BILL ANALYSIS �
AB 2592
Page 1
GOVERNOR'S VETO
AB 2592 (Chesbro and Levine)
As Amended April 28, 2014
2/3 vote
GOVERNMENTAL ORGANIZATION 19-0 APPROPRIATIONS 17-0
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|Ayes:|Hall, Nestande, |Ayes:|Gatto, Bigelow, |
| |Achadjian, Bigelow, | |Bocanegra, Bradford, Ian |
| |Campos, Chesbro, Cooley, | |Calderon, Campos, |
| |Dababneh, Gray, Roger | |Donnelly, Eggman, Gomez, |
| |Hern�ndez, Jones, | |Holden, Jones, Linder, |
| |Jones-Sawyer, Levine, | |Pan, Quirk, |
| |Medina, Perea, V. Manuel | |Ridley-Thomas, Wagner, |
| |P�rez, Salas, Waldron, | |Weber |
| |Wilk | | |
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ASSEMBLY: 73-0 (May 23, 2014)
SENATE: 21-13 (August 19, 2014)
SUMMARY : 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 bill :
1)Provides when the CHRB considers 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, the board shall conduct an economic analysis of the
proposal's effect on those fairs whose horse racing calendar
would be impacted. The economic analysis shall include, but
is not limited to, all of the following:
a) The financial loss or gain to each fair impacted by the
proposed fair horse racing calendar changes, including the
impact on fair admissions, concessions, and sponsorship.
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b) Jobs generated or lost due to the proposed fair horse
racing calendar changes.
c) Availability of seasonable workers as a result of the
fair horse racing calendar changes.
d) Impact on agricultural education programs, if
applicable.
e) Financial impact on the community at large due to the
changes to the fair horse racing calendar.
2)Specifies that the CHRB shall consider all proposed
alternative racing dates based on that economic analysis
before the board votes on the proposal or any alternative
option to the original proposal.
3)Defines "substantial change" as any change within the fair
horse racing calendar that changes the allocation of racing
dates to that fair by more than three days from the prior
year's horse racing dates.
EXISTING LAW :
1) Provides for the conduct of live horse racing in California
and for pari-mutuel wagering on these races at both on-track and
satellite wagering facilities and via Advance Deposit Wagering.
Horse racing in this state is subject to regulation and
oversight by the CHRB.
2) Provides that the CHRB board shall have the authority to
allocate racing weeks to an applicant or applicants pursuant to
the provisions of Horse Racing Law and to specify such racing
days, dates, and hours for horse racing meetings as will be in
the public interest, and will serve the purposes of the chapter.
3) Provides that the decision of the board as to such racing
days, dates, and hours shall be subject to change, limitation or
restriction only by the board. No municipality or county shall
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adopt or enforce any ordinance or regulation which has or may
have the effect of directly or indirectly regulating, limiting
or restricting the racing days and dates of horse racing
meetings.
4) Provides that the maximum number of racing weeks that may be
allocated to a fair shall be four weeks each year. The board
shall take public testimony and make all determinations on the
allocation of racing dates during a public hearing. All
discussions of allocating racing dates by the board or its
subcommittees shall be conducted during a public hearing.
Nothing in Horse Racing Law shall be deemed to diminish the
authority of the board to establish racing dates.
FISCAL EFFECT : According to the Senate Appropriations
Committee, unknown, potential costs of $96,000 to CHRB if two
economic analyses are required annually (General Fund).
CHRB estimates costs of $48,000 to contract out for the
performance of one economic impact analysis. If two analyses
were conducted each year, costs will be $96,000. CHRB has
indicated there could be up to seven analyses required each year
resulting in costs of $336,000 as oftentimes the shifting of one
fair's racing dates affects one or more other fairs.
