BILL ANALYSIS
SB 662
Page 1
Date of Hearing: July 8, 2009
ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
Joe Coto, Chairman
SB 662 (Yee) - As Amended: May 14, 2009
SENATE VOTE : 34-0
SUBJECT : Horse racing: pari-mutuel wagering: real time
monitoring.
SUMMARY : Authorizes the California Horse Racing Board (CHRB)
to provide real time monitoring of all pari-mutuel wagering
transactions on California horse races. Specifically, this
bill :
1)Expands the responsibilities of CHRB to include:
a) Providing real time transactional monitoring of all
pari-mutuel wagering on California horse races.
b) Maintaining independent technology services to provide
for capturing, saving, transmitting, receiving, and
otherwise disseminating technology resources. CHRB may
contract with the Department of Technology Services or seek
suitable accommodations with vendors of CHRB's choosing for
the purpose of furthering the CHRB's chosen business
objectives.
1)Requires any association or fair that conducts a racing
meeting to pay a license fee to the state to fund real time
transactional monitoring of all pari-mutuel wagering on
California horse races.
EXISTING LAW :
1)Provides the CHRB shall have all powers necessary and proper
to enable it to carry out the purposes of the Horse Racing Law
and specifies certain responsibilities of CHRB including, but
not limited to, all of the following:
a) Adopting rules and regulations for the protection of the
public and the control of horse racing and pari-mutuel
wagering.
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b) Administration and enforcement of all laws, rules, and
regulations affecting horse racing and pari-mutuel
wagering.
c) Adjudication of controversies arising from the
enforcement of those laws and regulations dealing with
horse racing and pari-mutuel wagering.
d) Licensing of each racing association and all persons,
other than the public at large, who participate in a horse
racing meeting with pari-mutuel wagering.
e) Allocation of racing dates to qualified associations in
accordance with law.
1)Provides that, as of July 1, 2009, any association or fair
that conducts a racing meeting shall only pay a
license fee to the state to fund CHRB and the Kenneth L. Maddy
Equine Research Laboratory at UC Davis as follows:
a) All racing associations and fairs including all breeds
of racing shall participate in the funding of CHRB in
accordance with a formula devised by CHRB in consultation
with the horse racing industry.
b) The baseline funding for CHRB and equine drug testing
in
the first fiscal year after the enactment of this
section shall be the amount approved in the
2008-2009
state budget.
c) Adjustments to the funding in subsequent budget years
may only be made by an act of the Legislature.
1)Provides that, after payments to fund CHRB and the equine
drug-testing program, the remaining amount of license fees
shall be distributed to the association that conducts the meet
and the horsemen participating in the meet as follows, 50
percent to the association as commissions, and 50 percent to
the horsemen as purses.
2)Authorizes CHRB to permit licensed racing associations and
fairs to operate satellite wagering facilities.
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3)Authorizes and defines "advance deposit wagering (ADW)" as a
form of pari-mutuel wagering in which a person "establishes an
account with a CHRB-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."
FISCAL EFFECT : Unknown.
COMMENTS :
According to the author's office, "SB 662 requires the CHRB to
provide for real time transactional monitoring of all
pari-mutuel wagering on California races. The CHRB sorely needs
to have the independence and ability to monitor all pari-mutuel
wagers on California horse races.
The author states, "This need was brought to the forefront
during the 2008 Kentucky Derby." A California bettor placed a
"Quick Pick" wager of $1,500 on the Kentucky Derby. This wager
was intended to randomly select horses from numbers 1 through 20
to fill the wager. The winner of the Derby was the number 20
horse.
The author reports, "Two days after the running of the Derby,
the California bettor came into the Stewards Office at Golden
Gate Fields and told the official, "It's really strange that out
of all these tickets the number 20 horse did not show up
anywhere." The steward asked the mutuel manager (an employee of
the racetrack) what he thought about this coincidence and the
employee said something to the effect that it was "bad luck."
The steward (a contract employee of CHRB) then reported the
coincidence, or bad luck, to the Executive Director (ED) of
CHRB. The ED then contacted the mutuel manager who stated:
"there may be a problem with the tote machines."
