BILL NUMBER: AB 471 AMENDED BILL TEXT AMENDED IN SENATE JUNE 7, 2001 INTRODUCED BY AssemblyMember AronerMembers, Hertzberg, Wesson, and Aroner (Coauthors: Senators Burton and Vincent) FEBRUARY 21, 2001An act to amend Section 19611.5 of the Business and Professions Code, relating to horse racing.An act to amend Sections 19461, 19481.5, and 19556 of, to add Sections 19461.5, 19526, 19613.8, and 19641.2 to, to add Article 2.5 (commencing with Section 19455) to Chapter 4 of Division 8 of, to amend, repeal, and add Sections 19411, 19590, 19595, and 19613 to, and to add and repeal Section 19601 of, the Business and Professions Code, relating to horse racing. LEGISLATIVE COUNSEL'S DIGEST AB 471, as amended, Aroner. Horse racing: distribution of handle. (1) Existing law authorizes wagering on the result of live and simulcast horse races, subject to the regulation and oversight of the California Horse Racing Board, and requires the licensure of various persons and entities associated with this industry. Existing law also imposes specified requirements on the operation of race tracks, backstretch facilities, and stabling and vanning services, and establishes pension funds and welfare funds for the benefit of backstretch personnel and horsemen. This bill would state findings and declarations of the Legislature regarding the employment rights of racetrack backstretch employees, and direct the California Horse Racing Board to oversee the conduct of a union and multiemployer collective bargaining agent recognition procedure subject to specified conditions and procedures, provide for resultant labor agreements to be binding on the parties, and establish reasonable rules to regulate the time, place, and manner of representational meetings within the racetrack enclosure. This bill would also authorize individual trainers to opt out of the multiemployer bargaining process, subject to specified conditions, and require each trainer to keep accurate payroll records for all of his or her employees, subject to audit by the Labor Commissioner as specified, containing specified information and signed declarations made under penalty of perjury, which would be available for inspection by, or furnished to, the employee, his or her authorized representative, the board, the administrators of specified pension and health and welfare funds, or the Division of Labor Standards Enforcement of the Department of Industrial Relations. By requiring these declarations to be made under penalty of perjury, this bill would create a crime and thereby impose a state-mandated local program. (2) Existing law provides that every license granted under the Horse Racing Law is subject to suspension or revocation in any case where the board has reason to believe that any condition regarding the license has not been complied with, or that any provision of law or any rule or regulation of the board affecting it has been broken or violated. This bill would expand this suspension and revocation authority to expressly include violations of the Labor Code and regulations adopted thereunder. This bill would also provide that upon a finding by the Labor Commissioner that a violation of any provision of the Labor Code under his or her jurisdiction has been committed by a person licensed under the Horse Racing Law, that upon expiration of the applicable period for appeal he or she shall notify the board of that finding. (3) Existing law provides that no license to conduct a horse racing meeting shall be issued unless the track has been inspected and approved by the board as to specified racetrack safety standards within 30 days prior to the date of application. This bill would additionally provide that the board shall, within 120 days of the effective date of this act, adopt emergency regulations, as specified, to establish employee housing standards at licensed racetracks, which shall be replaced by final, permanent regulations with 18 months thereafter, which racing associations shall be in compliance with by January 1, 2004, and as of that date would require the board, in conjunction with the Department of Housing and Community Development or a local housing authority in that jurisdiction, to annually inspect the living conditions of backstretch employee housing and submit these findings to the board. The bill would provide that no license to conduct a horse racing meeting shall be issued to a racing association unless the board has inspected the housing conditions that exist on that track's backstretch and determined them to be in compliance with these standards. (4) Existing law permits any racing association in this state, with the approval of the California Horse Racing Board, to accept out-of-state wagers on a race or races conducted by or disseminated by that association and to transmit live audiovisual signals of the race or races to locations out of state. Existing federal law, the Federal Interstate Wire Act, generally prohibits the transmission in interstate commerce of wagers using a wire communication facility, but allows for the transmission of wagering information as specified. This bill would state findings and declarations of the Legislature regarding online wagering and account wagering. This bill would authorize any racing association or fair to accept advance deposit wagers, or to allow these wagers through a betting system or multijurisdictional wagering hub, during the calendar period of its live racing meeting upon approval by the board, and to form partnerships, joint ventures, or any other affiliation to further this purpose. The bill would provide that an advance deposit wager is a method of making a parimutuel wager in which a person in California or elsewhere establishes an account with a licensee, betting system, or multijurisdictional wagering hub, and subsequently issues wagering instructions concerning the funds in this account, thereby authorizing the entity holding the account to place wagers on the account owner's behalf. The bill would provide that wagering instructions may be communicated by telephone call or through other electronic media, and that the entity holding the account shall ensure the identification of the account's owner by utilizing methods and technologies approved by the board. The bill would require entities holding advance wagering accounts to provide a full accounting of deposits and wagers, as specified, and after the payment of winning wagers and the deduction of contractual compensation and a host fee, where applicable, to pay the remaining amount to various racing entities in California, with specified percentages based on the amount handled on advance deposit wagers that originate in California for each race meeting to be dedicated to the Kenneth L. Maddy Fund for equine health, payment of auditing costs incurred pursuant to (1), the augmentation of compulsive gambling prevention programs, and the augmentation of an existing welfare fund and existing pension plans benefiting backstretch personnel, with the remaining funds to be distributed as commissions, purses, and incentive awards, as specified. The bill would require the board to develop and adopt rules to regulate and license advance deposit wagering operations, security, and advertising, and would require that entities conducting advance deposit wagering conducted in California enter into contractual agreements with labor organizations, as specified. This bill would repeal these provision on January 1, 2008. (5) Existing law defines "parimutuel wagering" as wagering where bettors purchase tickets, and provides that lawful parimutuel wagering shall only be conducted within the inclosure of a licensee. This bill would provide that the term "parimutuel wagering" includes the issuance of wagering instructions leading to the placement of wagers, and that wagering instructions concerning funds held in an advance deposit wagering account shall be deemed to be issued within the licensee's inclosure, in accordance with (1). This bill would repeal this provision on January 1, 2008. (6) Existing law requires each licensed racing association to designate a certain number of racing days to be conducted as charity days for the purpose of the distribution of the net proceeds therefrom to beneficiaries, and requires that at least 20% of the distributions therefrom to be made to charities associated with the horse racing industry. This bill would increase this distribution requirement to 50%. This bill would also specify that an existing specified backstretch employee welfare fund shall be a health and welfare trust fund administered without prejudice for the benefit of every eligible person, that the fund and benefits shall be administered in accordance with specified standards established in federal law, subject to oversight and regulation of the board, and that the