BILL ANALYSIS �
Bill No: AB
270
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Roderick D. Wright, Chair
2011-2012 Regular Session
Staff Analysis
AB 270 Author: Perea
As Amended: May 12, 2011
Hearing Date: June 14, 2011
Consultant: Art Terzakis
SUBJECT
Horse Racing: Satellite Wagering
DESCRIPTION
AB 270 creates an exception to Horse Racing Law by
authorizing a fair satellite wagering facility to elect not
to be subject to the requirements related to a "satellite
facility supervisor" if the board of directors of the fair,
after a public hearing, deems those requirements to be not
economically feasible. Specifically, this measure:
1. Permits a fair satellite wagering facility, that
generate less than $10 million annually in total
handle, to determine that the position of satellite
facility supervisor is not economically feasible,
following a public hearing by the board of directors.
2. Stipulates that a fair satellite wagering facility
which elects to eliminate the satellite wagering
supervisor position must do both of the following: (a)
continue to abide by all laws and regulations
pertaining to its operation and (b) provide notice of
the fair board's action to the California Horse Racing
Board (CHRB) within 10 days of approval of the fair
board.
EXISTING LAW
Article IV, Section 19(b) of the Constitution of the State
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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 grants the California Horse Racing Board
(CHRB) the authority to regulate the various forms of horse
racing authorized in this state.
Existing law requires the CHRB to set forth requirements
for the position of "satellite facility supervisor" for all
satellite wagering facilities operated by the state or on
public land. The law provides that the supervisor shall,
among other things, monitor the performance of licensees at
the facilities.
Existing law authorizes the CHRB to permit licensed racing
associations, fairs and mini-satellite licensees to operate
satellite wagering facilities.
Existing law authorizes the CHRB to approve the
establishment of 15 mini-satellite wagering sites in each
zone (for a total of 45) and defines "minisatellite
wagering site" to mean a location where satellite wagering
may be conducted, with the approval of the CHRB, provided
that the wagering occurs in an area that is restricted to
those who are 21 years of age or older.
Existing law specifies that no mini-satellite site may be
located within 20 miles of a race track, a satellite
wagering facility, or a tribal casino that has a satellite
wagering facility without the consent of each facility
within that 20-mile radius.
BACKGROUND
History: California has allowed off-track betting in
satellite wagering facilities located at fairs and racing
associations throughout the state for well over 25 years.
Satellite wagering 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 would expose and market
horse racing to potential customers and also make it far
more convenient for existing patrons to wager more often.
Currently, there are 34 satellite-wagering facilities in
California located at live race tracks, fair grounds and
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Indian casinos. In addition, seven state-designated or
county fairs have received statutory authority to locate
additional satellite-wagering facilities off the respective
fairgrounds but within the boundaries of the fair district.
To date, only the Fresno County Fair has exercised this
authority by leasing space in a card-club in downtown
Fresno (Fresno Club One).
In 2007, AB 241 (Price) was enacted to authorize the
creation of 15 "minisatellites" in each racing zone for a
total of 45. The stated intent of this legislation was to
make the sport of horse racing even more accessible to
potential California bettors and to increase the handle -
the amount wagered on horse races. To date, only two
mini-satellites have been opened and licensed statewide
(one is located at the California Commerce Club in the City
of Commerce, the other is located at the OC Tavern Grill
and Sports Bar in San Clemente).
Purpose of AB 270 : According to the author's office, this
measure is intended to provide greater financial
flexibility to smaller fair satellite wagering facilities
that find themselves in difficult financial situations due
to the mandatory staffing language in current law
pertaining to satellite facility supervisors.
The author's office points out that over the years,
expenses have increased considerably while the mechanism to
generate revenue to cover overhead is limited by Horse
Racing Law (2% commission on each dollar wagered). Due to
declining attendance, increased costs and other factors,
some smaller fair satellite wagering facilities have been
faced with the decision to close their wagering operations.
The author's office states that this measure would provide
flexibility in managing overhead costs which in turn would
enable these facilities to remain in operation generating
revenue for the fair and California's horse racing
industry.
The author's office notes that county fairs and
agricultural associations receive a great deal of their
revenue from wagering on horse racing, so it's in their
best interest to ensure that satellite wagering remains a
viable facet of their business operation. Additionally,
this bill is intended to ensure that the California horse
racing industry remains viable as an agribusiness within
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the state.
