BILL ANALYSIS
Bill No: AB
1792
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Roderick D. Wright, Chair
2009-2010 Regular Session
Staff Analysis
AB 1792 Author: Silva
As Amended: June 3, 2010
Hearing Date: June 9, 2010
Consultant: Chris Lindstrom
SUBJECT
Horse racing: license fee reduction: quarter horse racing:
advance deposit wagering: trainer-administered pension plan
funding.
DESCRIPTION
AB 1792 dedicates a portion of the handle on advanced
deposit wagers (ADW) to supplement purses for quarter horse
racing, and, it increases by one-half of one percent the
amount (formerly paid as license fees) that must be
deposited with the official quarter horse registering
agency for the benefit of breeding, rearing, and racing of
quarter horses in California.
Specifically, the bill:
1)Requires the money deposited in a pension fund for
quarter horse trainers prior to January 1, 2011, to be
used to supplement purses pursuant to an agreement
between individual racing associations and the
organizations representing quarter horse horsemen.
2)Increases, from 2.5 percent of the amount that quarter
horse racing license fees were reduced pursuant to SB
16xx (Ashburn), Chapter 12, Statutes of 2009 to 3 percent
of that amount, the sum from quarter horse racing
wagering pools that is required to be deposited with the
official quarter horse registering agency.
AB 1792 (Silva) continued
Page 2
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 to 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."
Existing law provides that one-half of the amount equal to
0.00165 multiplied by the amount handled on ADW that
originate in California for each racing meeting shall be to
supplement the trainer-administered pension plans for
backstretch personnel.
Existing law provides that the other half shall be
distributed to the welfare fund established for the benefit
of horsemen and backstretch personnel.
BACKGROUND
Purpose of the bill . According to the author's office,
"Horse racing within California is an important element to
the State's economy as a whole. Tens of thousands of
employees, large portions of the farm production income,
and county and state fairs have foundational investments in
the horse racing industry. Considering an unsteady budget,
California must encourage all business possible -
especially a business that is so ingrained in the State's
culture. AB 1792 takes a simple step towards fostering this
business; it seeks to increase to 3% the amount of the
reduction for quarter horse racing that is to be deposited
with the official registering agency. Although the
AB 1792 (Silva) continued
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proportion of the reduction that is deposited with the
registering agency is relatively small, the increase should
help to incentivize Cal-Bred racing for quarter horses."
Further, the author's office states, "Current law requires
that a specified percentage of the handle, or total amount
wagered, on advanced deposit wagers be deposited in a
pension fund for trainers, including quarter horse
trainers. AB 1792 will amend B&P Code so that the funds
for quarter horse trainers shall be used to supplement
purses, pursuant to an agreement between individual racing
associations and the organizations representing quarter
horse horsemen."
Background . SB 16xx (Ashburn), Chapter 12, Statutes of
2009-10 Second Extraordinary Session, shifted the horse
racing industry's obligation ($40 million) to fund state
and county fairs from licensing fees, paid by the
associations or fairs while operating live race meets, to
the General Fund. One component of the bill required that
a specific percentage of the license fee reduction
(resulting from the General Fund assuming the fair funding
obligation) be distributed to the official registering
agencies for the specific breeds of horses which race in
California.
Currently, 2.5% is set aside for the quarter horse
registering agency, the PCQHRA. This measure seeks to
increase the amount from 2.5% to 3%. The 3% will conform
to the amount of money which is paid to the thoroughbred
breeders' organization for the same license fee reduction
in 2009. The increased deposit will help to incentivize
breeding and racing of quarter horses within California.
This measure has no financial relationship to the General
Fund.
Additionally, under current law, an amount equal to 0.00165
multiplied by the amount handled on advance deposit wagers
is deposited in a pension fund for trainers, including
quarter horse trainers. This bill provides that those funds
for quarter horse trainers shall be used to supplement
purses, pursuant to an agreement between individual racing
associations and the organizations representing quarter
horse horsemen.
Arguments in support . The sponsor of the bill, the Pacific
AB 1792 (Silva) continued
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Coast Quarter Horse Racing Association (PCQHRA) writes, "AB
1792 is a technical clean-up bill to SB2X 16 which was
signed into law last year. SB2X 16 initially provided the
license fee reduction "savings" be split 48.75% each for
commissions and purses with 2.5% to breeders for quarter
horses. All other breeds were split 48.5% each to purses
and commissions and 3.0% to breeders. Since then, with the
approval of the CHRB, we have been using 3.0% to conform to
the other breeds. AB 1792 simply codifies the change into
law.
Further PCQHRA writes, "money deposited in a pension fund
for quarter horse trainers pursuant to this section shall
be used to supplement purses pursuant to an agreement
between the individual racing associations and the
organizations representing quarter horse horsemen." PCQHRA
is the recognized representative of California's racing
Quarter Horse owners, breeders and trainers. Our members
realize that without increased purses, our industry's
survival is questionable. As you know, two weeks ago, the
New York Racing Association threatened to shut its doors on
June 9, four days after the storied Belmont Stakes, the
third jewel of racing's Triple Crown, unless lawmakers
agree to fund the racing operations with a loan between $15
and $25 million. PCQHRA realizes this is not an option in
California. Our membership has voted to seek the increased
purses from our own pockets."
PRIOR/RELATED LEGISLATION
SB 16xx (Ashburn), Chapter 12, Statutes of 2009-10 Second
Extraordinary Session . Among other things, provides that
beginning on July 1, 2009, and annually thereafter,
thirty-two million ($32,000,000) shall be appropriated from
the state's General Fund and paid into the Fair and
Exposition Fund for the financial support of the network of
California fairs.
AB 765 (Evans), Chapter 613, Statute of 2007 . Among other
things, extended, expanded and revised state authorization
for ADW and established the jockeys' retirement pension
program.
AB 471 (Hertzberg), Chapter 198, Statutes of 2001 .
Authorized ADW.
AB 1792 (Silva) continued
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SUPPORT: As of June 4, 2010:
Los Alamitos Race Course
Pacific Coast Quarter Horse Racing Association
OPPOSE: None on file as of June 4, 2010.
FISCAL COMMITTEE: Senate Appropriations Committee
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