welfare fund board be expanded, by March 1, 2002, to include 2 additional groom and stable employee licenses, also would be replaced by designees of a labor union with 60 days of that union having been chosen as the exclusive collective bargaining agent of a statewide majority of backstretch workers. (7) Existing law provides that racing associations and fairs shall pay, from the portion deducted for purses, an amount equal to 1% of that portion for a pension plan for backstretch personnel to be administered by the respective trainers' organizations. This bill would provide that within 60 days of a union having been chosen as the exclusive collective bargaining agent for a statewide majority of backstretch workers these funds shall instead be directed to a pension plan for backstretch personnel established by a plan submitted by trainers' organizations as specified which shall be administered by a joint labor-management committee consistent with specified provisions of federal law. (8) This bill would provide that its provisions are severable as specified. (9) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason.Existing law permits every association other than a fair that conducts a thoroughbred race meeting to deduct from the total amount handled in daily double, quinella, exacta, and other multiple wagering pools approved by the board up to 3% thereof to be distributed 50% as commissions and 50% as purses. This bill would change the percentage to up to 4%.Vote: majority. Appropriation: no. Fiscal committee:noyes . State-mandated local program:noyes . THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:SECTION 1. Section 19611.5 of the Business and ProfessionsSECTION 1. Section 19411 of the Business and Professions Code is amended to read: 19411. "Parimutuel wagering" is a form of wagering in which bettors either purchase tickets of various denominations , or issue wagering instructions leading to the placement of wagers, on the outcome of one or more horse races. When the outcome of the race or races has been declared official, the association distributes the total wagers comprising each pool, less the amounts retained for purposes specified in this chapter, to winning bettors. This section shall remain in effect only until 2008, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2008, deletes or extends that date. SEC. 1.5. Section 19411 is added to the Business and Professions Code, to read: 19411. "Parimutuel wagering" is a form of wagering in which bettors either purchase tickets of various denominations on the outcome of one or more horse races. When the outcome of the race or races has been declared official, the association distributes the total wagers comprising each pool, less the amounts retained for purposes specified in this chapter, to winning bettors. This section shall become operative on January 1, 2008. SEC. 2. Article 2.5 (commencing with Section 19455) is added to Chapter 4 of Division 8 of the Business and Professions Code, to read: Article 2.5. Backstretch Worker Labor Relations 19455. (a) The Legislature finds and declares that Section 923 of the Labor Code recognizes that it is necessary that the individual worker have full freedom of association, self-organization, and designation of representatives of his or her own choosing, to negotiate the terms and conditions of his or her employment, and that he or she shall be free from the interference, restraint, or coercion of employers of labor, or their agents, in the designation of such representatives or in self-organization or in other concerted activities for the purpose of collective bargaining. (b) The Legislature finds that the National Labor Relations Board has formally declined to assert jurisdiction over horse racing because of extensive state control over the industry, the dominant pattern of sporadic short-term employment which poses problems for the effective enforcement of the National Labor Relations Act, and a unique and special relationship that has developed between the states and the industry. (c) It is the intent of the Legislature to establish an orderly procedure for backstretch employees to exercise their statutory rights to organize a labor union, in order to reduce the prospect of any strikes, disruptions, or economic action that would interfere with the operation of horse racing meetings in California. (d) Except as provided in subdivision (e), the board shall oversee the conduct of a union recognition procedure for backstretch employees under the following conditions: (1) Employees shall have the right to join, or refuse to join, a labor organization for purposes of collective bargaining and mutual aid and protection. Existing state-recognized organizations of trainers or horsemen established pursuant to the Horse Racing Law shall not use funds derived or distributed from parimutuel wagering pursuant to state law to advocate or advance any position with respect to unionization of employees. Individual trainers and horsemen, and their agents, shall not coerce or threaten any employee of any trainer or horseman in the context of an effort to obtain or revoke an employee authorization card with respect to selection by any backstretch employee of any labor union or collective bargaining agent. No employee shall be discharged or discriminated against for expressing any opinion concerning the selection of a labor union or collective bargaining agent for employees under this article. (2) The labor union and its representatives shall not coerce or threaten any employee of any trainer or horseman in the context of an effort to obtain or revoke authorization cards. The union and its representatives shall not interfere with the work of any employee, but shall have reasonable access to backstretch workers within the enclosure during working and nonworking hours, as determined by the board. (3) Within 30 days of a request, the board shall provide the labor union with a list of all backstretch workers including the type of license they hold, their employer, the location at which they are employed, and their address and telephone number. The board may require of any licensee information in the licensee's possession necessary to comply with this requirement. (4) The labor union may request board recognition as the exclusive bargaining agent for employees in any appropriate bargaining unit or of any employer, subject to the provisions and procedures described in paragraph (5). The Executive Director of the Board, or a disinterested neutral party selected by the Executive Director, shall have the authority to investigate and determine the validity of employee authorization cards submitted pursuant to this section, and shall conduct a review of cards submitted by a union in support of its claim to represent the majority of employees of an individual employer or the majority of employees within a bargaining unit approved by the board pursuant to paragraph (5). In the case of thoroughbred racing, a labor union may request recognition as the exclusive bargaining agent for backstretch employees by racetrack or by geographical zone, as defined in Section 19530.5; in the case of harness and quarter horse racing, a labor union may request recognition as the exclusive bargaining agent for backstretch employees by racetrack; in the case of fairs, a labor union may request recognition as the exclusive bargaining agent for backstretch employees by geographical zone, by fair, or by groups of fairs. "Appropriate bargaining unit" includes any community of interest of backstretch workers, including, but not limited to, geographic, occupational, and type of horse racing. "Backstretch employee" means a groom or stable employee licensed by the board pursuant to subdivision (c) of Section 1481 of Division 4 of Title 4 of the California Code of Regulations. (5) The board, by regulation, shall establish procedures for the recognition of collective bargaining representatives for both backstretch workers and the employers of those workers. In all matters pertaining to the rights established pursuant to this article, the board, upon the complaint of a party, shall have the authority to fashion an appropriate remedy, including the issuance of a make-whole remedy in the event of persistent failure of a party to bargain in good faith. Nothing in this section shall prohibit the board from requiring the parties to any dispute to submit the issue to binding arbitration pursuant to paragraph (8). In addition, the board shall use the California State Mediation and Conciliation Service for all appropriate purposes, including operations related to the conduct of recognition procedures and elections. (A) With respect to backstretch workers, a labor organization seeking recognition as the collective bargaining agent for these workers shall collect signed cards