BILL ANALYSIS
AB 2215
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Date of Hearing: April 21, 2010
ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
Joe Coto, Chair
AB 2215 (Fuentes) - As Introduced: February 18, 2010
SUBJECT : Horse racing: advance deposit wagering: wagering
account facilities.
SUMMARY : The intent of this bill is to allow a satellite
facility, including mini-satellites established under existing
law, to use a modified version of the current Advance Deposit
Wagering (ADW) infrastructure for processing wagers on horse
racing. Specifically, this bill :
1)Authorizes the California Horse Racing Board (CHRB) to adopt
rules and regulations authorizing ADW providers to create and
administer wagering accounts at facilities located within this
state through which persons may deposit cash funds or
vouchers, issue wagering instructions, and withdraw cash funds
or vouchers, subject to the approval of racing associations or
satellite wagering facilities located within 10 miles of a
facility administering those accounts, and the approval of the
horsemen's organization responsible for negotiating with the
racing associations or satellite wagering facilities.
EXISTING LAW :
1)Provides for the California Horse Racing Board (CHRB) to
regulate the various forms of horse racing authorized in this
state.
2)Authorizes and defines "Advance Deposit Wagering (ADW)" as a
form of pari-mutuel 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."
3)Provides that a racing association, a fair, or a satellite
wagering facility may enter into an agreement with an ADW
provider to accept and facilitate the placement of any wager
from a patron at its facility that a California resident could
make through that ADW provider, as defined.
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4)Authorizes CHRB to permit licensed racing associations and
fairs to operate satellite-wagering facilities on their
grounds, as specified.
5)Provides that CHRB may approve an additional 15 mini-satellite
wagering sites in the northern, central, and southern racing
zones, as defined.
FISCAL EFFECT : Unknown
COMMENTS :
Background :
Advance Deposit Wagering : The California horse racing industry
entered into a new era in 2002 with the advent of ADW [AB 471
(Hertzberg), Chapter 198, Statutes of 2001], which allows
customers to deposit funds into an account in order to wager
online and over the telephone. These wagers are commingled into
pools at the host track where the races are run, and within the
pari-mutuel wagering system regulated by CHRB.
ADW 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. In general, industry
stakeholders agree that ADW has become an important element to
the financial stability of California's horse racing industry.
Currently, the CHRB has approved three companies (Youbet.com,
TVG, and XpressBet) to provide ADW services to California
customers.
ADW constitutes about $600 million in handle for the horse
racing business. It has become an important segment of the
industry - in fact, it is the only segment that has been
growing.
Wagering at a satellite or mini-satellite : California has
allowed off-track betting in satellite wagering facilities
located at fairs and racing associations throughout the state
for 25 years. In 2007, AB 241 (Price) was enacted to authorize
the creation of 15 additional "mini-satellites" in each racing
zone for a total of 45. The stated intent of this legislation
AB 2215
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was to make the sport of horse racing more accessible to
potential California bettors and to increase the handle - the
amount wagered on horse races.
Currently, there are 34 satellite wagering facilities in
California located at live racetracks, fairgrounds and Indian
casinos. Furthermore, 64 additional wagering facilities are
authorized pursuant to SB 241 of 2007 - 44 mini-satellite
facilities (one has been established already) and all fairs that
currently are not operating satellite wagering facilities may do
so either on or off the fairgrounds (within the boundaries of
the fair district).
Currently, no mini-satellite wagering facility can be
established within a 20 mile radius of an existing satellite
wagering facility or racetrack without the consent of the
existing wagering facility.
The Commerce Club mini-satellite, which opened last July, has
averaged $80,000 in handle a day, taking bets on both the
afternoon and evening races. Overall though, California's
simulcasting network has seen a steady decline in the last
decade since the approval of ADW. That drop-off has been
accelerated with the recession.
Purpose of the bill : According to the author, ADW has operated
in California since 2002, and it has been proving to be an
efficient and accountable system employing current technologies
to process wagers on horse racing in California. Unfortunately
though, former customers of California's simulcast network
prefer to stay home to do their daily wagering. California's
racing industry thought that AB 241 (Price), Chapter 594,
Statutes of 2007 would help reverse the customer shift but to
date various obstacles, mostly financial have proved otherwise.
One of the challenges the industry faces relating to the
implementation of mini-satellites (sports bars, restaurants, and
card clubs) is the ability to process wagers in an economically
efficient manner because these facilities generally produce
lower wagering figures than established "brick and mortar"
facilities. Mini-satellite facilities though must bear the same
fixed costs associated with the traditional simulcast model. In
essence, the cost to facilitate a wager is the same no mater
where the wager takes place. Due to this inequality,
California's mini-satellite system has been slow to develop.
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This measure will make the operation of mini-satellites more
viable from a financial perspective while allowing California's
racing industry to market their product to new and existing
patrons. AB 2215 will assist to make satellite wagering more
attractive to the customer while reducing the migration of daily
wagering from brick and mortar locations to Internet wagering.
Policy consideration : The author might want to consider
amending this bill to clarify its stated intent. This bill as
written could be construed to include facilities or outlets in
addition to those which are authorized under current law, as
detailed in the analysis. The measure should be amended to
specify that the CHRB should only adopted rules and regulations
for satellite facilities or mini-satellites which have been
authorized by existing statute.
Prior Legislation : AB 765 (Evans), Chapter 613, Statutes of
2007. Reauthorized horse racing's ADW law, which was set to
"sunset" on January 1, 2008, as specified.
AB 241 (Price), Chapter 594, Statutes of 2007. Authorized all
fairs to operate a satellite wagering facility off of the fair
grounds. Authorized the establishment of up to 45
mini-satellite wagering sites to be operated by private industry
throughout California.
AB 1286 (Richardson), Chapter 202, Statutes of 2007. Authorized
the Alameda County Fair and the Los Angeles County Fair to
operate 2 additional satellite-wagering facilities off the
fairgrounds, with certain approval and conditions, as specified.
AB 401 (J. Horton), Chapter 556, Statutes of 2003. Permits the
California Exposition and State Fair, with the approval of CDFA
and CHRB, to operate a satellite wagering facility within the
boundaries of the fair in addition to any facility otherwise
authorized under current law.
REGISTERED SUPPORT / OPPOSITION :
Support
Thoroughbred Owners of California
Opposition
AB 2215
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None on file
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531