BILL ANALYSIS �
SB 721
Page 1
Date of Hearing: June 5, 2014
ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
Hall III, Isadore, Chair
SB 721 (Padilla) - As Amended: June 2, 2014
SENATE VOTE : Not relevant
SUBJECT : Horse racing
SUMMARY : Authorizes the Los Angeles County Fair (LACF), subject
to approval by the California Horse Racing Board (CHRB), to
conduct live racing meetings at another site within or outside
of the County of Los Angeles in accordance with specified
provisions. Specifically, this bill :
1) Provides that the CHRB may permit the LACF to conduct live
racing meetings at another site within or outside the County of
Los Angeles. The fair may conduct its racing dates at a
facility operated by a thoroughbred racing association licensed
to conduct a racing meeting in the southern zone. The bill
further provides, a racing meeting licensed to the fair, may be
operated by the fair, or the fair may contract for the operation
and management of the racing meeting with an individual racing
association that was previously licensed to conduct a racing
meeting, as specified.
2) Broadens the definition of "propositional wagering" to
include wagers on propositions approved by CHRB that are based
on the results of a live thoroughbred horse race, instead of
just quarter horse or harness horse race or races in current
law.
3) Makes minor code maintenance changes to horse racing law by
repealing obsolete references to license fees for racing
meetings at fairs.
EXISTING LAW :
1) 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.
2) Provides that the maximum number of racing weeks that may be
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allocated for horse racing other than at fairs, shall be as
follows: For thoroughbred racing: 44 weeks per year in the
northern zone; and 49 weeks per year in the combined central and
southern zones. From the weeks available in the combined
central and southern zones, the CHRB shall allocate a minimum of
seven weeks per year to a thoroughbred racing association to
conduct thoroughbred racing at a racetrack that was used to
conduct a thoroughbred race meeting in the southern zone prior
to 2012.
3) Provides that from the weeks available in the combined
central and southern zones, the CHRB shall allocate a minimum of
25 weeks per year to a thoroughbred racing association to
conduct thoroughbred racing at a racetrack that was used to
conduct a thoroughbred race meeting in the central zone prior to
2012. From the weeks available in the combined central and
southern zones, the board may allocate a maximum of five weeks
per year to a thoroughbred racing association to conduct
thoroughbred racing at a racetrack in the southern zone that was
not used to conduct a thoroughbred race meeting in the southern
zone prior to 2012.
4) Authorizes any county or district agricultural association
fair conducting racing meetings for the first time on or after
January 1, 1979, to retain the applicable state license fee for
payment of a capital expense loan incurred for the purpose of
preparing its facilities for horse racing.
5) Defines "Propositional pari-mutuel pool" as the total wagers
on propositions approved by CHRB that are based on the results
of a live harness or quarter horse race. The total wagers made
in the proposition pool are subject to the same license fee as
exotic wagers on a live harness or quarter horse race, and
commissions and purses shall be distributed in the amounts
mutually agreed upon by the association and the organization
representing the horsemen and women.
FISCAL EFFECT : Unknown.
COMMENTS :
Purpose of the bill: According to the author's office,
declining daily attendance at California's race tracks has led
to diminished on-track betting revenue which in turn has led to
smaller purses and reduced income for the horsemen involved. SB
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721 will provide the industry with a mechanism to increase track
commissions, purses, and breeder's awards for the participants
in this agribusiness. This bill is intended to preserve jobs
and assure that live horse racing remains economically viable in
southern California.
The Los Angeles County Fair, the sponsor of this bill, states
"that permitting LACF to conduct its 2014 and 2015 race meets at
Los Alamitos Race Course is in the best interest of the public,
fair racing, and the southern California racing circuit. The
future of fair racing at LACF is bleak due, in part, to the
condition of its racing facilities. The newly expanded and
renovated Los Alamitos facility would significantly benefit the
southern California racing circuit by allowing its live race
meet to be held at much improved and more desirable location for
Thoroughbreds, their trainers and owners."
According to the author's office, various sections of California
law reference horse racing license fees in conjunction with the
network of California fairs despite enactment of SB 16xx
(Ashburn), Chapter 12, Statutes of 2009-10 Second Extraordinary
Session. This measure would delete reference to those license
fees.
Lastly, supporters note that the definition of propositional
wagers in current law is restricted to harness or quarter horse
races only, and suggest that propositional wagering
opportunities should be available on Thoroughbred races as well.
The author states that propositional wagers might be a useful
marketing tool to increase public awareness of a special event,
such as the Breeders' Cup, Kentucky Derby or any of the other
Triple Crown races.