indicating individual worker's intent to be represented by that organization for collective bargaining purposes and submit those cards to the board for review and validation by the executive director. A labor union is free to define the characteristics of a potential collective bargaining unit subject to approval by the board pursuant to paragraph (4). Upon submission, review, and validation of cards indicating that a majority of employees within a defined unit wish to be represented by that union, the board shall recognize that union as the exclusive collective bargaining agent for those workers, and issue an order to affected employers to begin good faith negotiations for approval of employment agreements pursuant to the procedures described in subparagraphs (B) and (C). Employee authorization cards collected for purposes of this paragraph shall be deposited with the board and shall remain valid for one year starting on the date that the submitting labor organization is granted permission by the board to begin organizing activities in a given location, facility, region, or unit. After the expiration of this period, no further organizing efforts may be conducted with respect to that location, facility, region, or unit for a period of one year. Employee authorization cards may be revoked by the employee at any time prior to final certification of the union as his or her exclusive collective bargaining agent with respect to his or her employer. (B) Upon the recognition of a union as the exclusive collective bargaining agent for a given unit of backstretch workers, the Executive Director of the board shall identify the trainers and horsemen employing those workers, provide this information to the union, and may conduct an election among those employers for the selection of a designated agent or agents to represent the interests of participating employers in a multiemployer employment agreement with the union. Each voting employer shall be allotted one vote per employee within the collective bargaining unit, and the agent or agents receiving the largest plurality of votes shall be designated by the board as representing the participating employers. The agent or agents negotiating on behalf of the participating employers are expressly authorized to organize collective bargaining committees, approved by the board, that reflect the differences and circumstances of individual trainers, and are free to negotiate terms that provide varying wages and conditions of employment based on the economic circumstances of individual trainers. Any employer may opt out of these multiemployer bargaining procedures subject to the provisions of subparagraph (C). (C) If an individual employer of backstretch workers declines to be represented in the multiemployer collective bargaining procedure described in subparagraph (B), and a majority of that particular employer's workers within the identified unit had submitted valid cards indicating their intent to be represented by the union, the board shall certify the union as the collective bargaining agent of those workers and shall issue an order to begin good faith negotiations for employment agreements on an individual employer basis. If less than a majority of the opting-out employer's workers within the identified unit had submitted valid cards indicating their intent to be represented by the union, that employer shall not be subject to a bargaining order issued by the board, but may voluntarily agree to negotiate collectively with the union if it so desires, and an organizing union may continue to seek and submit employee authorization cards on an individual employer basis for purposes of recognition and mandatory negotiation under this subparagraph until the expiration of the one year period identified in subparagraph (A). The board may provide mediation and conciliation services upon request of the parties at any time. If an employer is required under this subparagraph to collectively bargain with the union, and the parties do not reach an agreement within 90 days of the order, the board shall require the parties to participate in mandatory mediation and conciliation services for a period of 30 days. If no agreement results from this mediation, either or both parties may declare an impasse. Upon a party's declaration of an impasse, the Executive Director of the Board shall appoint an arbitrator from a panel of professional arbitrators with expertise in labor negotiations selected by the California State Mediation and Conciliation Service to determine the issues and issue a final and binding order establishing the terms of a collective bargaining agreement. The cost of this arbitration shall be shared equally by the union and employer. (6) No labor agreement under this article shall apply to any trainer or horseman with respect to employment associated with fair meetings prior to January 1, 2003. After this date, employees shall be added by accretion into an existing contract where applicable. This section shall not apply to employers whose trainers, backstretch workers, or both, normally reside and work outside of California and who are engaged in racing in this state for a limited period of time not exceeding 90 racing days in any calendar year. (7) At any time subsequent to the expiration of an agreement under paragraph (5), when the agreement is not in effect, the board may recognize a majority interest, obtained during this period in the same manner as union recognition of employees, within a unit who no longer desire to be represented by the union, and withdraw the recognition granted pursuant to this section from that union. An employer may inform his or her employees that a process for decertification exists and direct them to the board for information. However any card, signature, vote, or other indicator obtained for this purpose by means of coercion or threat or with the assistance or inducement of any employer shall be invalid. (8) Disputes, other than disputes concerning the operation and application of ongoing contracts, disputes subject to binding interest arbitration pursuant to subparagraph (C) of paragraph (5), and economic disputes arising in the context of multiemployer bargaining pursuant to subparagraph (B) of paragraph (5), but including disputes concerning the rights established in paragraphs (1) and (2), upon complaint shall be adjudicated by the board, and the board may require the parties to submit the issue to binding arbitration subject to judicial review in the same manner as decisions of the board. Disputes subject to this paragraph include disputes involving any backstretch employee or group of employees, and any trainer or group of trainers. Upon submission of a complaint to binding arbitration, the board shall select an arbitrator who is mutually accepted by the affected parties, with hearing to be held within 72 hours of written notice to the parties. If the parties are unable to reach agreement prior to the commencement of arbitration, the board shall provide the parties with a list of qualified arbitrators, from which the parties shall alternately strike an equal number of names until one remains, who shall be the selected arbitrator. The selected arbitrator shall have the authority to order any remedy, including injunctive relief, damages, and attorney' s fees. Either party may bring an action in state court to compel a party to go to arbitration or to enforce the decision of the arbitrator, and the board may take administrative action as necessary to ensure this paragraph is complied with. The board may delegate all or part of its authority under this paragraph to the executive director. Costs of arbitration shall be shared equally by the parties, and any party shall be entitled to recover any reasonable fees or costs incurred in securing compliance with or enforcement of an award or order of the arbitrator. (e) Nothing in this section shall prevent a labor union and an individual trainer, or any group of trainers, from entering into a mutually acceptable agreement, which may substitute for the requirements of subdivision (d), for union organizing of employees of the horsemen or trainers. Nothing in this article shall be interpreted to require representative parties in negotiation to enter into any labor agreement, as long as each party is negotiating in a good faith effort to reach an agreement. 19455.2. (a) The board shall provide for labor agreements under this article to be binding upon every applicable licensee. (b) No horseman or trainer who has a separate agreement with the exclusive representative labor union shall be required to be a party to a multiemployer collective bargaining agreement. 