BILL ANALYSIS
SB 766
Page 1
Date of Hearing: July 8, 2009
ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
Joe Coto, Chairman
SB 766 (Negrete McLeod) - As Amended: April 2, 2009
SENATE VOTE : 36-0
SUBJECT : Horse racing.
SUMMARY : Allows uncommitted surplus funds in the horse racing
Marketing Promotion Fund or the horse racing Workers
Compensation Fund, to be reallocated to any other fund or
account created pursuant to the Horse Racing Law. Specifically,
this bill :
1)Provides that, in the event there are at any time uncommitted
surplus funds in accounts created pursuant to existing law
(marketing fund and workers' compensation fund), those
unexpended funds may, at the request of the organization
governing those funds and with the approval of the California
Horse Racing Board (CHRB), be reallocated to any other fund or
account created pursuant to the Horse Racing Law.
EXISTING LAW :
1)Under existing law, 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.
2)Authorizes the CHRB to regulate the various forms of horse
racing authorized in this state.
3)Authorizes, until January 1, 2011, racing associations, fairs,
and other related organizations to form a private, statewide
marketing organization to market and promote thoroughbred and
fair horse racing, and to obtain, provide, or defray the cost
of workers' compensation coverage for stable employees and
jockeys of thoroughbred trainers.
4)Provides, until January 1, 2014, every thoroughbred
association and fair that conducts a racing meet shall deduct
a percentage of the total amount handled in exotic pari-mutuel
pools of thoroughbred races, which shall be distributed to an
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organization, as specified, to defray costs of workers'
compensation insurance in connection with thoroughbred horses
that race in this state, as specified.
5)Provides that any funds that are not used to defray the cost
of workers' compensation insurance shall either be carried
forward to the subsequent year or used to reimburse racing
associations for safety-related expenditures, as specified.
FISCAL EFFECT : Unknown.
COMMENTS :
Purpose of the bill : According to the author's office, there
are two funds in horse racing that have surpluses, the Marketing
Promotion Fund and the Workers' Compensation Fund. SB 766 would
allow any surplus in the funds to be transferred to accounts
that are in deficit, such as the Vanning and Stabling Fund.
Background : The Horse Racing Law establishes the amount that
may be deducted (the takeout) from the pari-mutuel wagering
pools of horse races in California. The takeout is the amount
deducted from wagers before winnings are paid out to bettors.
Currently, California's takeout rate on Thoroughbred races is
15.43 percent for win, place, and show wagers, and 20.18 percent
for other types of wagers (Exacta, Trifecta, and Pick-6). The
takeout may be used for specific purposes, as defined by law,
such as license fees, enforcement fees, owners purses, racing
association commissions, marketing, workers' compensation, and
vanning and stabling, among others.
For more than a decade, horse racing has been a declining
industry. Some argue that the decline stems from increased
competition from expanded gaming in California to the inability
of the industry to attract new fans. Regardless of the reasons,
the closure and threatened closure of racetracks are
indicators that the sport of kings is in a precarious position.
Further exasperating the problem is the downturn in the economy
which has significantly impacted the amount wagered (the
handle).
As a result, programs that are funded from a percentage of the
handle are realizing deficits. For example, the vanning and
stabling fund - a fund that helps to defray the cost of having
to transport and stable race horses at auxiliary training
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facilities, is experiencing a deficit. To address the deficit
in the vanning and stabling fund, CHRB on November 18, 2008,
approved an increase in the amount of simulcast fees allowed to
be deducted from the off-track handle at California simulcast
facilities from 1.06% to 1.25%, the maximum amount allowed by
law. Projections show, however, that the increase may not cover
the ongoing costs of vanning and stabling horses.
Additionally, over the years, legislation has been enacted to
redirect monies from the vanning and stabling fund for such
purposes as, to pay for capital projects, defray the costs of
workers' compensation coverage for stable employees and jockeys
of thoroughbred trainers, the marketing and promotion of horse
racing, and the backstretch employee's welfare fund to provide
various services and benefits to backstretch employees.
SB 766 is intended to give CHRB the authority to approve the
transfer of monies from two specific funds that have surpluses
to accounts that have a negative fund condition. Specifically,
the bill authorizes the organizations that administer the
Marketing Promotion Fund and the Workers' Compensation Fund to
reallocate, upon the approval of CHRB, any surplus monies in
these two funds to any other account created by the Horse Racing
Law.
In support : Proponents argue that the horse racing industry has
been going through a very difficult time in this economy. Many
horse racing funds are running into deficits. SB 766 will
provide the flexibility for horse racing to help stabilize funds
that are running into deficits.
Prior Legislation : AB 813 (Portantino), Chapter 19, Statutes of
2008. Provides that, with respect to harness meetings, if there
are funds unexpended in the horse racing promotion account,
those funds may be expended for other purposes with the consent
of the horsemen and the racing association to benefit the
horsemen, or the racing association, or both, pursuant to their
agreement.
AB 2103 (Plescia), Chapter, Statutes of 2008. Extends the
sunset date, from January 1, 2009 to January 1, 2014, on a
deduction from pari-mutuel wagering on thoroughbred horse racing
in order to defray the costs of pay or workers' compensation
insurance.
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SB 1805 (Florez), Chapter 883, Statutes of 2006. Provides that
any funds not used to defray the costs of workers compensation
insurance as described, may also be used to reimburse a racing
association for actual costs of safety improvements to racing
and training surfaces, health and safety programs,
research or safety equipment.
AB 701 (Horton), Chapter 40, Statutes of 2004. Provides a
framework for the deduction from pari-mutuel pools in order to
address increased costs in workers compensation insurance in the
horse racing industry. Requires thoroughbred racing
associations to deduct an additional one-half percent of the
total amount handled in exotic pari-mutuel pools to be used to
defray increasing workers' compensation costs in the horse
racing industry.
AB 2931 (Horton), Chapter 922, Statutes of 2002. Authorizes
racing associations to use existing industry funds (stabling and
vanning and promotion funds) for use in developing a program to
offset workers' compensation rates for horse trainers in the
state.
REGISTERED SUPPORT / OPPOSITION :
Support
California Teamsters Public Affairs Council
Del Mar Thoroughbred Club
Jockey's Guild
Los Angeles County Fair Association (Fairplex)
Oak Tree Racing Association
Opposition
None on file
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531