BILL ANALYSIS
SB 693
Page 1
Date of Hearing: June 24, 2009
ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
Joe Coto, Chairman
SB 693 (Harman) - As Amended: April 13, 2009
SENATE VOTE : 34-0
SUBJECT : Horse racing: advance deposit wagering: satellite
wagering facilities.
SUMMARY : Modifies the commissions paid to satellite wagering
facilities based on the time that the satellite wagering
facilities are open and operating. Specifically, this 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)Provides the satellite wagering commissions not paid shall be
redistributed proportionately to other eligible satellite
facilities.
4)Makes other technical changes.
EXISTING LAW :
1)Provides for the California Horse Racing Board (CHRB) to
regulate the various forms of horse racing authorized in this
state.
2)Authorizes CHRB to permit licensed racing associations, fairs
and mini-satellites licensees to operate satellite wagering
facilities.
3)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
SB 693
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where the account owner provides "wagering instructions"
authorizing the entity holding the account to place wagers on
the owner's behalf."
4)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.
5)Provides satellite facilities that were not operational in
2001 are not eligible for satellite wagering commission
distributions.
6)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.
7)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.
FISCAL EFFECT : Unknown.
COMMENTS :
When ADW was authorized in California in 2001, 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.
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Additionally, under current law, all satellite facilities in
business prior to 2001 are eligible for ADW commissions.
Therefore, 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.
Background : 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.
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. In order to obtain licenses, the applicants posted a
$500,000 bond and provided financial information demonstrating
their financial resources to operate such a system, provided
contracts with racetracks and horsemen, established security
access policies and safeguards; agreed to protect the
confidentiality of account information, ensured that persons
under age 18 will not be permitted to open accounts, and agreed
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to include in their promotional literature information for a
recognized problem gambling support organization.
Prior Legislation : AB 765 (Evans), Chapter 613, Statutes of
2007. Reauthorized horse racing's ADW law, which was set to
"sunset" on January 1, 2008, as specified.
AB 241 (Price), Chapter 594, Statutes of 2007. Authorized 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.
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.
REGISTERED SUPPORT / OPPOSITION :
Support
Los Alamitos Race Course
Opposition
None on file
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531