BILL ANALYSIS
Bill No: AB
1499
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Roderick D. Wright, Chair
2009-2010 Regular Session
Staff Analysis
AB 1499 Author: Evans
As Introduced: February 27, 2009
Hearing Date: June 9, 2009
Consultant: Chris Lindstrom
SUBJECT
Horse racing: workers' compensation.
DESCRIPTION
AB 1499, an urgency measure, reauthorizes 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. Specifically, AB 1499:
1)Authorizes a fair to 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. The 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, or to benefit the
purse pool of each breed at the particular fair where the
AB 1499 (Evans) continued
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funds are generated in the same proportions as each breed
generated at that fair in the year the funds are
collected.
3)Requires fairs and the organizations representing the
horsemen and horsewomen of each breed for which
deductions have been approved to 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 distributing these funds to defray the costs
of workers' compensation insurance, the matter shall be
submitted to the CHRB, as specified.
5)Sunsets the authorization created by the bill on January
1, 2014.
6)Becomes effective immediately upon enactment in order to
ensure that trainers and owners of certain horse racing
breeds continue to receive assistance in defraying
workers' compensation insurance costs, as is currently
done for trainers and owners of other horse racing
breeds.
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 provides that the California Horse Racing
Board (CHRB) regulate the various forms of horse racing
authorized in this state.
Existing law requires various deductions and distributions
to be made from pari-mutuel pools, as specified.
Existing law provides that until January 1, 2014,
thoroughbred associations or fairs may deduct 0.5 percent
AB 1499 (Evans) continued
Page 3
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.
Existing law 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.
Existing law 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 CHRB for a decision.
BACKGROUND
Purpose of the bill. According to the author, AB 2103
(Plescia), Chapter 443, Statutes 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.
AB 2103 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.
AB 1499 (Evans) continued
Page 4
Background. Over the years, California's horse racing
industry has been significantly threatened by the
escalating 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.
AB 1499 (Evans) continued
Page 5
4)Reductions of premiums and claim costs have occurred. In
a six month period (12/02 - 7/03) prior to the law, there
were 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
PRIOR/RELATED LEGISLATION
AB 2048 (Silva), Chapter 439, Statutes of 2008 . Extends
the sunset date, from January 1, 2009, to January 1, 2014,
on a program to allow a Quarter Horse racing association to
deduct an additional 0.5% of the total amount handled in
exotic pari-mutuel pools to defray the costs of paying for
workers' compensation insurance.
AB 2103 (Plescia), Chapter 443, Statutes of 2008 . Extends
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, until January 1, 2009, for the deduction from
the pari-mutuel pools in order to address increased costs
in workers' compensation insurance in the horse racing
industry.
SUPPORT: As of June 5, 2009:
American Mule Association
California Authority of Racing Fairs
OPPOSE: None on file as of June 5, 2009.
FISCAL COMMITTEE: Senate Appropriations Committee
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