BILL NUMBER: AB 422 AMENDED
BILL TEXT
AMENDED IN SENATE JULY 30, 1998
AMENDED IN SENATE JULY 22, 1998
AMENDED IN SENATE JUNE 4, 1997
AMENDED IN ASSEMBLY MARCH 31, 1997
INTRODUCED BY Assembly Member Floyd
FEBRUARY 20, 1997
An act to amend Sections 19605.7, 19605.71, and 19616.51
of An act to repeal and add Section 19602 of the
Business and Professions Code, relating to horse racing.
LEGISLATIVE COUNSEL'S DIGEST
AB 422, as amended, Floyd. Horse racing: license fees :
satellite wagering .
Existing law permits any racing association in this state to
authorize betting systems located outside of this state to accept
wagers on a race or races conducted or disseminated by that
association, and requires that association, when it does so, to pay a
license fee to the state in an amount equal to 8% of the total
amount received by the association from the out-of-state betting
system.
This bill would repeal the provisions imposing the license fee,
and would instead require that an amount equal to 8% of the total
amount received from the out-of-state betting system be distributed
to the official registering agency for thoroughbred or quarter horse
racing, depending on the type of racing conducted. The bill would
also provide that, after the deduction of specified contractual
costs, rents and fees, the remaining amount shall be distributed 50%
as purses to the horsemen and horsewomen participating in the racing
meeting and 50% as commissions to the association.
The existing Horse Racing Law provides for the distribution of
funds and awards on various horse meetings and races, including
thoroughbred racing. This law specifies the percentages deducted
from wagers at satellite wagering facilities in the state and
specifies the manner in which they are to be distributed.
This bill would raise the percentage of the amount handled by a
satellite wagering facility distributed to specified organizations
operating audiovisual signal systems from 2.5% or the amount of
actual operating expenses incurred to 3% or the amount of actual
operating expenses incurred.
Existing law requires the state license fee rate on all wagers
made in the state on horse races conducted by, or disseminated by, a
thoroughbred racing association or fair to be reduced from the
license fee rate in effect for each type of wager for the majority of
1996 by 1/2 of 1% on January 1, 1997, and requires the savings
resulting from that reduction to be distributed 40% as commissions,
55% as purses, and 5% to the official registering agency for
thoroughbreds.
This bill instead would prohibit any state license fee on any
wager made with a licensed parimutuel clerk on horse races conducted
or disseminated by a thoroughbred racing association or fair on or
after January 1, 1999. Additionally, the bill would revise the
percentages for the distributions resulting from the above savings to
require 47.5% of the savings be distributed as commissions and
47.5%, as purses.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 19605.7 of the Business and
SECTION 1. Section 19602 of the Business and Professions Code is
repealed.
19602. (a) Notwithstanding any other provision of law, any racing
association in this state may authorize betting systems located
outside of this state to accept wagers on a race or races conducted
or disseminated by that association and may transmit live audiovisual
signals of the race or races and their results to those betting
systems, except that any authorization is subject to the consent of
the host association and applicable federal laws, including, but not
limited to, Chapter 57 (commencing with Section 3001) of Title 15 of
the United States Code.
(b) (1) Except as provided in paragraph (2), any racing
association described in subdivision (a), when it authorizes betting
systems located outside of this state to accept wagers on a race,
shall pay a license fee to the state in an amount equal to 8 percent
of the total amount received by the association from the out-of-state
betting system. In addition, with respect to thoroughbred racing
only, 3 percent of the amount remaining after the payment of the
license fee shall 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. The remaining amount received by the association
shall be distributed to the association that conducts the racing
meeting and to horsemen participating in that racing meeting as
follows: 50 percent to the association as commissions, and 50
percent to the horsemen as purses. All rents, costs, and fees shall
be deducted pursuant to a contract between the association that
conducts the racing meeting and the horsemen participating in the
racing meeting. Notwithstanding any other provision of law, racing
associations may form a partnership, joint venture, or any other
affiliation in order to negotiate terms and conditions of agreements
with out-of-state betting systems.
(2) A thoroughbred association that hosts the series of races
known as the "Breeder's Cup" shall not be required to pay to the
state the license fees required pursuant to paragraph (1). Amounts
received by the association from out-of-state betting systems as
wagers on Breeder's Cup races shall be distributed as follows: 50
percent as commissions to the association that conducts the racing
meeting, and 50 percent as purses to the horsemen participating in
the meeting.