Background : For more than 70 years, Fairplex has been the home
of horse racing at the Los Angeles County Fair. In April 2014,
the Los Angeles County Fair (LACF) announced its intention to
transfer its 2014 live racing dates, contingent upon CHRB
approval, to Los Alamitos Race Course in Orange County. The
fair has been granted approval by the CHRB to run an 11-day meet
in 2014 from September 5-21.
Los Alamitos, California's nighttime quarter horse racing
facility was granted Thoroughbred dates in 2014 as part of the
state racing industry's response to the closure of Hollywood
Park. Other dates previously held by Hollywood Park were
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awarded to Del Mar and Santa Anita. The track, located in
Cypress on the northern end of Orange County, was previously
approved for five weeks of racing-two weeks in July and three
more in December. If LACF was to move its dates, the additional
dates would be bring the total to eight weeks of live horse
racing at the facility.
Los Alamitos Race Course recently expanded its main oval from
five furlongs to nearly a mile and is making grandstand
renovations for their race meet which begins on July 3, 2014.
The track is also in the process of adding stalls on the
backstretch to accommodate up to 700 additional horses.
Temporary stalls could make room for as many as 900 horses
during the running of meets. Los Alamitos does not have a turf
course.
The potential transfer of fair racing dates to Los Alamitos
continues an ever-evolving year of change for Thoroughbred
racing in Southern California. Hollywood Park closed its barn
area in January, leading to an expansion of Thoroughbred
training at Los Alamitos, Fairplex Park, and the San Luis Rey
Downs training center in northern San Diego County.
According to the Los Angeles County Fair, "the fair has enjoyed
a long and proud history of horse racing here at Fairplex, but
with the limitations of our facility we made a strategic
decision for the continued growth of the industry to reach out
to Los Alamitos and seek to move our dates to their facility.
By moving our dates to a new market on a one-mile track we think
we can grow on the past success of our race meet."
The LACF notes that "its facilities are marginally adequate for
"fair racing," but not for Thoroughbred racing at the highest
level. LACF does not have the capital and financial resources
necessary to upgrade its existing facilities to a premier level.
The costs of such necessary upgrades, including expenses
associated with necessary compliance with the Clean Water Act
which would be required for year around use, have been
previously reviewed and evaluated, and are estimated to be $40
million or more. Even if the necessary capital was available,
such an investment could not be economically justified."
Lastly, LACF notes during the past five years, on-track handle
decreased by 35%, while total fair attendance increased by 5%.
The LACF will continue to offer wagering on horse racing via
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satellite at its Finish Line Sports Grill.
Supporters conclude by moving the fair's race dates to Orange
County, Los Alamitos will be able to attract more horses to
race, induce more patrons to attend the races while increasing
the size of the handle (money bet) compared to operating a live
race meet at LACF.
California's Horse Racing Industry : 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.
There is an abundance of testimony in the legislative record
regarding the economic condition of the horseracing industry,
and specifically, the direct economic impact it has on the state
of California. Nonetheless, there are many questions that need
to be answered if this agribusiness is to remain viable for
generations to come.
Prior legislation : AB 1303 (Hall), Chapter 7, Statutes of 2014.
Allowed a racing association to enter into an agreement to
operate a live race meet at a fair (Alameda County Fair) in the
northern zone provided the CHRB grants approval.
AB 1074 (Adkins), Chapter 428, Statutes of 2013. Authorized the
CHRB to allocate a maximum of five weeks per year to a
thoroughbred racing association to conduct thoroughbred racing
at a racetrack on the southern zone that was not used to conduct
a thoroughbred race meeting in the southern zone prior to 2012.
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AB 2205 (Garrick), Chapter 448, Statutes of 2008. Authorized
the CHRB to allocate dates to licensed associations or racing
fairs in the southern or central zone if a venue used for
Thoroughbred racing by an association or racing fair licensed to
conduct Thoroughbred racing in the central zone in 2008 is not
available for racing in 2009 or thereafter.
AB 241 (Price), Chapter 594, Statutes of 2007. Provided that
any racetrack in the central zone that conducted racing in 2007,
but has since closed may continue to operate a satellite
wagering. If the racetrack site is no longer available for use
as a satellite wagering facility, then the owner of the
racetrack may conduct satellite racing at another location
within that city, subject to approval of CHRB, as specified.
REGISTERED SUPPORT / OPPOSITION :
Support
Del Mar Thoroughbred Club
Los Angeles County Fair
Oak Tree Racing Association
Thoroughbred Owners of California
Opposition
None on file
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531