BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 2215|
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THIRD READING
Bill No: AB 2215
Author: Fuentes (D)
Amended: 8/5/10 in Senate
Vote: 21
SENATE GOVERNMENTAL ORG. COMMITTEE : 8-0, 6/29/10
AYES: Wright, Harman, Calderon, Florez, Negrete McLeod,
Padilla, Price, Yee
NO VOTE RECORDED: Denham, Oropeza, Wyland
SENATE APPROPRIATIONS COMMITTEE : 9-0, 8/2/10
AYES: Kehoe, Alquist, Ashburn, Corbett, Emmerson, Price,
Wolk, Wyland, Yee
NO VOTE RECORDED: Leno, Walters
ASSEMBLY FLOOR : 73-0, 6/2/10 - See last page for vote
SUBJECT : Horse racing: advance deposit wagering:
minisatellite
wagering facilities
SOURCE : Author
DIGEST : This bill makes various substantives changes to
the California Horse Racing law pertaining to advance
deposit wager and minisatellite facilities.
ANALYSIS :
Existing law
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1. Provides for the California Horse Racing Board (CHRB)
which regulates 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.
4. Authorizes the CHRB to permit licensed racing
associations and fairs to operate satellite-wagering
facilities on their grounds, as specified.
5. Provides that the CHRB may approve an additional 15
mini-satellite wagering sites (total of 45) in the
northern, central, and southern racing zones, as
defined.
This bill:
1. Requires the CHRB to develop and adopt rules to license
and regulate advance deposit wagering activity that
takes place within a minisatellite wagering facility and
also permits the CHRB to recover any costs associated
with the licensing or regulation.
2. Makes a conforming change to authorize a minisatellite
wagering facility to enter into an agreement with an ADW
provider to accept and facilitate the placement of any
wager at its facility that a California resident could
make through that ADW provider.
Advance Deposit Wagering . The California horse racing
industry entered into a new era in 2002 with the advent of
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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 the 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 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 Satellite or Minisatellite Facilities . In
2007, AB 241 (Price) was enacted to authorize the creation
of 15 additional "mini-satellites" in each racing zone.
The stated intent of AB 241 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 race tracks, fairgrounds and
Indian casinos. Furthermore, 64 additional wagering
facilities are authorized - 44 mini-satellite facilities
(one has been established already inside the Commerce
Casino, a Southern California Card Club) 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 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.
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California's first and only minisatellite facility to date
opened in July 2009 at the Commerce Casino, a southern
California Card Club. The facility is currently averaging
more than $80,000 in horse racing wagers per day. It is
unclear why there has not been a broader interest in these
facilities. Some speculate that the two percent commission
that is retained by the minisatellite is not enticing
enough for business owners.
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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee analysis:
Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12
2012-13 Fund
Admin expenses --unknown, less than
$50 annually-- General
SUPPORT : (Verified 8/5/10)
Thoroughbred Owners of California
ARGUMENTS IN SUPPORT : The author's office notes that ADW
has operated in California since 2002 and has proven to be
an efficient and accountable system employing current
technologies to process wagers on horse racing in
California. Unfortunately, former customers of
California's simulcast network prefer to stay home to
conduct their daily wagering. California's racing industry
believed that AB 241 (Price) of 2007, which authorized 45
minisatellites, would help reverse the customer shift but
to date various obstacles - mostly financial - have proven
otherwise.
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One of the challenges the industry faces relative to the
implementation of minisatellites in various venues (e.g.,
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.
Minisatellite 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
matter where the wager takes place. Due to this
inequality, the State's minisatellite system has been slow
to develop.
This bill intends to establish another distribution method
for wagering on horse racing by allowing minisatellite
facilities, to access the current ADW infrastructure.
Proponents believe this bill helps make the operation of
minisatellites more viable from a financial perspective
while allowing California's racing industry to market their
product to new and existing patrons. This bill also is
expected to make satellite wagering more attractive to the
customer while reducing the migration of daily wagering
from brick and mortar locations to Internet wagering.
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Anderson, Arambula, Bass, Beall, Bill
Berryhill, Blakeslee, Block, Blumenfield, Bradford,
Brownley, Buchanan, Caballero, Charles Calderon, Carter,
Chesbro, Conway, Cook, Coto, Davis, De La Torre, De Leon,
DeVore, Emmerson, Evans, Feuer, Fletcher, Fong, Fuentes,
Fuller, Furutani, Gaines, Galgiani, Garrick, Gilmore,
Hagman, Hall, Harkey, Hayashi, Hernandez, Hill, Huber,
Huffman, Jeffries, Jones, Knight, Logue, Bonnie
Lowenthal, Ma, Mendoza, Miller, Monning, Nava, Nestande,
Niello, Nielsen, Norby, V. Manuel Perez, Portantino,
Salas, Saldana, Silva, Skinner, Smyth, Solorio, Swanson,
Torlakson, Torres, Torrico, Tran, Villines, John A. Perez
NO VOTE RECORDED: Tom Berryhill, Eng, Lieu, Ruskin, Audra
Strickland, Yamada, Vacancy
TSM:do 8/5/10 Senate Floor Analyses
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SUPPORT/OPPOSITION: SEE ABOVE
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