19455.4. The board may establish reasonable rules to regulate the time, place, and manner for representatives of labor unions to meet backstretch workers within the enclosure during working and nonworking hours. With the approval of the board, these regulations may be superceded by collective bargaining agreements between horsemen's organizations or trainers' organizations and labor organizations. SEC. 3. Section 19461 of the Business and Professions Code is amended to read: 19461. Every license granted under this chapter is subject to suspension or revocation by the board in any case where the board has reason to believe that any condition regarding it has not been complied with , or that any law , including the Labor Code and the regulations adopted thereunder, or any rule or regulation of the board affecting it has been broken or violated. All proceedings to revoke a license shall be conducted in accordance with Chapter 5 of Part 1 of Division 3 of Title 2 of the Government Code. SEC. 4. Section 19461.5 is added to the Business and Professions Code, to read: 19461.5. Upon a finding by the Labor Commissioner that a violation of any provision of the Labor Code, within the jurisdiction of the Labor Commissioner, has been committed by a person licensed pursuant to this chapter in the course of such licensed activity, the Labor Commissioner shall, upon expiration of the applicable period for appeal, notify the board of that finding. SEC. 5. Section 19481.5 of the Business and Professions Code is amended to read: 19481.5. (a) Notwithstanding any other provision of law, no license shall be issued to conduct a horse racing meeting upon a track unless the track has been inspected by the board within 30 days prior to the date of application for a license and the track has been approved by the board as conforming to the racetrack safety standards set forth in subdivision (a) of Section 19481, and the board determines that the proposed licensee is in substantial compliance with all of the rules and regulations of the board and the provisions of this chapter. (b) The board shall, within 120 days of the effective date of this subdivision, adopt emergency regulations in accordance with the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) to establish standards governing the employee housing provided to backstretch personnel at licensed racetracks. These regulations shall be deemed to be an emergency and necessary for the immediate preservation of the public peace, health and safety, or general welfare, shall be commensurate with the housing standards established in the Employee Housing Act (commencing with Section 17000 of Division 13 of the Health and Safety Code), and shall consider the following: (1) The health and safety of the human and equine population and the necessity for humans and horses to live in close proximity. (2) The housing needs of state or county facilities with live racing meeting of no more than 43 days in duration that do not operate as year-round training facilities. The board shall specifically consider the different needs of these facilities compared to permanent facilities or other state and county facilities that function on a year-round basis, including state and county fair facilities that operate as a year-round training facilities where horses are stabled and workers live. (3) Compliance of facilities with racing meetings of 19 days or less to this subdivision shall be contingent on funding in the 2002-03 Budget Act. These emergency regulations shall be submitted to the Office of Administrative Law for filing with the Secretary of State and publication in the California Code of Regulations and shall be replaced by final, permanent regulations within 18 months of their adoption. Every racing association shall be in compliance with these housing standards by January 1, 2004. (c) Commencing January 1, 2004, the board, in conjunction with the California Department of Housing and Community Development or a local housing authority for the jurisdiction in which the race track is located, shall annually inspect the living conditions of backstretch employee housing to ensure compliance with the housing standards established by the board, the findings or results of which shall be submitted to the board. No license shall be issued to a racing association to conduct a horse race meeting unless the board has inspected the housing conditions that exist on the race track's backstretch and determined the living conditions to be in compliance with the standards established by the board in subdivision (b). (d) The board may assess a reasonable fee upon racing associations to defray the costs associated with the inspections provided for in subdivision (c). SEC. 6. Section 19526 is added to the Business and Professions Code, to read: 19526. (a) Each trainer shall keep accurate payroll records, showing the name, address, social security number, work classification, straight time and overtime hours worked each day and week, paid to each of his or her employees. Each payroll record shall contain both of the following signed declarations by the trainer, which shall be made under penalty of perjury: (1) That the information contained in the payroll record is true and correct. (2) That the employer has complied with the requirements of Labor Code and applicable wage orders of the Industrial Welfare Commission. (b) The payroll records enumerated under subdivision (a) shall be certified and shall be available for inspection at all reasonable hours at the principal office of the trainer on the following basis: (1) A certified copy of an employee's payroll record shall be made available for inspection or furnished to the employee or his or her authorized representative upon request. (2) A certified copy of all payroll records enumerated in subdivision (a) shall be made available for inspection or furnished upon request to the board and the Division of Labor Standards Enforcement of the Department of Industrial Relations. (3) On or before January 31 of each year, each trainer shall provide copies of federal W-2 and 1099 tax forms for his or her backstretch employees for the previous calendar year to the administrator of the pension fund for backstretch employees. (c) The certified payroll records described in this section shall be on forms provided by the Division of Labor Standards Enforcement or shall contain the same information as the forms provided by the division. (d) A trainer shall file a certified copy of the records enumerated in subdivision (a) to an employee or his or her authorized representative within 10 days after receipt of a written request. (e) The trainer shall inform the board of the location of the records enumerated under subdivision (a), including the street address, city and county, and shall, within five working days, provide a notice of a change of location and address. (f) In addition to any other penalty imposed by law, any trainer who fails to provide access to the records enumerated in subdivision (a) to the board, the employee or his or her authorized representative, the administrator of the pension or welfare funds, or to the Division of Labor Standards enforcement as required by law shall be subject to suspension of his or her license. (g) Except for trainers covered by an operative collective bargaining agreement pursuant to Section 19613.7, the board shall require, as a condition of issuing or renewing a trainer's license, that the trainer annually submit a certified declaration that they have maintained true and correct payroll records and have complied with the requirements of the Labor Code and applicable wage orders of the Industrial Welfare Commission. (h) The Labor Commissioner shall establish and maintain a program to audit the certified payroll records of trainers who are not parties to a collective bargaining agreement entered pursuant to Article 2.5 (commencing with Section 19455) and who operate in California for 90 or more racing days in a calendar year, in a manner to ensure that every subject licensee is audited at least once prior to January 1, 2006, and as necessary thereafter to ensure that at least 15 percent of subject trainers are audited each year as part of an ongoing program. Evidence of substantial noncompliance with the Labor Code and applicable wage orders of the Industrial Welfare Commission shall be referred by the board to the Labor Commissioner. SEC. 7. Section 19556 of the Business and Professions Code is amended to read: 19556. (a) The distribution shall be made by the distributing agent to beneficiaries qualified under this article. For the purposes of this article, a beneficiary shall be all of the following: (1) A nonprofit corporation or organization entitled by law to receive a distribution made by a distributing agent. (2) Exempt or entitled to an exemption from taxes measured by income imposed by this state and the United States. (3) Engaged in charitable, benevolent, civic, religious, educational, or