The tote machines are property of a contractor, who contracts
with the racing associations. The ED then contacted the tote
company's Regional Manager who stated that he had heard of a
similar problem nine months earlier in Indiana. Based on this
information, the ED ordered an audit of the tote
system in California.
At that point, about two weeks after the Derby, the possible
failure in the tote system became public knowledge. Senator
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Leland Yee called the ED to ask the question: "Don't you have
any way of monitoring the system to know if something is going
wrong?" The ED responded that the CHRB is conducting an audit
of the tote company to find out if there was or is a problem,
and, that the CHRB is dependent on the numbers furnished by the
tote company through a system called the Consolidated Horse
Racing Information Management System (CHRIMS).
The CHRB reports, "The audit of the tote company revealed an
"anomaly" on some machines and only on the "Quick Pick" wager.
The Quick Pick wager was withdrawn from the betting format, and
the tote company was ordered to pay restitution for not bringing
this to the attention of the CHRB in a more timely fashion.
"In addition, on April 23, 2009, Thoroughbred Times reported
that a wagering system foul-up on April 22 impacted wagering
pools in five states and affected bettors across the country.
$2 bets placed at New York City Off-Track Betting and processed
through AmTote were deposited into wagering pools as $200 bets.
Thoroughbred facilities affected were Aqueduct, Golden Gate
Fields, Gulfstream Park, Indiana Downs, Keeneland Race Course,
and Tampa Bay Downs.
The author states, "These known incidents make it clear that
California consumers need independent, real time oversight of
all pari-mutuel wagering on California horse races."
Currently, New York State Racing and Wagering Board passed
legislation requiring independent real time monitoring of all
pari-mutuel wagering. New York aimed to have the system in
place by January 1, 2009, but missed that target date. New York
is working closely with the industry and system providers to
develop the parameters of and implement the system. The state
of Indiana and Minnesota are looking at adding oversight
software for its horse racing pari-mutuel wagering
pools.
The author's office, through this bill, is committed to working
with the industry to establish a real time system to protect
California's wagering public as soon as possible. The author's
office indicates that if and when a national system is
developed, then California could participate in the national
program.
Background :
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Consolidated Horse Racing Information Management System
(CHRIMS) . CHRIMS is a database system developed in 1989 that
keeps track of wagers and the flow of money in horse
racing. CHRIMS provides end-users access to information by
selected data ranges and a variety of data-sorting options.
Using CHRIMS, end-users can see what has actually taken place on
the prior day, in terms of handle, takeout, total amount payable
to the public, distributions, etc., and can be further sorted by
location groups (California on-track, off-track, and
out-of-state wagers) or by various date ranges, breeds and a
variety of other options. CHRIMS can also run "what-if"
scenarios to project the effects of proposed changes to law that
would change distribution percentages.
CHRIMS does not provide real time information. Utilizing
software tools, CHRIMS staff loads and balances California
pari-mutuel data on a daily basis. Each night following the
close of wagering, CHRIMS computers download complete wagering
files from the three totalizator hubs.
Totalizator . A totalizator is the name of the system, which
runs pari-mutuel wagering, calculating payoff odds as wagers are
made and payouts once a race is complete. Electronic terminals
are used by pari-mutuel clerks to key in wagers into the system
and by customers who place bets into the system directly or
through a wagering hub.
Independent Monitoring System (IMS) . IMS is a computerized
system that has been designed, built and/or operated or
supported by a company or companies other than the totalizator
provider or related entity and is not related to the totalizator
provider or authorized pari-mutuel wagering entity in any way.
The system must, among other things, monitor all transactions
received and processed by the totalizator, produce alerts
corresponding to potential wagering rule violations or other
situations that could compromise the integrity of the wagering
process.
Real Time Transactional Monitoring System . A real time
transactional monitoring system is an operating system that can
respond to input immediately (ranging from a few seconds to
minutes depending on the function). The system must be able to
react to a steady flow of new information without interruption
and perform its tasks within the same time constraints of the
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totalizator system it monitors.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file
Opposition
None on file
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531