BILL ANALYSIS �
AB 2693
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 2693 (Governmental Organization Committee)
As Amended August 15, 2012
Majority vote
-----------------------------------------------------------------
|ASSEMBLY: |73-0 |(May 10, 2012) |SENATE: |39-0 |(August 22, |
| | | | | |2012) |
-----------------------------------------------------------------
Original Committee Reference: G.O.
SUMMARY : Adds the Arkansas Derby to the group of stake races
in Horse Racing Law which are exempt from the 50-race per day
limit on imported races, as defined. In addition, the bill
clarifies in statute that the California Thoroughbred Trainers
(CTT), sponsors the backstretch workers' pension plan.
The Senate amendments specify that the referenced trainers'
organization, known as the California Thoroughbred Trainers,
Inc., is the plan sponsor for purposes of the federal Employee
Retirement Income Security Act of 1974 (ERISA).
FISCAL EFFECT : Unknown. This bill is keyed non-fiscal by
Legislative Counsel.
COMMENTS :
Purpose of the bill : The author's office notes that this bill
will help increase the wagering handle on this specific day
(Arkansas Derby) which will lead to increased purses, racetrack
revenue, and breeders' awards in California. Purses are
important to California's racing industry because they provide
revenue to horse owners for their racing operations and to
breeders through an increase in the value of their breeding
stock.
The author's office states "California's racing industry has
found that it's much easier to make a big day bigger relative to
their marketing efforts rather than trying to increase
attendance on a typical Wednesday or Thursday." The author's
office believes that this bill also provides the racing industry
a marketing tool to increase on-track and off-track attendance
on this designated day because racing fans will want to wager on
all the races from the host track of the prestigious Arkansas
AB 2693
Page 2
Derby horse race.
In addition, existing law requires any racing association that
conducts thoroughbred races to, among other things, pay a
specified amount for a pension plan for backstretch personnel to
be administered by the trainers' organization (CTT). This
particular statute has existed since the 1970s. During the most
recent request for a favorable determination letter on the tax
status of the pension plan, the Internal Revenue Service (IRS)
questioned the ability of the CTT to sponsor the pension plan
since the CTT is not the actual employer of the backstretch
workers. The IRS has questioned the ability of CTT to sponsor
the plan despite Business and Professions Code (BPC) Section
19613.
A "determination letter" is a formal document issued by the IRS
that decrees whether or not the retirement plan is within ERISA
guidelines. If the plan is determined to be lacking in some
respect, the shortcomings and necessary action to be taken will
be listed. If the plan meets all of the requirements set forth
by ERISA, then the plan becomes certified as a qualified plan
and is eligible for all resulting tax benefits.
This bill simply clarifies that the Legislature intended the CTT
to be the sponsor of the pension plan.
This bill also adds the word "horsewomen" to the above
referenced provision of law as well to BPC Section 19596.2 so
that those provisions now read "horsemen and horsewomen."
Background :
Arkansas Derby : The Arkansas Derby is a Grade 1 stakes race for
three-year-old thoroughbreds, which is held annually at Oaklawn
Park in Hot Springs, Arkansas. Each April, this prestigious
race acts as a major prep for three-year-old horses with two
winners having gone on to victory in the Kentucky Derby. The
race is shown each year on ESPN.
Satellite wagering : Satellite wagering via an off-track
facility has been legal in California since 1985. It was
authorized at a time when California racetracks were beginning
to experience declining attendance and handle figures. The
industry believes that making the product easier to access not
only exposes and markets horse racing to potential customers,
AB 2693
Page 3
but also makes it more convenient for the existing patrons to
wager more often.
Simulcasting : Simulcasting is the process of transmitting the
audio and video signal of a live racing performance from one
facility to a satellite for retransmission to other locations or
venues where pari-mutuel wagering is permitted. Simulcasting
provides racetracks with the opportunity to increase revenues by
exporting their live racing content to as many wagering
locations as possible, such as other racetracks, fair satellite
facilities and Indian casinos. Revenues are increased because
simulcasting provides racetracks that export their live content
with additional customers in multiple locations who otherwise
would not have been able to place wagers on the live racing
event.
Racetrack attendance : Over the past 20 years the industry has
witnessed a general decline in the number of people attending
and wagering at live horse racetracks in California due to a
number of factors, including increased competition from other
forms of gaming, unwillingness of customers to travel a
significant distance to racetracks and the availability of
off-track wagering. The declining attendance at live horse
racing events has prompted racetracks to rely on revenues from
in-state and out-of-state satellite wagering and account
wagering.
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531
FN: 0005171