BILL ANALYSIS
Bill No: SB
693
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Roderick D. Wright, Chair
2009-2010 Regular Session
Staff Analysis
SB 693 Author: Harman
As Amended: April 13, 2009
Hearing Date: April 14, 2009
Consultant: Chris Lindstrom
SUBJECT
Horse racing: advance deposit wagering: satellite wagering
facilities.
DESCRIPTION
SB 693 modifies the commissions paid to satellite wagering
facilities based on the time that the satellite wagering
facilities are open and operating. Specifically, the bill:
1)Provides that if a satellite wagering facility is
permanently closed, other than for renovation or
remodeling, then the commissions payable to that facility
shall be eliminated entirely.
2)Provides that if a satellite wagering facility is
unwilling or unable to accept all of the signals that are
available to that facility, then the commissions payable
to that facility would be proportionately reduced to take
into account the time that satellite wagering is no
longer conducted at that facility.
3)The satellite wagering commissions not paid shall be
redistributed proportionately to other eligible satellite
facilities.
4)Makes other technical changes.
EXISTING LAW
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Article IV, Section 19(b) of the Constitution of the State
of California provides that the Legislature may provide for
the regulation of horse races and horse race meetings and
wagering on the results.
Existing law provides for the California Horse Racing Board
to regulate the various forms of horse racing authorized in
this state.
Existing law authorizes CHRB to permit licensed racing
associations, fairs and mini-satellites licensees to
operate satellite wagering facilities.
Existing law authorizes and defines "advance deposit
wagering (ADW)" as a form of parimutuel 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."
Existing law provides that two percent of the first $250
million of handle (and a sliding downward scale thereafter)
from advance deposit wagers be distributed to satellite
wagering facilities as commissions.
Existing law provides satellite facilities that were not
operational in 2001 are not eligible for satellite wagering
commission distributions.
Existing law provides the satellite wagering facility
commissions calculated pursuant to the ADW handle are
distributed to each satellite wagering facility in the zone
in which the wager originated in the same relative
proportions that the satellite wagering facility generated
satellite commissions during the previous calendar year.
Existing law provides that if there is a reduction in the
satellite wagering commissions, the resulting benefits
shall be distributed equitably as purses and commissions to
all associations and racing fairs generating advance
deposit wagers in proportion to the handle generated by
those associations and racing fairs.
BACKGROUND
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When ADW was authorized in California, it was recognized
that it might impact attendance at satellite wagering
facilities and, thus, satellite wagering facilities would
incur a loss of business. To account for this impact, a
portion of the take-out from every advance deposit wager is
designated to go to satellite wagering facilities as a
commission or "impact fee".
Under the construct of current law, satellite wagering
facilities can receive ADW commissions or impact fees on
races for which they do not accept the signal. For
example, if a satellite wagering facility shuts down
operations at 6 o'clock in the evening and does not offer
wagering on the night signal (Quarter horse and Harness
racing), the facility will still receive the commission on
those night races.
Additionally, under current law, all satellite facilities
in business prior to 2001 are eligible for ADW commissions.
So, if a fair decides to shut down its satellite wagering
facility entirely, because it had been in existence prior
to 2001, it continues to receive ADW commissions.
SB 693 is intended to clean up this provision of law by
clarifying that satellite wagering facilities are eligible
for ADW commissions only from races on which they offer
wagering. The bill provides that money not distributed to
satellites as commissions or impact fees from ADW wagers as
a result of this change, instead will flow be distributed
proportionately to the other eligible satellite facilities.
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.
PRIOR/RELATED LEGISLATION
AB 765 (Evans), Chapter 613, Statutes of 2007 . Extended,
expanded and revised state authorization for ADW.
AB 241 (Price), Chapter 594, Statutes of 2007 . Authorizes
all fairs to operate a satellite wagering facility off of
the fair grounds. Authorizes the establishment of up to 45
mini-satellite wagering sites to be operated by private
industry throughout California.
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AB 509 (Horton), Chapter 235, Statutes of 2004 . Permits a
thoroughbred racing association or fair to import the
audiovisual signal, and accept wagers on, the results of
out-of-country thoroughbred races.
AB 471 (Hertzberg), Chapter 198, Statutes of 2001 .
Authorized ADW.
SB 2054 (GO), Chapter 1082, Statutes of 2000 . Authorized
CHRB to allow by regulation any association or fair to
offer any form of parimutuel wager that is recognized and
permitted by the Association of Racing Commissioners
International.
SB 27 (Maddy), Chapter 335, Statutes of 1998 . Granted
limited authorization for out-of-state full-card
simulcasting.
SB 14 (Maddy), Chapter 1273, Statues of 1987 . Expanded
satellite wagering statewide. Satellite wagering was the
first major expansion of racing in this state since 1933.
Since then, full-card wagering on out-of-state races has
been authorized. Satellite wagering, in general, has been
successful and provided the fairs with additional revenue.
License fees from satellite wagering are deposited into the
Satellite Wagering Account for the benefit of the fairs.
SB 1499 (Maddy), Chapter 1698, Statutes of 1984 .
Implemented satellite wagering in the central and southern
part of the state, and made conforming and technical
changes in the northern part of the state.
Proposition 3 of 1933, legalized parimutuel wagering on
horse racing in California.
SUPPORT: As of April 10, 2009:
Los Alamitos Race Course
OPPOSE: None on file as of April 10, 2009.
FISCAL COMMITTEE: No.
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