veterans' work similar to that of agencies recognized by an organized community chest in the State of California, except that the funds so distributed may be used by the beneficiary for capital expenditures. (4) Approved by the board. (b) At least2050 percent of the distribution shall be made to charities associated with the horse racing industry. No beneficiary otherwise qualified under this section to receive charity day net proceeds shall be excluded on the basis that the beneficiary provides charitable benefits to persons connected with the care, training, and running of racehorses, except that type of beneficiary shall make an accounting to the board within one calendar year of the date of receipt of any distribution. SEC. 8. Section 19590 of the Business and Professions Code is amended to read: 19590. The board shall adopt rules governing, permitting, and regulating parimutuel wagering on horse races under the system known as the parimutuel method of wagering.SuchParimutuel wagering shall be conducted only by a person licensed under this chapter to conduct a horse racing meeting, and only within theinclosureenclosure and on the dates for which horse racing has been authorized by the board. Wagering instructions concerning funds held in an advance deposit wagering account shall be deemed to be issued within the licensee's enclosure. This section shall remain in effect only until January 1, 2008, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2008, deletes or extends that date. SEC. 8.5. Section 19590 is added to the Business and Professions Code, to read: 19590. The board shall adopt rules governing, permitting, and regulating wagering on horse races under the system known as the parimutel method of wagering. Such wagering shall be conducted only by a person licensed under this chapter to conduct a horse racing meeting, and only within the enclosure and on the dates for which horse racing has been authorized by the board. This section shall become operative on January 1, 2008. SEC. 9. Section 19595 of the Business and Professions Code is amended to read: 19595. Any form of wagering or betting on the result of a horse race other than that permitted by this chapter is illegal. Also illegal is any wagering or betting on horse races outside aninclosureenclosure where the conduct of horse racing is licensed by the board. Wagering instructions concerning funds held in an advance deposit wagering account shall be deemed to be issued within the licensee's enclosure. This section shall remain in effect only until January 1, 2008, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2008, deletes or extends that date. SEC. 9.5. Section 19595 is added to the Business and Professions Code, to read: 19595. Any form of wagering or betting on the result of a horse race other than that permitted by this chapter is illegal. Also illegal is any wagering or betting on horse races outside an enclosure where the conduct of horse racing is licensed by the board. This section shall become operative on January 1, 2008. SEC. 10. Section 19604 is added to the Business and Professions Code, to read: 19604. Notwithstanding any other provision of law, in addition to parimutuel wagering otherwise authorized by this chapter, advance deposit wagering may be conducted upon approval of the board. The board may authorize any racing association or fair, during the calendar period it is licensed by the board to conduct a live racing meeting in accordance with the provisions of Article 4 (commencing with Section 19480), to accept advance deposit wagers or to allow these wagers through a betting system or a multijurisdictional wagering hub in accordance with the following: (a) Racing associations and racing fairs may form a partnership, joint venture, or any other affiliation in order to further the purposes of this section. (b) As used in this section, "advance deposit wagering" means a form of parimutuel wagering in which a person residing within California or outside of this state establishes an account with a licensee, a board-approved betting system, or a board-approved multijurisdictional wagering hub located within California or outside of this state, and subsequently issues wagering instructions concerning the funds in this account, thereby authorizing the entity holding the account to place wagers on the account owner's behalf. An advance deposit wager may be made only by the entity holding the account pursuant to wagering instructions issued by the owner of the funds communicated by telephone call or through other electronic media. The licensee, a betting system, or a multijurisdictional wagering hub shall ensure the identification of the account's owner by utilizing methods and technologies approved by the board. Further, at the request of the board, any licensee, betting system, or multijurisdictional wagering hub located in California, and any betting system or multijurisdictional wagering hub located outside of this state that accepts wagering instructions concerning races conducted in California or accepts wagering instructions from California residents, shall provide a full accounting and verification of the source of the wagers thereby made, including the zone and breed, in the form of a daily download of parimutuel data to a database designated by the board. Additionally, when the board approves a licensee, a betting system, or a multijurisdictional wagering hub, whether located within California or outside of this state, to accept advance deposit wagering instructions on any race or races from California residents, the licensee, betting system, or multijurisdictional wagering hub may be compensated pursuant to a contractual agreement with a California licensee, in an amount not to exceed 6.5 percent of the amount handled on a race or races conducted in California, and in the case of a race or races conducted in another jurisdiction, may be compensated in an amount not to exceed 6.5 percent, plus a fee to be paid to the host racing association not to exceed 3.5 percent, of the amount handled on that race or races. The amount remaining after the payment of winning wagers and after payment of the contractual compensation and host fee, if any, shall be distributed as a market access fee in accordance with subdivision (g). As used in this section, "market access fee" means the contractual fee paid by a betting system or multijurisdictional wagering hub to the California licensee for access to the California market for wagering purposes. As used in this section, "licensee" means any racing association or fair, or affiliation thereof authorized in subdivision (a). (c) (1) The board shall develop and adopt rules to license and regulate all phases of operation of advance deposit wagering for licensees, betting systems, and multijurisdictional wagering hubs located in California. Betting systems and multijurisdictional wagering hubs located and operating in California shall be approved by the board prior to establishing advance deposit wagering accounts or accepting wagering instructions concerning those accounts and shall enter into a written contractual agreement with the bona fide labor organization that has historically represented the same or similar classifications of employees at the nearest horse racing meeting. Permanent state or county employees and nonprofit organizations that have historically performed certain services at county, state, or district fairs may continue to provide those services, notwithstanding this requirement. (2) The board shall develop and adopt rules and regulations requiring betting systems and multijurisdictional wagering hubs to establish security access policies and safeguards, including, but not limited to, the following: (A) The betting system or wagering hub shall utilize the services of a board-approved independent third party to perform identity, residence, and age verification services with respect to persons establishing an advance deposit wagering account. (B) The betting system or wagering hub shall utilize personal identification numbers (PINs) and other technologies to assure that only the accountholder has access to the advance deposit wagering account. (C) The betting system or wagering hub shall provide for withdrawals from the wagering account only by means of a check made payable to the accountholder and sent to the address of the accountholder or by means of an electronic transfer to an account held by the verified accountholder. (D) The betting system or wagering hub shall allow the board access to its premises to visit, investigate, and place expert accountants and other persons it deems necessary for the purpose of ensuring that its rules and regulations concerning credit authorization, account access, and other security provisions are strictly complied