BILL ANALYSIS �
AB 2765
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Date of Hearing: May 7, 2014
ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
Hall III, Isadore, Chair
AB 2765 (Committee on Governmental Organization) - As Amended:
April 22, 2014
SUBJECT : Horse racing: marketing organization.
SUMMARY : Specifies that the private, statewide marketing
organization (California Marketing Committee) authorized in
Horse Racing Law to market and promote Thoroughbred and fair
horse racing may utilize outside consultants with horse racing
or other related experience, including experience in other
gaming enterprises while developing its annual marketing plan.
In addition, each year, the organization shall submit a written
report to the California Horse Racing Board (CHRB) by October 1.
EXISTING LAW :
1)Provides that the CHRB regulates the various forms of horse
racing authorized in this state.
2)Authorizes until January 1, 2015, Thoroughbred racing
associations, fairs, and the organization responsible for
contracting with thoroughbred racing associations and fairs
with respect to the conduct of racing meetings, to form a
private, statewide marketing organization to market and
promote thoroughbred and fair horse racing.
3)Requires an amount not to exceed 0.25% of the total amount
handled by each satellite wagering facility to be distributed
to the marketing organization, and imposes certain
requirements on the marketing organization, including that the
marketing organization annually submit certain information to
the CHRB.
4)Provides that the organization shall consist of the following
members: two members, one from the northern zone and one from
the combined central and southern zones, appointed by the
Thoroughbred racetracks; two members, one from the northern
zone and one from the combined central and southern zones,
appointed by the owners' organization responsible for
contracting with associations and fairs with respect to the
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conduct of racing meetings; and two members, one from the
northern zone and one from the combined central and southern
zones, appointed by the organization representing racing and
satellite fairs.
FISCAL EFFECT : This bill is keyed fiscal by Legislative
Counsel.
COMMENTS :
Purpose of the bill : According to the author, SB 27 (Maddy),
Chapter 335, Statutes of 1998, among its provision, created a
private statewide marketing organization for Thoroughbred and
fair racing that is funded by a percentage of the intra-state
off-track handle. The funds generated from this distribution
are used to market California horse racing on a statewide basis.
The CMC is generally responsible for promoting horse racing in
the state by developing and implementing a marketing plan that
will increase on-track and off-track attendance in California.
An underlying assumption of the CMC's Marketing Plan over the
years has been that it is far easier to capture a new fan
through an on-track experience than through an off-track
visitation to a satellite wagering facility.
The author states this bill will allow the CMC to utilize
outside consultants with horse racing or other related
experience, including involvement with other gaming enterprises
while developing its annual marketing plan. The author believes
that the CMC should be allowed to access the knowledge of
consultants who have experience in quantitative marketing
research in other gaming related businesses. The goal of this
bill is to give the CMC the tools to gain fresh perspectives and
new ideas to generate a comprehensive marketing which will
expand California's horse racing industry into new demographics
and markets.
In addition, the bill would change the date for submission of
CMC's annual expenditure report to the CHRB from November 1 to
October 1. This modification will provide the CHRB staff with
more time to review the annual expenditure plan before the CMC
presents their findings in a verbal report to CHRB members
before the start of the New Year.
Marketing horse racing in California : In 2003, the CMC received
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approximately $6.1 million to support its marketing efforts but
due to handle declines it has been reduced to approximately $1.8
million in 2013. Current law provides that the CMC must
annually submit to the CHRB a statewide marketing and promotion
plan for thoroughbred and fair horse racing that encompasses all
geographical zones in the state, including the manner in which
funds were expended in the implementation of the plan for the
previous calendar year.
The 2013 CMC budget included expenditures relating to: 1)
Product enhancement; 2) Significant player program: 3) Satellite
marketing; 4) Cal racing web-site; and 5) Administration.
Deteriorating status of the horse racing industry in California :
The California horse racing industry's long-term health is
threatened by a combination of factors, including competition
from racing in other states, other forms of gaming within
California, racetrack bankruptcies and the potential for higher
return from development than operating revenues. As resources
shrink, the industry is experiencing deficits in virtually every
one of its revenue sources. Traditional takeout, allocation and
distribution formulas are no longer able to sustain ongoing
operations. As the value of racing operations declines, track
ownership is struggling to maximize shareholders' return on the
investment and tempted by alternative uses of the property that
yield higher returns. Consequently, the racing industry is
suffering unprecedented instability and capital flight. Tens of
thousands of industry jobs might be in jeopardy, along with
breeding farms and precious open space in urban centers
throughout California. Also at risk is a substantial amount of
local and state revenue generated both directly and indirectly
by the industry.
Prior legislation : AB 1074 (Atkins), Chapter 428, Statutes of
2013. Extended the sunset date on the statewide marketing
organization for one year (from January 1, 2014 to January 1,
2015).
SB 1072 (Ron Calderon), Chapter 283, Statutes of 2010. Among
its provisions, extended the sunset date from January 1, 2011,
to January 1, 2014, in existing law relating to a private
statewide marketing organization to market and promote
thoroughbred and fair horse racing in California, as defined.
AB 1736 (Governmental Organization Committee), Chapter 444,
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Statutes of 2007. Extended "sunset" provisions relating to the
marketing of the California Horse Racing Industry.
SB 27 (Maddy), Chapter 335, Statutes of 1998, Among its
provision, created a private statewide marketing organization
for thoroughbred and fair racing that is funded by .4% of the
instate off-track handle. The funds generated from this
distribution are used to market California horse racing on a
statewide basis. CMC is generally responsible for promoting
horse racing in the state by developing and implementing a
marketing plan that will increase on-track and off-track
attendance throughout the state.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file
Opposition
None on file
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531