BILL ANALYSIS
AB 1499
Page 1
Date of Hearing: April 22, 2009
ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
Curren Price, Chairman
AB 1499 (Evans) - As Introduced: February 27, 2009
SUBJECT : Horse racing: workers' compensation.
SUMMARY : Allows a fair to deduct an additional 0.5% of the
total amount handled in exotic pari-mutuel pools of races for
any breed, other than races solely for thoroughbreds to defray
workers' compensation insurance costs for trainers and owners
who race at an applicable fair. This authorization would expire
on January 1, 2014. Specifically, this bill :
1)Provides a fair may deduct an additional 0.5 percent of the
total amount handled in exotic pari-mutuel pools of races for
any breed, other than races solely for thoroughbreds. This
additional deduction shall only be permitted for a breed's
races with the approval of the organization representing the
horsemen and horsewomen of that breed at the fair.
2)Provides the amounts distributed to the organization, as
described, and shall be deposited in a separate account to
defray workers' compensation insurance costs for trainers and
owners who are racing breeds other than thoroughbreds at the
applicable fair. Any funds not expended for this purpose in
the calendar year in which they are collected may either be
used for the following year's workers' compensation costs, as
specified above, or to benefit the purse pool of each breed at
the particular fair where the funds are generated in the same
proportions as each breed generated at that fair in the year
the funds are collected.
3)Provides the fairs and the organizations representing the
horsemen and horsewomen of each breed for which deductions
have been approved shall form an organization to which any
funds deducted, as defined, shall be distributed. The fairs
collectively shall have representation equal to the collective
representation of the organizations representing horsemen and
horsewomen on the governing board of the organization formed
pursuant to this subdivision.
4)Provides that if the fairs and the organizations representing
horsemen and horsewomen cannot agree on the manner for
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distributing these funds to defray the costs of workers'
compensation insurance, the matter shall be submitted to the
CHRB, as specified.
5)Contains a "sunset date" of January 1, 2014.
6)Contains an urgency clause.
EXISTING LAW :
1)Provides CHRB shall regulate the various forms of horse racing
authorized in this state.
2)Requires various deductions and distributions to be made from
pari-mutuel pools as specified.
3)Provides that until January 1, 2014, a thoroughbred
associations or fairs may deduct 0.5 percent of the amount of
exotic pari-mutuel wagering on thoroughbred races to defray
the costs of workers' compensation insurance. Provides that
this deduction shall pay for supplemental premiums that reduce
rates, pay for benefits of trainers and owners of thoroughbred
horses, and to reimburse these trainers and owners for the
costs of workers' compensation insurance.
4)Provides that funds not expended for workers' compensation
costs shall be carried forward to the subsequent year, or used
for the cost of health and safety programs, research or safety
equipment, or to make capital improvements to prevent
workplace accidents and to increase the safety of jockeys,
exercise riders, backstretch employees, and other racetrack
personnel.
5)Provides that if the racing association and the organization
representing horsemen and horsewomen cannot agree on the
manner of distribution of these funds to defray the costs of
workers' compensation insurance, the matter is required to be
submitted to the CHRB for a decision.
FISCAL EFFECT : Unknown
COMMENTS :
Background . Over the years, the California's horse racing
industry has been significantly threatened by the escalating
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cost of workers' compensation insurance, in that the costs are
not only causing horses and trainers to leave this state, but
also discouraging owners and trainers from bringing horses into
California to race. In 2004, AB 701 (J. Horton), Chapter 40,
Statutes of 2004 was enacted to provide the horse racing
industry with some workers' compensation relief through the
redistribution of 0.5 percent of the pari-mutuel handle on
exotic wagers for thoroughbred associations and live racing
fairs. The bill passed with the industry in agreement that a
trial period was in order and therefore a January 1, 2009 sunset
provision was included in the bill.
Last year, the provisions of AB 701 relating to thoroughbreds
were extended until January 1, 2014 in AB 2103 (Plescia),
Chapter 443, Statutes of 2008.
The funds generated from the two bills have been used to defray
the costs of workers' compensation insurance incurred in
connection with horses that race in this state through the
payment of supplemental premiums that reduce rates, payment to
or for the benefit of trainers and owners of such horses, based
on the number of such horses they start, in order to reimburse
them for the costs of workers' compensation insurance directly
or indirectly incurred by them, and other appropriate payments.
Impact of workers' compensation relief bills. After the passage
of AB 701 in 2004, the industry established its own captive
insurance program, referred to as the California Horsemen's
Safety Alliance (CHSA). According to various segments within
the horse racing industry, the CHSA has produced the following
results:
1)Workers' compensation costs have been reduced.
2)The exodus of trainers and owners has decreased and new
trainers and owners are bringing horses into California.
3)The CHSA established industry safety training programs,
treatment oversight programs, return to work programs, and
safety equipment research programs, which reduced the number
of accidents and cost of resulting claims.
4)Reductions of premiums and claim costs have occurred. In a
six month period (12/02 -7/03) prior to the law, there were
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123 insured participants with total premiums of $2,929,585 and
claims paid of $2,617,716. In contrast, in the 12-month
policy period between July 2006 to June 2007, there were 399
insured participants with premiums of $8,757,818 and claims
paid of $2,830,121.
Purpose of the bill . According to the author, AB 2103 (Plescia)
of 2008, extended the sunset date from January 1, 2009 to
January 1, 2014, for the law which established an internal
workers compensation insurance program for California's Horse
Racing Industry. The bill allowed a fair race meet to deduct
0.5 percent from the exotic wagering pools to help cover the
costs of workers' compensation for thoroughbreds but not the
other breeds (mules, appaloosas, quarter horses, and Arabians)
that race on the northern California Summer Fair Circuit. Those
specific breeds were inadvertently omitted from AB 2103
(Plescia).
This bill reinstates the 0.5% workers compensation insurance
program deduction for non-thoroughbred breeds that race at the
fairs. AB 1499 contains an urgency clause to prevent adverse
affects on the non-thoroughbred owners and trainers who race on
the northern California Fair Racing Circuit when racing
commences in June. The author notes, that a sunset date was
added to this bill to stay consistent with AB 2103 (Plescia) of
2008.
Prior legislation . AB 2103 (Plescia), Chapter 443, Statutes of
2008. Extended the sunset date, from January 1, 2009 to January
1, 2014, on a deduction from pari-mutuel wagering on
thoroughbred horse racing in order to defray the costs of pay or
workers' compensation insurance.
AB 701 (J. Horton), Chapter 40, Statutes of 2004. Provided a
framework for the deduction from the pari-mutuel pools in order
to address increased costs in workers compensation insurance in
the horse racing industry.
REGISTERED SUPPORT / OPPOSITION :
Support
American Mule Association
California Authority of Racing Fairs
AB 1499
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Opposition
None on file
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531