with. (3) The board shall prohibit advance deposit wagering advertising that it determines to be deceptive to the public. The board also require, by regulation, that every form of advertising contain a statement that minors are not allowed to open or have assess to advance deposit wagering accounts. (d) As used in this section, a "multijurisdictional wagering hub" is a business conducted in more than one jurisdiction that facilitates parimutuel wagering on races it simulcasts and other races it offers in its wagering menu. (e) As used in this section, a "betting system" is a business conducted exclusively in this state that facilitates parimutuel wagering on races it simulcasts and other races it offers in its wagering menu. (f) In order for a licensee, betting system, or multijurisdictional wagering hub to be approved by the board to conduct advance deposit wagering, it shall meet both of the following requirements: (1) All wagers thereby made shall be included in the appropriate parimutuel pool of the host racing association or fair under a contractual agreement with the applicable California licensee, in accordance with the provisions of this chapter. (2) The amounts deducted from advance deposit wagers shall be in accordance with the provisions of this chapter. (g) The amount received as a market access fee from advance deposit wagers shall be distributed as follows: (1) An amount equal to .0011 percent of the amount handled on advance deposit wagers originating in California for each race meeting shall be distributed to the Center for Equine Health to establish the Kenneth L. Maddy Fund for the benefit of the School of Veterinary Medicine at the University of California at Davis. (2) An amount equal to .0003 percent of the amount handled on advance deposit wagers originating in California for each race meeting shall be distributed to the Department of Industrial Relations to cover costs associated with audits conducted pursuant to Section 19526, however, if that amount would exceed the costs of the Department of Industrial Relations, the amount distributed to the department shall be reduced, and that reduction shall be forwarded to an organization designated by the racing association or fair described in subdivision (a) for the purpose of augmenting a compulsive gambling prevention program specifically addressing that problem. (3) An amount equal to .00165 of the amount handled on advance deposit wagers that originate in California for each race meeting shall be distributed as follows: (A) One-half of the amount shall be distributed to supplement the trainer-administered pension plans for backstretch personnel established pursuant to Section 19613. Moneys distributed pursuant to this subparagraph shall supplement, and not supplant, moneys distributed to that fund pursuant to Section 19613 or any other provision of law. (B) One-half of the amount shall be distributed to the welfare fund established for the benefit of horsemen and backstretch personnel pursuant to subdivision (b) of Section 19641. Moneys distributed pursuant to this subparagraph shall supplement, and not supplant, moneys distributed to that fund pursuant to Section 19641 or any other provision of law. (4) With respect to wagers on each breed of racing that originate in California, an amount equal to 2 percent of the first two hundred fifty million dollars ($250,000,000) of handle from all advance deposit wagers originating from within California annually, an amount equal to 1.5 percent of the next two hundred fifty million dollars ($250,000,000) of handle from all advance deposit wagers originating from within California annually, and an amount equal to 1 percent of handle from all advance deposit wagers originating from within California in excess of five hundred million dollars ($500,000,000) annually, shall be distributed as satellite wagering commissions. The satellite wagering facility commissions calculated in accordance with this subdivision shall be distributed to each satellite wagering facility and racing association or fair in the zone in which the wager originated in the same relative proportions that the satellite wagering facility or the racing association or fair generated satellite commissions during the previous calendar year. For purposes of this section, the purse funds distributed pursuant to Section 19605.72 shall be considered to be satellite wagering facility commissions attributable to thoroughbred races at the locations described in that section. (5) With respect to wagers on each breed of racing that originate in California for each race meeting, after the payment of contractual obligations to the licensee, the betting system, or the multijurisdictional wagering hub, and the distribution of the amounts set forth in paragraphs (1) through (4), inclusive, the amount remaining shall be distributed to the racing association or fair that is conducting live racing on that breed during the calendar period in the zone in which the wager originated, and this amount shall be allocated to that racing association or fair as commissions, to horsemen participating in that racing meeting in the form of purses, and as incentive awards, in the same relative proportion as they were generated or earned during the prior calendar year at that racing association or fair on races conducted or imported by that racing association or fair after making all deductions required by applicable law. Purse funds generated pursuant to this section may be utilized to pay 50 percent of the total costs and fees incurred due to the implementation of advance deposit wagering. "Incentive awards" shall be those payments provided for in Sections 19617.2, 19617.7, 19617.8, 19617.9, and 19619. The amount determined to be payable for incentive awards shall be payable to the applicable official registering agency and thereafter distributed as provided in this chapter. If the provisions of Section 19601.2 apply, then the amount distributed to the applicable racing associations or fairs from advance deposit wagering shall first be divided between those racing associations or fairs in direct proportion to the total amount wagered in the applicable zone on the live races conducted by the respective association or fair. Notwithstanding this requirement, when the provisions of subdivision (b) of Section 19607.5 apply to the 2nd District Agricultural Association in Stockton or the California Exposition and State Fair in Sacramento, then the total amount distributed to the applicable racing associations or fairs shall first be divided equally, with 50 percent distributed to applicable fairs and 50 percent distributed to applicable associations. For purposes of this subdivision, the zones of the state shall be as defined in Section 19530.5, except as modified by the provisions of subdivision (f) of Section 19601, and the combined central and southern zones shall be considered one zone. Notwithstanding any provision of this section to the contrary, the distribution of the market access fee, other than the distributions specified in paragraph (1) or (2), may be altered upon the approval of the board, in accordance with an agreement signed by all parties receiving a distribution under paragraphs (4) and (5). (h) Notwithstanding any provisions of this section to the contrary, all funds derived from advance deposit wagering that originate from California for each race meeting on out-of-state and out-of-country thoroughbred races conducted after 6 p.m., Pacific Time, shall be distributed in accordance with this subdivision. With respect to these wagers, 50 percent of the amount remaining after the payment of contractual obligations to the multijurisdictional wagering hub, betting system, or licensee and the amounts set forth in paragraphs (1) through (5), inclusive, of subdivision (g) shall be distributed as commissions to thoroughbred associations and racing fairs, as thoroughbred and fair purses, and as incentive awards in accordance with subdivision (g), and the remaining 50 percent, together with all funds derived for each race meeting from advance deposit wagering originating from California out-of-state and out-of-country harness and quarter horse races conducted after 6 p.m. Pacific Time shall be distributed as commissions on a pro rata basis to the applicable licensed quarter horse association and the applicable licensed harness association, based upon the amount handled instate, both on- and off-track, on each breed's own live races in the previous year by that association, or it's predecessor association. One-half of the amount thereby received by each association shall be retained by that association as a commission, and the other half of the money received shall be distributed as purses to the horsemen participating in its current or next-scheduled licensed racing