BILL ANALYSIS �
Bill No: AB
2592
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Lou Correa, Chair
2013-2014 Regular Session
Staff Analysis
AB 2592 Author: Chesbro
As Amended: April 28, 2014
Hearing Date: June 24, 2014
Consultant: Art Terzakis
SUBJECT
California Horse Racing Board: fair horse racing calendar:
economic analysis
DESCRIPTION
AB 2592 adds a new provision to California Horse Racing Law
that requires the California Horse Racing Board (CHRB) to
complete an economic analysis when it receives a proposal
to make a "substantial change" to the number of days a fair
conducts horse racing or to the weeks in the horse racing
calendar allocated to that fair to conduct a live race
meet. Specifically, this measure:
1)Requires the CHRB, when it receives a proposal to make a
substantial change to the number of days a fair conducts
races or to the weeks in the horse racing calendar
allocated to that fair, to conduct an economic analysis
of the proposal's effect on those fairs whose horse
racing calendar would be impacted.
2)Defines "substantial change" to mean any change within
the fair horse racing calendar that changes the
allocation of racing dates to that fair by more than
3-days from the prior year's horse racing dates.
3)Stipulates that the economic analysis must include, but
not be limited to, all of the following: (a) the
financial loss or gain to each fair impacted by the
proposed fair horse racing calendar changes and the
effect on admissions, concessions and sponsorships; (b)
jobs created or lost; (c) availability of seasonal
AB 2592 (Chesbro) continued
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workers; (d) impact on agricultural education programs;
and, (e) financial consequences on the community at
large.
4)Requires the CHRB to consider all proposed alternative
racing dates based on the economic analysis referenced
above before the CHRB votes on the proposal or any
alternative option to the original proposal.
5)In addition, this measure makes technical and code
maintenance changes to Section 19530 of Horse Racing Law.
EXISTING LAW
Article IV, Section 19(b) of the Constitution of the State
of California stipulates that the Legislature may provide
for the regulation of horse races and horse race meetings
and wagering on the results.
Existing law provides the CHRB with the authority to
allocate racing weeks to an applicant pursuant to the
provisions of the Horse Racing Law and to specify such
racing days, dates and hours for horse racing meetings as
will be in the public interest.
Additionally, existing law provides that the CHRB shall
make allocation for racing weeks, including simultaneous
racing between zones, as it deems appropriate.
Existing law limits the allocation of dates for mixed breed
meetings and combined fair horse racing meetings to between
June 1 and October 31. The law provides that the maximum
number of racing weeks that may be allocated to a fair
shall be four weeks each year and requires the CHRB to take
public testimony and make all determinations on the
allocation of racing dates during a public hearing.
Furthermore, existing law stipulates that nothing in Horse
Racing Law shall be deemed to diminish the authority of the
CHRB to establish racing dates.
Existing law prohibits the allocation of days for a mixed
breed meeting or a combined fair horse racing meeting
during the month of June at Cal-Expo if a standardbred
meeting is being conducted at that facility during that
month. The law also requires that the mixed breed meetings
AB 2592 (Chesbro) continued
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be conducted by an entity other than Cal-Expo as specified,
and that the meeting encourage the racing of emerging
breeds of horses.
BACKGROUND
Purpose of AB 2592 : The author notes that when the CHRB
proposes changes in the live fair horse racing schedule
there is no independent economic analysis conducted of
those proposals. Thus, CHRB members must make decisions
without clear knowledge of the potential financial impact
to those fairs and their communities.
According to the author, this measure has been introduced
as a result of a recent experience that he and
Assemblymember Levine had with the CHRB regarding a
proposal to move the Sonoma and Humboldt fairs' 2015 horse
racing schedule one week later in the racing calendar. The
proposed change would have resulted in the final week of
the fair overlapping with the first week of the new school
year. Both fairs strongly believed that the proposed
change would have impacted the profitability and viability
of their respective fairs. The author states that the CHRB
did not have sufficient information available to make an
informed decision because little if any data relative to
the fiscal impact of this change on the fairs was provided
to the CHRB by its staff.
The author maintains that this measure would ensure that
the CHRB is fully aware of the financial implications of
any future decisions relating to fair race date
allocations.
Arguments in Support: Writing in support, the Sonoma
County Fair states, "AB 2592 will be key element to the
longevity and success of California's horse racing Fairs.
The commissioners who serve on the CHRB have a wealth of
knowledge about the horse racing industry, but may not
always have the Fair industry experience to comprehend the
economic impact their decisions have on a single Fair or
the entire Fair family. These economic factors not only
affect the few days or weeks of racing that a Fair offers,
but significantly impact local stakeholders, fairgoers, and
the viability of a Fair organization. By requiring the
CHRB to complete an independent, non-biased economic
analysis of a potential racing date change that will impact
one Fair or multiple Fairs, AB 2592 will provide the CHRB a
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more thorough understanding of any changes made based on
their decisions."
