BILL ANALYSIS
AB 2215
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 2215 (Fuentes)
As Amended August 5, 2010
Majority vote
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|ASSEMBLY: |73-0 |(June 2, 2010) |SENATE: |32-0 |(August 18, |
| | | | | |2010) |
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Original Committee Reference: G.O.
SUMMARY : Requires the California Horse Racing Board (CHRB) to
develop and adopt rules to license and regulate advance deposit
wagering activity that takes place within a mini-satellite
wagering facility.
The Senate amendments :
1)Authorize a mini-satellite wagering facility to enter into an
agreement with an advance deposit wagering provider to accept
and facilitate the placement of any wager at its facility that
a California resident could make through that advance deposit
wagering provider.
2)Specify that the CHRB must develop and adopt rules to license
and regulate advance deposit wagering activity that takes
place in a mini-satellite wagering facility.
3)Authorize the CHRB to recover any costs associated with the
licensing or regulation of advance deposit wagering activity
in a mini-satellite wagering facility, as provided.
4)Delete language which authorized the CHRB, if it determines
that it is appropriate to allow advance deposit wagering at
mini-satellite wagering facilities, to evaluate the
feasibility of that wagering at those facilities and to
undertake a study to determine the appropriate licensing fee
sufficient to cover the costs to the board for regulation and
oversight.
EXISTING LAW :
1)Provides for the California Horse Racing Board (CHRB) to
regulate the various forms of horse racing authorized in this
AB 2215
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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 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.
AS PASSED BY THE ASSEMBLY , the intent of the bill was to allow
mini-satellite wagering facilities established under existing
law, to use a modified version of the current ADW infrastructure
for processing wagers on horse racing.
FISCAL EFFECT : According to the Senate Appropriations
Committee, unknown, less than $50,000 annually.
COMMENTS :
Background :
ADW : 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.
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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
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 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.
California's first and only mini-satellite facility 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 2% commission that is retained by the mini-satellite is
not enticing enough for business owners.
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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.
This bill is intended to establish another distribution method
for wagering on horse racing by allowing mini-satellite
facilities, to access the current ADW infrastructure. 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.
Related legislation : SB 1439 (Price) of 2010 modifies
provisions of the Horse Racing Law relative to the authorization
of "mini-satellite" wagering facilities by shrinking the
protective zone for existing satellite wagering facilities, as
specified, from a 20 mile radius to 15 miles. That bill is
currently pending on the Senate Floor.
Prior legislation : AB 765 (Evans), Chapter 613, Statutes of
2007, reauthorizes horse racing's ADW law, which was set to
"sunset" on January 1, 2008, as specified.
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AB 241 (Price), Chapter 594, Statutes of 2007, authorizes 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.
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531
FN: 0005727