meeting. (i) Notwithstanding any provisions of this section to the contrary, all funds derived from advance deposit wagering which originate from California for each race meeting on out-of-state and out-of-country nonthoroughbred races conducted before 6 p.m., Pacific time, shall be distributed in accordance with this subdivision. With respect to these wagers, 50 percent of the amount remaining after the payment of contractual obligations to the multijurisdictional wagering hub, betting system, or licensee and the amounts set forth in paragraphs (1) through (5), inclusive, of subdivision (g) shall be distributed as commissions as provided in subdivision (h) for licensed quarter horse and harness associations, and the remaining 50 percent shall be distributed as commissions to the applicable thoroughbred associations or fairs, as thoroughbred and fair purses, and as incentive awards in accordance with subdivision (g). (j) A racing association, a fair, or a satellite wagering facility may accept and facilitate the placement of any wager from a patron at its facility that a California resident could make through a betting system or multijurisdictional wagering hub duly offering advance deposit wagering in this state, and the facility accepting the wager shall receive a 2 percent commission on that wager in lieu of any distribution for satellite commissions pursuant to subdivision (g). (k) Any disputes concerning the interpretation or application of this section shall be resolved by the board. This section shall remain in effect only until January 1, 2008, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2008, deletes or extends that date. SEC. 11. Section 19613 of the Business and Professions Code is amended to read: 19613. (a) Except as provided in subdivisions (b), (c), (d), (e), and (f), the portion deducted for purses pursuant to this chapter shall be paid to or for the benefit of the horsemen at the racing meeting. (b) Any association other than a fair that conducts a thoroughbred racing meeting shall pay to the owners' organization contracting with the association with respect to the conduct of racing meetings for administrative expenses and services rendered to owners, an amount not to exceed two-thirds of 11/2 percent of the portion, and to a trainers' organization for administrative expenses and services rendered to trainers and backstretch employees an amount equivalent to one-third of 11/2 percent of the portion. That association shall also pay an amount for a pension plan for backstretch personnel to be administeredby the trainers' organizationpursuant to Section 19613.8 equivalent to an additional 1 percent of the portion. The remainder of the portion shall be distributed as purses. (c) Any other association may pay to the horsemen's organization contracting with the association with respect to the conduct of racing meetings for administrative expenses and services rendered to horsemen an amount out of the portion as may be determined by the association by agreement or otherwise, but, in all events, shall include, relative to a thoroughbred horsemen's organization racing, 1 percent of the portion for a pension plan for backstretch personnelto be administered by the trainers' organizationpursuant to Section 19613.8 . The remainder of the portion shall be distributed as purses. (d) Notwithstanding subdivisions (b) and (c), any association conducting a fair racing meeting or conducting a mixed breed racing meeting shall pay to the horsemen's organizations contracting with the association with respect to the conduct of races for their respective breeds of horses at the meetings for administrative expenses and services rendered to their respective horsemen those amounts out of the portion as determined by the horsemen's organization for the respective breeds with the approval of the board. Pursuant to this subdivision, amounts not to exceed 3 percent of the portion for the owners' and trainers' organizations shall be distributed to any thoroughbred owners' and trainers' organizations contracting with an association for a fair racing meeting or participating in mixed breed racing meetings as follows: two-thirds of 1 percent to the owners' organization and one-third of 1 percent to the trainers' organization for administrative expenses and services rendered to both owners and trainers, 1 percent for welfare funds, and 1 percent for a pension program for backstretch personnel, to be administeredby the thoroughbred trainers' organizationpursuant to Section 19613.8 . (e) Any association other than a fair that conducts a quarter horse racing meeting , except a mixed breed meeting, shall pay to the horsemen's organization contracting with the association with respect to the conduct of racing meetings for administrative expenses and services rendered to horsemen, an amount not to exceed 3 percent of the portion. The remainder of the portion shall be distributed as purses. (f) For racing meetings other than thoroughbred meetings, if no contract has been signed between the association conducting the racing meeting and the organization representing the horsemen by the time the racing meeting commences, the distribution of purses shall be governed by the following: (1) If the association conducted a racing meeting within the past 15 months and a contract was in existence for that meeting with the horsemen's organization and the association is conducting a subsequent meeting for the same breed or mixed breeds, the amounts payable to the horsemen's organization under subdivision (c) shall be computed under the provisions of the last signed contract between the parties. (2) This subdivision applies regardless of the cause of the failure to execute a contract, whether that failure is a result of inadvertence or otherwise. (3) For racing meetings that do not come within paragraph (1), the board shall, within 15 days after the commencement of the racing meeting, determine the amounts payable to the horsemen's organization for administrative expenses and services, and provide for the direct payment of those amounts. (g) Amounts distributed pursuant to this section are derived from owners' purses. (h) For the purposes of this section, the following definitions shall apply: (1) "Owner" means a person currently licensed by the board as an owner of a thoroughbred racehorse. (2) "Trainer" means a person currently licensed by the board as an owner and trainer or as a trainer of a thoroughbred racehorse. This section shall remain in effect only until January 1, 2008, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2008, deletes or extends that date. SEC. 11.5. Section 19613 is added to the Business and Professions Code, to read: 19613. (a) Except as provided in subdivisions (b), (c), (d), (e), and (f), the portion deducted for purses pursuant to this chapter shall be paid to or for the benefit of the horsemen at the racing meeting. (b) Any association other than a fair that conducts a thoroughbred racing meeting shall pay to the owners' organization contracting with the association with respect to the conduct of racing meetings for administrative expenses and services rendered to owners, an amount not to exceed two-thirds of 11/2 percent of the portion, and to a trainers' organization for administrative expenses and services rendered to trainers and backstretch employees an amount equivalent to one-third of 11/2 percent of the portion. That association shall also pay an amount for a pension plan for backstretch personnel to be administered by the trainers' organization equivalent to an additional 1 percent of the portion. The remainder of the portion shall be distributed as purses. (c) Any other association may pay to.the horsemen's organization contracting with the association with respect to the conduct of racing meetings for administrative expenses and services rendered to horsemen an amount out of the portion as may be determined by the association by agreement or otherwise, but, in all events, shall include, relative to a thoroughbred horsemen's organization racing, 1 percent of the portion for a pension plan the trainers' organization. The remainder of the portion shall be distributed as purses. (d) Notwithstanding subdivisions (b) and (c), any association conducting a fair racing meeting shall pay to the horsemen's organizations contracting with the association with respect to the conduct of races for their respective breeds of horses at the meetings for administrative expenses and services rendered to their respective horsemen those amounts out of the portion as determined by the horsemen's organization for the respective breeds with the approval of the board. Pursuant to this subdivision, amounts not to exceed 3 percent of the portion for the owners' and trainers' organizations shall be distributed to any thoroughbred