Arguments in Opposition: Opponents claim that the racing
industry is already an over regulated and economically
stressed industry and that the CHRB will be compelled to
pass along these additional costs of a study at a time when
the industry can least afford it. Opponents also contend
that this measure is unnecessary because it has been
introduced as a result of an isolated incident involving
certain county fairs and a ruling by the CHRB.
PRIOR/RELATED LEGISLATION
SB 721 (Padilla), 2013-14 Session. Among other things,
would authorize the Los Angeles County Fair, subject to
approval by the CHRB, to conduct live racing meetings at
another site within or outside of the County of Los Angeles
in accordance with specified provisions. (Pending on Senate
floor for concurrence)
AB 2765 (Governmental Organization Committee), 2013-14
Session. Among other things, would extend the sunset date
by 4 years (from January 1, 2015 to January 1, 2019) for
the statewide marketing organization that is responsible
for marketing and promoting thoroughbred and fair horse
racing. (Pending in Senate Appropriations Committee)
AB 2005 (Chesbro), 2013-14 Session. Would expand the
membership of the CHRB by adding 4 members of the
Legislature (2 appointed by the Senate Committee on Rules
and 2 appointed by the Speaker of the Assembly) as
non-voting, ex-officio members. (Pending in this
committee)
AB 2637 (Hall), 2013-14 Session. Among other things, would
delete an outdated cross-reference in law which allows the
CHRB to annually allocate a maximum of 28 racing days to
any county fair in the northern zone which did not conduct
horse racing prior to January 1, 1985. (Pending in this
committee)
SB 1418 (Berryhill), Chapter 225, Statutes of 2012.
Removed the restriction that the CHRB may only allocate
race dates for combined fair horse racing meetings and for
mixed breed meetings between the months of June and October
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and instead allowed those race meetings any time throughout
the year. In addition, allowed mixed breed meetings and
combined fair meetings to be held at the Cal Expo race
track, with the exception of the month of June, if a
standardbred meeting is being held at Cal Expo during that
time.
SB 16xx (Ashburn), Chapter 12, Statutes of 2009-10 Second
Extraordinary Session . Among other things, eliminated the
$40 million floor on the amount the horse racing industry
is required to pay annually for support of the network of
California fairs, the CHRB, and the Kenneth L. Maddy Equine
Analytical Chemistry Laboratory at UC Davis. Other than
the supplemental 1% assessed against fair meets, it also
eliminated the license fee on horse racing wagers and
provided that beginning on July 1, 2009, and annually
thereafter, $32 million shall be appropriated from the
state's General Fund and paid into the F&E Fund for the
financial support of the State's network of fairs.
SB 561 (Margett), Chapter 380, Statutes of 2008. Among
other things, granted greater flexibility to the CHRB in
allocating racing dates in Northern California in response
to the closure of Bay Meadows race track.
AB 3073 (Governmental Organization), Chapter 509, Statutes
of 2008. Among other things, deleted the requirement in
existing law that horse racing days at fairs be during the
period in which general fair activities are conducted.
AB 2205 (Garrick), Chapter 448, Statutes of 2008. Allowed
the Del Mar Fairgrounds to use allocations of racing weeks
from the central zone and to conduct thoroughbred racing
throughout the year.
SB 1825 (Kelley), Chapter 342, Statutes of 2000. Provided
that, notwithstanding any other provision of law, if the
total amount paid to the state by racing associations and
fairs pursuant to the Horse Racing Law is less than $40
million in any calendar year, beginning January 1, 2001,
and thereafter, all associations and fairs that conducted
live racing during the year of shortfall shall remit to the
state, on a pro rata basis according to the amount handled
in-state by each association or fair, the amount necessary
to bring the total amount paid to the state to $40 million.
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SB 27 (Maddy), Chapter 335, Statutes of 1998. Among other
things, granted major license fee relief ($40 million
annually) and limited out-of-state full-card simulcasting.
AB 3090 (Machado), Chapter 741, Statutes of 1996.
Authorized the CHRB to allocate combined fair horseracing
meetings between July 1 and October 31, the traditional
summer fair racing dates.
SUPPORT: As of June 20, 2014:
California Thoroughbred Trainers
Sonoma County Fairgrounds
OPPOSE: As of June 20, 2014:
California Authority of Racing Fairs
Los Alamitos Race Course
Los Angeles County Fair Association
Oak Tree Racing Association
Pacific Coast Quarter Horse Racing Association
FISCAL COMMITTEE: Senate Appropriations Committee
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