COMMENTS :
Purpose of the bill: According the author, under existing law,
when the CHRB proposes changes in the live fair horse racing
schedule there is no independent economic analysis of those
proposals. This lack of analysis results in CHRB members
making decisions based on very limited financial data without a
clear knowledge of the actual financial impact to those fairs
and their communities. This bill will simply require that an
economic analysis which includes various criteria be done prior
to any decision made by the board. The economic analysis would
include: 1) The financial loss or gain to each fair impacted by
the proposed fair horse racing calendar changes, including the
impact on fair admissions, concessions, and sponsorship; 2) Jobs
generated or lost due to the proposed fair horse racing calendar
changes; 3) Availability of seasonable workers as a result of
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the fair horse racing calendar changes; 4) Impact on
agricultural education programs, if applicable; and 5) The
financial impact on the community at large due to the changes to
the fair horse racing calendar.
The author notes, this bill has been introduced as a result of a
recent experience that he and Assemblymember Levine had with the
CHRB regarding a 2015 race dates proposal to move the Sonoma and
Humboldt fairs' horse racing schedule one week later in the
racing calendar. This change would have resulted in the final
week of the fair overlapping with the first week starting the
new school year. Both fairs felt very strongly that this change
would seriously affect the profitability and viability of their
respective fairs. The author states that there was no analysis
done on the fiscal impact of this change on the fairs so the
CHRB did not have accurate information to make an informed
decision.
The author maintains that this bill will ensure that the CHRB
would be fully aware of all of the financial implications of any
decision made relating to fair race dates allocations in the
future.
In support: In support of this bill, the Sonoma County Fair
writes, "AB 2592 will be key 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, it will provide the CHRB board a more thorough
understanding of any changes made based on their decisions."
Background: The "Horse Racing Law," found in Chapter 4 of the
Business and Professions Code, conveys regulatory authority over
horse racing to the CHRB. The CHRB currently consists of seven
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members, each appointed by the Governor of California. CHRB
regulation, as it relates specifically to the associations,
takes the form of licensing individual racing associations and
allocating racing days among associations.
Demand for horse racing originates with the viewing and wagering
public. Horse racing in California is supplied jointly by the
horse owners and the various racetracks, under state regulation.
There are four principal participants in California's horse
racing industry: the horse sector, the racing associations, the
bettors and/or spectators, and the State of California.
There has been 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 and Advance Deposit 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. In addition, the rapid
appreciation of track real estate assets has reduced financial
ratios to operating a live race meet racing below competitive
levels.
For instance, in December 2013, Hollywood Park racetrack in
Inglewood was closed by its owner after operating for 75 years
in California. The track's 260-acre footprint will be turned
into 3,000 new housing units, including single-family townhomes
and condos; 25 acres of parkland, including a 10-acre central
park; and a retail and entertainment district, a movie theatre,
office space and a 300-room hotel. Racetrack representatives
said, "From an economic point of view, the land now simply has a
higher and better use." Hollywood Park was the second major
California racetrack to close since 2008, when Bay Meadows in
San Mateo also closed after 74 years for commercial and
residential development. These racetrack closures have forced
the CHRB to make changes in the overall calendar to not only
give horsemen and horsewoman a location to race at but provide a
suitable place for horses to be stabled and vanned from on a
year-round basis.
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There is an abundance of testimony in the legislative record
regarding the economic condition of the horseracing industry,
and specifically, the direct impact on the allocation of race
dates. There are large questions that need to be answered in
California's racing industry relating to its future. The
industry is in the process of identifying what the possibilities
are and deciding which ones are realistic and which ones are
unrealistic.
In opposition: Opponents claim that the racing industry is
already an over regulated and economically stressed industry and
that 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 bill is unnecessary because it
has been introduced as a result of an isolated incident
involving certain county fairs and a ruling by CHRB.
GOVERNOR'S VETO MESSAGE :
"When considering the allocation of racing dates, the California
Horse Racing Board actively solicits feedback from the
horseracing community and the public at large. Often spirited
discussions occur at the hearing of the full Board, or in the
smaller expert subcommittees. I am confident that the
Commissioners consider all competing proposals before voting.
"Mandating a specific economic analysis before a decision could
be made would add substantial costs to an already complex
process without commensurate benefit."
Analysis Prepared by : Eric Johnson / G.O. / (916) 319-2531
FN: 0005619