BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
2414 (J. Perez)
Hearing Date: 08/12/2010 Amended: 06/22/2010
Consultant: Maureen Ortiz Policy Vote: GO 8-0
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BILL SUMMARY: AB 2414 authorizes the thoroughbred racing
industry to use monies from horse racing wagering pools to
promote the Breeders' Cup, in cooperation with the California
Tourism Commission.
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Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
Marketing program -------------$2,000
annually--------------- Special*
Admin expenses
------------------minor------------------- General
*California Marketing Committee Fund
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STAFF COMMENTS: SUSPENSE FILE.
The horse racing takeout is the percentage deducted from all of
the wagers before the winnings are paid out to bettors. These
takeout rates vary among states and types of races. The current
takeout rate in California is 15.43% for conventional wagers
(win, place, and show) and 20.68% for exotic wagers (Exacta,
Trifecta, and Pick-6). The money from the takeouts is used for
owner purses, racing association commissions, and breeding
incentive programs. In addition, funds are used for offsite
stabling and transporting horses on race day, workers
compensation program, pension and welfare fund for backstretch
employees, and for funding the California Marketing Committee.
While current law allows for the adjustment in the takeout rates
upon approval of the California Horse Racing Board (CHRB), this
bill will allow an increased takeout during the Breeders' Cup
upon filing a written notice with the CHRB, but without the
necessity of obtaining CHRB approval.
Staff recommends an amendment to require CHRB approval of any
changes in the takeout amount in order to be consistent with
other provisions of horse racing law that provide the board with
continued oversight of the industry.
In 2009, $128 million was wagered on Breeders' Cup Championship
races and the takeout was approximately $26 million. AB 2414
will give the industry flexibility in adjusting the takeout
which could result in the takeout being anywhere from $13
million to $32 million.
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AB 2414 (J. Perez)
Specifically, AB 2414 does the following:
1)Contains Legislative findings and declarations that the
Breeders' Cup Championship series of races is the preeminent
series of horse races recognized throughout the world; that it
is the desire of the Legislature to make California the
permanent home of this series; and, that it is the intent of
the Legislature to provide substantial support towards that
end.
2)Authorizes a thoroughbred association, upon filing a written
notice with the California Horse Racing Board (CHRB), to
deduct from the total amount handled in the parimutuel pool
for any wagers made during the days on which the Breeders' Cup
races are held, an amount of not less than 10% not more than
25%.
3)Requires the existing private statewide marketing organization
that markets and promotes the horse racing industry, with the
cooperation of the California Tourism Commission, to enter
into an agreement with the organization operating the
Breeders' Cup in the years that the Cup is held in California.
The agreement shall provide a minimum of $2 million in annual
financial support to promote the Breeders' Cup.
4)Authorizes the CHRB to require that a percentage of takeout
that is attributable to the Breeders' Cup races be made
available to support the statewide marketing organization that
promotes horse racing in California.
The Breeders' Cup Championship races were held in California
during 2008 and 2009 and resulted in bringing significant
revenue and tourism to this state. The event is a year-end
championship for North American thoroughbred racing and attracts
top horses from other parts of the world. The Breeders' Cup is
considered to be the richest two days in the United States for
total purses paid to horse owners.
In 2009, the Breeders' Cup was held at Santa Anita racetrack
located in Los Angeles County where it was attended by over
96,000 fans and was telecast to over 130 countries. The Los
Angeles Economic Development Commission concluded that the
Breeders' Cup has brought $60 million in economic impact in each
of the last two years through added tourism and has created over
500 jobs.
The California Travel & Tourism Commission is a not-for-profit
corporation formed in 1998 to work jointly with the state's
Division of Tourism to implement an annual marketing plan which
promotes California as a travel destination. While the
commission and the division are two separate entities, they are
commonly referred to jointly as the California Tourism
Commission.
Existing law authorizes racing associations, fairs, and the
Thoroughbred Owners of California to form a private statewide
marketing organization to market and promote thoroughbred and
fair horse racings. The California Marketing Committee promotes
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AB 2414 (J. Perez)
horse racing in the state by developing and implementing a
marketing plan to increase on-track and off-track attendance.
Created by SB 27 (Maddy), Chapter 335, Statutes of 1998, the
Committee is funded by 0.4% of the in-state satellite wagering
facility handle, and is expected to receive approximately $4
million in 2010.
The intent of this bill is to promote the Breeders' Cup in order
that California might be considered the permanent home of this
championship series of races. California is currently in
competition with Kentucky and New York as permanent host states.
The 2010 series will be held at Churchill Downs in Kentucky.