BILL ANALYSIS
Bill No: AB
1152
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Roderick D. Wright, Chair
2009-2010 Regular Session
Staff Analysis
AB 1152 Author: Anderson
As Amended: April 21, 2010
Hearing Date: April 27, 2010
Consultant: Chris Lindstrom
SUBJECT
Horse racing: advance deposit wagering: jockey retirement
plan: license fee.
DESCRIPTION
AB 1152, an urgency measure, strikes "outriders" from the
list "racing officials" for licensure purposes and places
them back amongst the list of "racing personnel." Deletes
the vesting requirements of the jockeys' retirement program
for purposes of conforming with federal tax law.
Specifically, the bill:
1)Requires the licensure of outriders by the California
Horse Racing Board pursuant to the provisions of law
listing the persons who participate in, or have anything
to do with, the racing of horses must be licensed.
2)Provides that the CHRB may adopt regulations to require
outrider license applicants to pass both a written and an
oral examination and to authorize outriders to exercise
the duties and powers as prescribed by the CHRB.
3)Deletes the provisions requiring a jockey to have ridden
in a minimum of 1,250 parimutuel races conducted in
California in order to be vested in the jockeys'
retirement pension program.
4)Exempts California harness racing meetings from
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participating in the jockeys' retirement pension program.
5)Takes effect immediately as an urgency measure.
EXISTING LAW
Article IV, Section 19(b) of the Constitution of the State
of California provides that the Legislature may provide for
the regulation of horse races and horse race meetings and
wagering on the results.
Existing law authorizes parimutuel wagering on horse racing
at or disseminated by licensed racing associations and
fairs. Racing was legalized through constitutional
amendment in 1933. The California Horse Racing Board has
complete jurisdiction and supervision over all racing
activities in the State of California.
Existing law authorizes and defines "advance deposit
wagering" as a form of parimutuel wagering in which a
person "establishes an account with a board-approved
betting system or wagering hub where the account owner
provides 'wagering instructions' authorizing the entity
holding the account to place wagers on the owner's behalf."
Under current law, a percentage of ADW wagers is used to
establish and administer a defined contribution retirement
plan for California licensed jockeys who retired from
racing on or after January 1, 2009. The revenue paid into
this fund shall not exceed $1 million annually.
Existing law defines "racing official" as the starter,
outrider, timer, paddock judge, horseshoe inspector, horse
identifier, official veterinarian, racing veterinarian,
associate judge, placing judge, patrol judge, clerk of
scales, clerk of the course, and any other person acting as
an official at any horse racing meeting.
Existing law provides that every steward and racing
official shall be licensed and subject to both written and
oral examinations.
Existing law requires persons who participate in a horse
race without proper licensure are guilty of a misdemeanor.
BACKGROUND
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Purpose of the bill . According to the sponsor, "B & P Code
section 19604(i)(1), which was enacted as part of the
implementation of AB 765 (Evans), creates a retirement plan
for California licensed jockeys paid for by funds generated
by advanced deposit wagering. That plan is required to be
a "defined contribution plan." The section also contains a
vesting provision that provides that retirement is vested
when a jockey has ridden 1,250 mounts in California races.
The plan has been presented to the Internal Revenue Service
to insure that it is a "qualified plan" under the Internal
Revenue Code and the IRS has indicated that a defined
contribution plan cannot have a delayed vesting requirement
and remain a "qualified plan." Therefore, to insure that
plan is consistent with federal law, the vesting provision
is being removed. The effect would be that a jockey would
be vested from the first dollar contributed to his or her
retirement account, as is the case with all other defined
contribution plans.
"Last year, the Legislature passed an omnibus Committee
bill, AB 1575, which defined "outriders" (the guys who ride
the horses that escort the racehorses to the gate) as
"racing officials." This gave the CHRB the authority to
require the outriders to exercise greater responsibility in
the conduct of the race. Unfortunately, the bill had an
unexpected effect on the collective bargaining contracts in
the industry. These amendments (agreed to by the CHRB)
will allow the CHRB to give "outriders" greater
responsibility over the conduct of the race without calling
them "racing officials," which will accomplish the CHRB's
goals in AB 1575 without upsetting the collective
bargaining contracts."
Background . This bill is intended to address two problems
in the Horse Racing Law that relate to jockeys retirement
plans and a specific classification of racetrack personnel,
respectively.
Jockey retirement plans. In 2007, the Legislature passed
AB 765 (Evans), Chapter 613, Statutes of 2007, which
extended the authorization for advanced deposit wagering
(ADW) in horse racing. A portion of that bill directed
some of the proceeds to fund a "defined contribution"
retirement plan for California licensed jockeys. At the
time, the bill included a vesting requirement of 1,250
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races run in California.
Upon implementing that legislation, the law firm hired by
the California Horse Racing Board has been informed by the
Internal Revenue Service (IRS) that the vesting requirement
is inconsistent with federal law. A defined contribution
plan (e.g., IRA, 401K, etc.) cannot have a vesting
requirement. It must vest with the first dollar
contributed, otherwise, it loses its tax-deferred status.
AB 1152 corrects this problem by removing the vesting
provisions to ensure that the plan is consistent with
federal law and qualifies as a "defined contribution plan".
Classification of racetrack personnel. Additionally, in
2009, the Legislature passed AB 1575 (Governmental
Organization), Chapter 650, Statutes of 2009, which changed
the licensure classification for outriders from "barn
personnel" to "racing officials". This change was intended
to recognize the significant amount of responsibility that
outriders exercise on-track, working in close
communications with the race steward, and thereby requiring
outriders to demonstrate a higher level of qualification.
Unfortunately, the bill had an unexpected effect of placing
outriders in a different collective bargaining unit.
The change proposed by AB 1152 corrects the problem without
undoing the intent of AB 1575 of last year. The change
reclassifies outriders as "general racing personnel" who
must be licensed. The bill also specifies that the CHRB
may administer written and oral examinations of outriders
to certify that they are qualified.
PRIOR/RELATED LEGISLATION
AB 1575 (Governmental Organization) Chapter 650, Statutes
of 2009 . Requires "outriders" to be licensed as "racing
officials" rather than just as "barn personnel".
SB 317 (Denham), Chapter 77, Statutes of 2007 . Requires
applicants for license as an official veterinarian to pass
both a written and oral exam, and would establish
qualifications for persons to be admitted to the official
veterinarian exam.
AB 765 (Evans), Chapter 613, Statutes of 2007 . Extended,
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expanded and revised state authorization for ADW, and
established the jockeys' retirement pension program
AB 471 (Hertzberg), Chapter 198, Statutes of 2001 .
Authorized ADW.
SUPPORT: As of April 23, 2010:
Jockeys' Guild
California Exposition and State Fair
OPPOSE: None on file as of April 23, 2010.
FISCAL COMMITTEE: Senate Appropriations Committee
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