BILL ANALYSIS �
Bill No: AB
2637
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Lou Correa, Chair
2013-2014 Regular Session
Staff Analysis
AB 2637 Author: Hall
As Amended: March 28, 2014
Hearing Date: June 24, 2014
Consultant: Art Terzakis
SUBJECT
Horse Racing: pari-mutuel wagering and charity racing days
DESCRIPTION
AB 2637 makes the following substantive and clarifying
changes to California Horse Racing Law:
1)Increases the minimum distribution from charity day horse
racing required to be allocated to charities associated
with the horse racing industry from 20% to 30%.
2)Deletes the California Horse Racing Board's (CHRB)
authority 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.
3)In addition, corrects an outdated cross reference in the
law and makes other minor code maintenance changes.
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
AB 2637 (Hall) continued
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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 requires each licensed racing association to
designate a certain number of racing dates to be conducted
as charity days by the licensee for the purpose of
distribution of the net proceeds to charitable
beneficiaries.
Existing law requires that at least 20% of the distribution
from charity day racing be made to charities associated
with the horse racing industry. In addition to this 20%,
another 5% of the distribution must go to a welfare fund
established for the benefit of horsemen, horsewomen and
backstretch personnel, as specified, and another 5% of the
distribution must be provided to a nonprofit corporation
assisting horsemen, horsewomen and backstretch personnel
who are affected adversely as a result of alcohol or
substance abuse. In addition to the above distribution,
existing law requires that a separate 20% of the
distribution from charity day racing, up to a maximum of $2
million, be provided as an endowment for a nonprofit
corporation or trust which assists disabled jockeys.
Furthermore, existing law requires that beneficiaries of
these proceeds be a nonprofit corporation or organization
entitled by law to receive a distribution made by a
distributing agent, exempt or entitled to exemption from
state and federal income taxes, involved in specified
beneficial activities, and approved by the CHRB.
BACKGROUND
Purpose of AB 2637 : According to the author's office, this
measure would provide the horse racing industry the ability
to further support charities associated with the horse
racing industry. Currently, charity day proceeds go to a
number of causes, including a backstretch program to combat
drug and alcohol abuse, a workers' welfare fund, support of
disabled jockeys and other charities associated with the
industry.
The author's office states that AB 2637 is intended to
AB 2637 (Hall) continued
Page 3
ensure that California's horse racing industry is also
providing sufficient funds to aid charities dedicated to
the rescue, rehabilitation, retraining, adoption, and
retirement of racehorses which no longer compete at
racetracks throughout the state. For example, it might be
beneficial to use charity day proceeds for therapeutic
riding programs involving children and adults with
physical, developmental, social and emotional disabilities.
Such programs provide a golden opportunity for the
utilization and retraining of retired race horses.
Staff Comments: Since the early 1940's, California racing
associations have been required to conduct charity racing
days. By law, each racing association must either conduct
a specified portion of its race meeting, based on the
length of the race meet, for the benefit of charities
meeting the statutory criteria and approved by the CHRB, or
two tenths of one percent of the live handle for the entire
meet. The law also requires that at least 50% of the
proceeds be distributed to charitable groups within the
horse racing industry. While recognizing the worthwhile
nature of all the charitable organizations favored by the
various distributing foundations, the CHRB encourages the
foundations to exceed this minimum percentage.
On charity racing days, the racing association furnishes
the facilities and personnel necessary for the conduct of
racing. The income from all operations of the race meeting
on charity racing days, less deductions for actual
expenses, is dedicated to charitable purposes. The
following racing associations distributed funds last year:
Los Angeles Turf Club, Hollywood Park Racing Association,
Del Mar Thoroughbred Club, Los Alamitos Quarter Horse
Racing Association, and the Pacific Racing Association.
According to the CHRB, charity racing day donations in the
2012-13 Fiscal Year totaled approximately $778,707.
PRIOR/RELATED LEGISLATION
SB 1337 (Vincent), Chapter 904, Statutes of 2002. Provided
that, in addition to the 20% of the distribution from
charity day racing that is required to go to charities
associated with the horse racing industry, another 5% of
the distribution shall be provided to a welfare fund
established for the benefit of horsemen and backstretch
AB 2637 (Hall) continued
Page 4
personnel, as specified, and another 5% of the distribution
shall be provided to a nonprofit corporation assisting
horsemen and backstretch personnel who are affected
adversely as a result of alcohol or substance abuse. In
addition, required that an additional 20% of the
distribution from charity day racing, up to a maximum of $2
million, be provided as an endowment for a nonprofit
corporation or trust which assists disabled jockeys.
SB 517 (Johnson), Chapter 170, Statutes of 1999. Allowed a
California racing association to act as its own
distributing agent for distribution of charity day
proceeds, provided the association complies with existing
law and receives approval from the CHRB.
SB 220 (Rosenthal), Chapter 451, Statutes of 1997.
Required that at least 20% of the proceeds derived from
charity racing days be distributed to charities associated
with the horse racing industry.
SUPPORT: None on file as of June 20, 2014.
OPPOSE: None on file as of June 20, 2014.
FISCAL COMMITTEE: Senate Appropriations Committee
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