owners' and trainers' organizations contracting with an association for a fair racing meeting or participating in mixed breed racing meetings as follows: two-thirds of 1 percent to the owners organization and one-third of 1 percent to the trainers' organization for administrative expenses and services rendered to both owners and trainers, 1 percent for welfare funds, and 1 percent for a pension program for backstretch personnel, to be administered by the thoroughbred trainers' organization. (e) Any association other than a fair that conducts a quarter horse racing meeting shall pay to the horsemen's organization contracting with the association with respect to the conduct of racing meetings for administrative expenses and services rendered to horsemen, an amount not to exceed 3 percent of the portion. The remainder of the portion shall be distributed as purses. (f) For racing meetings other than thoroughbred meetings, if no contract has been signed between the association conducting the rating meeting and the organization representing the horsemen by the time the racing meeting commences, the distribution of purses shall be governed by the following: (1) If the association conducted a racing meeting within the past 15 months and a contract was in existence, for that meeting with the horsemen's organization and the association is conducting a subsequent meeting for the same breed or mixed breeds, the amounts payable to the horsemen's organization under subdivision (c) shall be computed under the provisions of the last signed contract between the parties. (2) This subdivision applies regardless of the cause of the failure to execute a contract, whether that failure is a result of inadvertence or otherwise. (3) For racing meetings that do not come within paragraph (1), the board shall, within 15 days after the commencement of the racing meeting, determine the amounts payable to the horsemen's organization for administrative expenses and services, and provide for the direct payment of those amounts. (g) Amounts distributed pursuant to this section are derived from owners' purses. (h) For the purposes of this section, the following definitions shall apply: (1) "Owner" means a person currently licensed by the board as an owner of a thoroughbred racehorse. (2) "Trainer" means a person currently licensed by the board as an owner and trainer or as a trainer of a thoroughbred racehorse. (i) This section shall become operative on January 1, 2008. SEC. 12. Section 19613.8 is added to the Business and Professions Code, to read: 19613.8. Within 60 days of a statewide majority of backstretch workers having chosen to be represented by an exclusive collective bargaining agent pursuant to Article 2.5 (commencing with Section 19455) or any other law, the respective organization of horsemen, or in the case of the thoroughbred industry the organization of trainers, shall submit a plan to the board for the administration of the pension program by a joint labor-management committee, consistent with the standards established by Section 302 of the Taft-Hartley Act (29 U.S.C. Sec. 5186). Notwithstanding Section 19613, upon approval by the board, a joint labor-management committee shall administer the pension program. SEC. 13. Section 19641.2 is added to the Business and Professions Code, to read: 19641.2. (a) The nonprofit foundation authorized to receive funds pursuant to Section 19641 shall use those funds to administer a health and welfare trust fund without prejudice and for the benefit of every eligible person. The welfare fund and benefits shall be administered consistent with the standards established by the federal Employee Retirement Income Security Act of 1974 (29 U.S.C. Sec. 1001 and following) subject to the oversight and regulation of the board. (b) Every employer of backstretch workers shall, upon request, submit or provide access to the administrator of the welfare program for backstretch workers any employment records necessary for prompt payment of benefits and proper administration of the program. (c) On or before March 1, 2002, the welfare fund board shall be expanded to include two additional holders of groom or stable employee licenses who are currently employed in these occupations at a California horse racing facility. Within 60 days of a statewide majority of backstretch workers having chosen to be represented by an exclusive bargaining agent pursuant to Article 2.5 (commencing with Section 19455) or any other law, that agent shall designate two representatives to replace the board members appointed pursuant to this subdivision. (d) Nothing in this section is intended to affect the status of the welfare fund as a charity under Section 501(c)(3) of the federal Internal Revenue Code or it compliance with the Charitable Purposes Act (Article 7 (commencing with Section 12580) of Chapter 6 of Part 2 of Division 3 of Title 2 of the Government Code). SEC. 14. The Legislature hereby finds and declares the following with respect to the addition of Section 19604 to the Business and Professions Code: (a) There are currently over 1,200 websites on the Internet that provide for online gambling, including wagering on horse races, as well as other types of gambling. (b) Online wagering activity occurs in a way which is unregulated and unlicensed by the California Horse Racing Board, avoiding all of the legal and law enforcement protections administered by the California Horse Racing Board, including appropriate consumer protection measures and threatens the health, safety, economy, and welfare of the citizens and businesses in California. (c) Unregulated gaming websites have a deleterious and very negative impact on horse racing in California because they result in a significantly reduced, lawful wagering activity at locations which are regulated and licensed by the California Horse Racing Board, including racetracks and satellite wagering facilities, and threaten the positive reputation of California horse racing. (d) Unregulated gaming websites result in a revenue loss to the State of California, as well as California's horse racing industry. Those losses are estimated at over two hundred fifty million ($250,000,000) in wagering handle and result in the loss of at least twelve million five hundred thousand dollars ($12,500,000) in purses for California races. (e) That California's horse racing industry provides over 50,000 jobs in this state, as well as revenue to the General Fund which supports California's county fairs, as well as other important programs, and further, has operated under California law for over 60 years in a strictly regulated environment which protects California residents and provides for necessary oversight of its activities. (f) Ten other states have authorized account wagering, further placing, California's horse racing industry at a competitive disadvantage relative to the industry in those states, and threatening the viability of the horse racing industry in California. (g) It is the policy of this state to make every effort to regulate all wagering activity on California horse racing, and to assure that the horse racing industry in California is able to compete with other states, provide jobs to California residents, and help assure the overall health and viability of the industry in California. (h) That it is the intent of the Legislature to ensure that the California Horse Racing Board has the authority necessary to regulate all wagering activity on horse racing in California, and to ensure all appropriate steps are taken to prohibit access of wagering to minors. SEC. 15. The provisions of this act are severable. If any provision of this act or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application. SEC. 16. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.Code is amended to read: 19611.5. (a) In addition to the amounts otherwise deducted pursuant to this chapter, every association other than a fair that conducts a thoroughbred race meeting may deduct from the total amount handled in daily double, quinella, exacta, and other multiple wagering pools approved by the board up to 4 percent thereof to be distributed 50 percent as commissions and 50 percent as purses. From the amount distributed as purses, a sum equal to 0.07 percent of the total handle shall be held by the association to be deposited with the official registering agency pursuant to subdivision (a) of Section 19617.2, and shall thereafter be distributed in accordance with subdivisions (b), (c), and (d) of Section 19617.2. (b) At least 30 days prior to the commencement of its meeting, the association shall file with the board a statement of the additional deduction to be made pursuant to subdivision (a). Except with the consent of the board, the amount of the deduction shall not be changed during the course of the meeting.