2009
Majority vote
GOVERNMENTAL ORGANIZATION 16-0APPROPRIATIONS 16-0
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|Ayes:|Price, Anderson, Chesbro, |Ayes:|De Leon, Nielsen, |
| |Cook, De Leon, | |Ammiano, |
| |Galgiani, Hall, Hill, | |Charles Calderon, Davis, |
| |Jeffries, Lieu, Mendoza, | |Duvall, Krekorian, Hall, |
| |Nestande, Portantino, | |Harkey, Miller, |
| |Torres, Torrico, Tran | |John A. Perez, Price, |
| | | |Skinner, Solorio, Audra |
| | | |Strickland, Torlakson |
|-----+--------------------------+-----+--------------------------|
| | | | |
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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 the California Department of Food
and Agriculture (CDFA) to maintain operations at any fair
satellite wagering facility in the state. Specifically, this
bill authorizes the Secretary of CDFA to make money in the
Inclosure Facilities Improvement Fund (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
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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 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 of CDFA to appoint a committee to
advise on the administration of the funds, and requires the
secretary to report any allocations, as specified.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, the Fund has not been authorized by CHRB, therefore
there are no funds available.
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
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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
allow the Secretary of CDFA to make money in the 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
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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.
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
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.
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531
FN: 0000727