BILL ANALYSIS Ó
AB 432
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Date of Hearing: May 8, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 432 (V. Manuel Perez) - As Introduced: February 15, 2013
Policy Committee: Governmental
Organization Vote: 17 - 0
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill requires any racing association or racing fair
receiving distributions from any exchange provider's exchange
revenues to distribute a portion of that revenue to the official
registering agency.
FISCAL EFFECT
Because exchange wagering has not been implemented by the state,
it is unknown how much the racing associations and racing fairs
will receive. This bill requires a small redistribution of
those funds, 0.54% of whatever agreement is made in terms of
payment for the racing association. If the racing association
receives 25% of the gross income, and that income totals $10
million per year, the registering agency (likely the
Thoroughbred Breeders Association) would receive $13,500.
COMMENTS
1)Rationale . According to the author, when exchange wagering was
authorized by the Legislature in 2010, the enabling
legislation lacked clarity pertaining to the allotment of
exchange wagering revenues for California's Thoroughbred
breeders.
The author contends this bill simply clarifies that if
exchange wagering is implemented in the state, California
Thoroughbred breeders will not see a reduction in breeder,
owner and stallion owner incentives. The intent of the bill
is to ensure that each official registering agency for a
specific breed of horse receives the same type of proportion
AB 432
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distribution as retained for other types of wagers in current
law (on-track, simulcasting, and advance deposit wagering).
1)Exchange Wagering . SB 1072 (Ron Calderon), Chapter 283,
Statutes of 2010, required the California Horse Racing Board
(CHRB) prescribe rules, regulations, and conditions under
which exchange wagering may be conducted in California.
Exchange wagering is a relatively new form of wagering that
was introduced in the United Kingdom in 2000. Exchange
wagering account holders may buy, sell, or back the outcome of
horse races in a manner much like day trading on the stock
exchange. The statute defines exchange wagering as a form of
pari-mutuel wagering in which two or more persons place
identically opposing wagers in a given market. Exchange
wagering can only commence after a California racetrack and
the horsemen's organization at that racetrack reach an
agreement with one or more exchange wagering companies and the
agreement/operating plan is approved by the CHRB.
To date, exchange wagering has not been implemented in
California. In March 2013, the state's Office of
Administrative Law (OAL) notified the CHRB that they
disapproved the proposed exchange wagering regulations for
failure to comply with specified standards and procedures of
the California Administrative Procedure Act (APA). The
rejected provisions were approved in November 2012 by the
CHRB. The CHRB has stated that this will delay the
implementation of exchange wagering in California for several
months.
1)Related Legislation . Currently, AB 1423 (Committee on GO)
removes the January 1, 2021 sunset date for the distribution
of the revenue collected through exchange wagering and instead
sunsets the provisions after the 10th annual distribution of
those funds. That bill is currently pending before this
committee.
SB 1072 (Ron Calderon), Chapter 283, Statutes of 2010,
authorized the California Horse Racing Board (CHRB) to license
entities to operate exchange wagering systems, that accept
exchange wagers from individuals residing either within or
outside of this state on horse races run in California or
other states. The bill stated that exchange wagering shall not
become operative until May 1, 2012.
AB 432
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Analysis Prepared by : Julie Salley-Gray / APPR. / (916)
319-2081