Duties of a Simulcast or Satellite Facility Supervisor :
The simulcast facility supervisor is responsible for the
oversight of the facility and to ensure compliance with the
state's laws, rules and regulations. The duties, in
addition to any duties and responsibilities required by his
or her employer, include, but are not limited to,
immediately reporting to the CHRB or its stewards, in
writing or by telephone, any violation of the CHRB's rules
or regulations which come to their attention or of which
they have knowledge. This includes referrals of matters
involving misconduct of licensees to the host track
stewards and ordering the exclusion or ejection of persons
who are prohibited from participating in pari-mutuel
wagering and from being present within any racing enclosure
during a recognized race meeting. Additional duties
include maintaining minutes of the conduct of each day's
events at the simulcast location where assigned,
supervising all phases of the facility which are directly
related to the requirements of the CHRB's laws and
regulations at the simulcast location.
Staff Comments: By eliminating the requirement for the
position, some individuals may raise concerns about
opportunities for abuse within this state licensed system.
However, the bill does not alleviate the facility from the
responsibility of complying with wagering laws. It simply
allows the fair management to decide how best to assign the
duties. In this era of very little state support for the
fairs, they need to be given the flexibility to adapt their
business models in order to function more economically.
PRIOR/RELATED LEGISLATION
SB 305 (Calderon) 2011-12 Session. Would modify a
provision of Horse Racing Law that currently requires the
CHRB to license minisatellite facilities for two years and
instead directs the CHRB to license such facilities for up
to five years. (Pending in Assembly G.O. Committee)
SB 1439 (Price) of 2010. Would have decreased the exclusion
zone in which a "minisatellite" horse racing wagering
facility can be situated in proximity to an existing horse
racing satellite wagering facility or live horse racing
race track from a 20 to 15 mile radius. (Failed passage on
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Senate floor)
AB 2215 (Fuentes), Chapter 255, Statutes of 2010. Among
other things, authorized a minisatellite wagering facility
to enter into an agreement with an advance deposit wagering
(ADW) provider to accept and facilitate the placement of
any wager at its facility that a California resident could
make through that ADW provider.
SB 16xx (Ashburn) Chapter 12, Statutes of 2009-10 Second
Extraordinary Session . Among other things, provided that
beginning on July 1, 2009, and annually thereafter,
thirty-two million ($32,000,000) shall be appropriated from
the state's General Fund and paid into the Fair and
Exposition Fund for the financial support of the network of
California fairs.
AB 246 (Price), Chapter 226, Statutes of 2009. Authorized
a quarter horse association and a harness racing
association to deduct up to 2 percent more from the total
amount wagered in the pari-mutuel pool for any type of
wager, and, specified how the funds shall be distributed to
eligible satellite wagering facilities, owners purses and
racetrack commissions
AB 241 (Price), Chapter 594, Statutes of 2007. Authorized
all fairs to operate a satellite wagering facility off of
the fair grounds. Also, authorized the establishment of up
to 45 mini-satellite wagering sites to be operated by
private industry throughout California.
AB 1286 (Richardson) Chapter 202, Statutes of 2007 .
Allowed the Alameda County Fair and the Los Angeles County
Fair (Fairplex) to obtain authorization to operate new
satellite wagering facilities off of their fair grounds
under certain conditions.
SB 677 (Murray) 2005-06 Session. Would have authorized the
establishment of seven additional satellite wagering
facilities around the state. (Died Assembly Inactive File)
SB 1096 (Dutton) Chapter 1096, Statutes of 2005.
Authorized the National Orange Show (San Bernardino County)
to operate a second satellite-wagering operation within its
fair district boundaries.
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AB 401 (J. Horton) Chapter 556, Statutes of 2003.
Permitted CalExpo, with the approval of the Department of
Food and Agriculture and CHRB, to operate a satellite
wagering facility within the boundaries of CalExpo in
addition to any facility otherwise authorized under current
law.
SB 14 (Maddy), Chapter 1273, Statues of 1987. Expanded
satellite wagering statewide.
SUPPORT: As of June 10, 2011:
California Authority of Racing Fairs
California Exposition and State Fair
Del Mar Thoroughbred Club
Kern County Fair
National Date Festival
Riverside County Fair
San Joaquin County Fair
Santa Maria Fairpark
Shasta District Fair
The Big Fresno Fair
OPPOSE: None on file as of June 10, 2011.
FISCAL COMMITTEE: No