BILL ANALYSIS
AB 2414
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 2414 (John A. Perez)
As Amended August 31, 2010
Majority vote
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|ASSEMBLY: | |(June 1, 2010) |SENATE: |28-0 |(August 31, |
| | | | | |2010) |
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(vote not relevant)
Original Committee Reference: G.O.
SUMMARY : Add a sunset date of May 1, 2016, to a provision
contained in SB 1072 (Ron Calderon) of the 2009-10 Regular
Session relating to exchange wagering on horse racing.
The Senate amendments delete the Assembly version of the bill,
and instead:
1)Add a sunset date of May 1, 2016, to SB 1072 (Ron Calderon) of
the 2009-10 Regular Session relating to exchange wagering on
horse racing (Article 9.1). The article shall become
inoperative on May 1, 2016, and as of January 1, 2017, is
repealed, unless a later enacted statute becomes operative on
or before January 1, 2017, as specified.
2)Contain language to avoid chaptering-out issues with SB 1072,
as specified.
EXISTING LAW :
1)Provides that California Horse Racing Board (CHRB) shall
regulate the various forms of horse racing authorized in this
state.
2)Provides that CHRB shall have all powers necessary to carry
out the purposes of the Horse Racing Law, such as adopting
rules and regulations to protect the public, allocating dates
for and controlling horse racing and pari-mutuel wagering, and
enforcing all rules and regulations.
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3)Provides that "pari-mutuel wagering" is a form of wagering in
which bettors either purchase tickets of various
denominations, or issue wagering instructions leading to the
placement of wagers, on the outcome of one or more horse
races. When the outcome of the race or races has been
declared official, the association distributes the total
wagers comprising each pool, less the amounts retained for
purposes specified in this chapter, to winning bettors.
4)Provides that CHRB may authorize any racing association,
racing fair, betting system, or multijurisdictional wagering
hub to conduct Advance Deposit Wagering (ADW), as specified.
Permits racing associations, racing fairs, and their
respective horsemen's organizations to form a partnership,
joint venture, or any other affiliation, as specified.
AS PASSED BY THE ASSEMBLY , this bill encouraged the Breeders'
Cup to designate California as the permanent host state for the
Breeders' Cup World Championship horse racing event.
FISCAL EFFECT : Unknown
COMMENTS : This bill was substantially amended in the Senate and
the Assembly-approved provisions of this bill were deleted.
This bill adds a sunset date of May 1, 2016, to SB 1072 relating
to exchange wagering on horse racing, as defined. This gist of
this measure pertaining to exchange wagering on horse racing was
heard and passed by the Assembly Governmental Committee on
August 30, 2010. This bill simply codifies an agreement reached
between interested parties on matters pertaining to the
operation of exchange wagering in California.
Background :
Deteriorating Status of the Horse Racing Industry in California :
The California horse racing industry's long-term health is
threatened by a combination of factors, including competition
from racing in other states, other forms of gaming within
California, racetrack bankruptcies and the potential for higher
return from development than operating revenues. As resources
shrink, the industry is experiencing deficits in virtually every
one of its revenue sources. Traditional take out, allocation
and distribution formulas are no longer able to sustain ongoing
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operations. As the value of racing operations declines, track
ownership is struggling to maximize shareholders' return on the
investment and tempted by alternative uses of the property that
yield higher returns. Consequently, the racing industry is
suffering unprecedented instability and capital flight. Tens of
thousands of industry jobs are in immediate jeopardy, along with
breeding farms and precious open space in urban centers
throughout California. Also at risk is a substantial amount of
local and state revenue generated both directly and indirectly
by the industry.
Exchange Wagering : SB 1072 would additionally authorize the
CHRB to license entities to operate exchange wagering systems
that accept "exchange wagers" from individuals residing either
within or outside of this state on horse races run in California
or in other states, so long as the process is conducted in
compliance with the federal Interstate Horseracing Act.
"Exchange wagering" is defined as a means of pari-mutuel
wagering in which two or more persons place identically opposing
wagers on a horse race. SB 1072 would require exchange wagering
agreements to be entered into by the exchange wagering licensee,
the applicable racing association or fair conducting live racing
in the state, and the horsemen's organization representing the
particular breed currently racing at the meet, and that provides
for the contractual terms and conditions specifying the use of
the racing signal and the compensation returned to the
respective parties to the agreement, audit terms and conditions,
and contractual remedies.
Exchange wagering on horse racing is currently permitted in
England, where it has been reported to have contributed to a
double-digit increase in wagering handle as well as helping to
appeal to a different segment of the betting public that
generally did not gravitate to conventional pari-mutuel wagering
opportunities. Similar legislation has been introduced and is
moving through the New Jersey State Legislature as well.
Wagering on horse races in California is conducted using the
"pari-mutuel method" in which bettors are betting against each
other, with no other entity having an interest or stake in the
outcome of the race.
In pari-mutuel "exchange wagering" (which involves bettors
betting against each other, with no other entity having an
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interest or stake in the outcome of the race), each bettor again
selects a horse, an outcome, and the amount the bettor desires
to wager. Another bettor can match that wager, choosing to
wager the opposite of the original wager. For example, if
bettor "A" thinks a horse will win a race and would like to
wager $2 to win on that horse at 1-1 odds, bettor "B" can match
the wager for $2 at 1-1 odds if bettor B has the opinion that
the horse will not win the race. When wagers are matched, they
are pooled together and the pari-mutuel exchange wagering
operator is responsible for paying the winning bettors out of
the pool (just as is the case in all other forms of pari-mutuel
wagering on horse races in California.) Pari-mutuel exchange
wagering is limited to win, place and show wagering.
Related legislation : SB 1072 (Ron Calderon) of the 2009-10
Regular Session: 1)requires Thoroughbred racing associations
and fairs to deduct an additional amount of the total handle on
exotic wagering for purse augmentation; 2) authorizes CHRB to
license entities to operate "exchange wagering" systems, as
defined, that accept exchange wagers from individuals residing
either within or outside of this state on horse races run in
California or other states; 3) states that exchange wagering
shall not become operative until May 1, 2012; 4) authorizes the
Thoroughbred racing industry to use monies from horse racing
wagering pools to promote the Breeders' Cup, in order that
California might be considered the permanent home of this
championship series of races; 5) extends the sunset date from
January 1, 2011, to January 1, 2014, in existing law relating to
a private statewide marketing organization to market and promote
Thoroughbred and fair horse racing in California, as described;
and, 6) provides that an amount not to exceed 0.05% of the total
amount handled by each satellite wagering facility shall be
distributed to the non-profit organization designated by CHRB
for the purpose of maintaining a database of horse racing
information, as defined.
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531
FN: 0006908