(c) With the permission of the board, wagers accepted by betting
systems located outside of this state may be, but are not required to
be, included in the parimutuel pool of the association that conducts
the racing meeting in this state. If the wagers accepted by betting
systems located outside of this state are included in the parimutuel
pool of the association that conducts the racing meeting in this
state, the betting system located outside of this state shall, if
permissible under applicable law, deduct from the total amount
handled in each conventional and exotic parimutuel pool the same
total percentages deducted pursuant to Article 9.5 (commencing with
Section 19610) by the association that conducts the racing meeting in
this state. If the laws of the jurisdiction in which the betting
system is located do not permit the betting system to deduct the same
percentages as are deducted by the association that conducts the
racing, the board may, nonetheless, permit the inclusion of those
out-of-state wagers in the association's parimutuel pool if the board
determines it to be in the public interest of this state to do so.
(d) If wagers accepted by an association conducting racing within
the state and wagers accepted by a betting system located outside of
the state are combined in one parimutuel pool and the association and
the betting system both deduct the same total percentages as set
forth in subdivision (c), the breakage shall be allocated between the
association and the betting system on the basis of a calculation for
distribution approved by the board.
(e) If wagers accepted by an association conducting racing within
the state are combined in one parimutuel pool with wagers accepted by
a betting system located outside the state and the association and
the betting system deduct different percentages from the amount
handled in the parimutuel pool, the precise calculation and
distribution of payments on winning tickets and breakage between the
association and the betting system shall be on the basis of a
calculation for distribution approved by the board.
(f) The board shall report to the Department of Finance whenever
it approves a calculation for distribution pursuant to subdivision
(d) or (e) and the projected impact of that calculation, if any, on
state revenues.
(g) Breakage allocated pursuant to this section to an association
conducting racing within this state shall be distributed in the same
manner as would be breakage arising from wagers at the association in
the absence of a combined parimutuel pool. This section does not
apply to the disposition of breakage allocated to the betting system
located outside of the state.
(h) If wagers accepted by a betting system located outside of this
state are included in the parimutuel pool of an association
conducting racing in this state, funds in the parimutuel pool
attributable to unclaimed tickets relating to wagers accepted by the
association conducting racing within the state shall be distributed
in the same manner as unclaimed tickets relating to wagers accepted
by that association in the absence of a combined parimutuel pool.
Funds in the parimutuel pool attributable to unclaimed tickets
related to wagers accepted by the betting system located outside of
this state shall be allocated to that betting system, and this
section does not otherwise apply to the disposition of those funds at
that location outside of the state.
SEC. 2. Section 19602 is added to the Business and Professions
Code, to read:
19602. (a) Notwithstanding any other provision of law, any racing
association in this state may authorize betting systems located
outside of this state to accept wagers on a race or races conducted
or disseminated by that association and may transmit live audiovisual
signals of the race or races and their results to those betting
systems, except that any authorization is subject to the consent of
the host association and applicable federal laws, including, but not
limited to, Chapter 57 (commencing with Section 3001) of Title 15 of
the United States Code.
(b) With respect to thoroughbred and quarter horse racing only,
the following two paragraphs shall apply:
(1) Any racing association described in subdivision (a), when it
authorizes betting systems located outside of this state to accept
wagers on a race, shall pay no license fee, but shall distribute an
amount equal to 8 percent of the total amount received by the
association from the out-of-state betting system as provided in
paragraphs (2) and (3). The remaining amount received by the
association from the out-of-state betting system shall be distributed
as follows: 50 percent to the horsemen and horsewomen as purses and
50 percent to the association as commissions. All rents, costs, and
fees shall be deducted pursuant to a contract between the
association that conducts the racing meeting and the horsemen and
horsewomen participating in the racing meeting. Notwithstanding any
other provision of law, racing associations may form a partnership,
joint venture, or any other affiliation in order to negotiate terms
and conditions of agreements with out-of-state betting systems.
(2) For thoroughbred racing, 8 percent of the total amount
received by the association from the out-of-state betting system
shall 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.
(3) For quarter horse racing, 8 percent of the total amount
received by the association from the out-of-state betting system
shall be deposited with the official registering agency pursuant to
subdivision (b) of Section 19617.7, and shall thereafter be
distributed in accordance with subdivisions (c), (d), and (e) of
Section 19617.7.
(c) With the permission of the board, wagers accepted by betting
systems located outside of this state may be, but are not required to
be, included in the parimutuel pool of the association that conducts
the racing meeting in this state. If the wagers accepted by betting
systems located outside of this state are included in the parimutuel
pool of the association that conducts the racing meeting in this
state, the betting system located outside of this state shall, if
permissible under applicable law, deduct from the total amount
handled in each conventional and exotic parimutuel pool the same
total percentages deducted pursuant to Article 9.5 (commencing with
Section 19610) by the association that conducts the racing meeting in
this state. If the laws of the jurisdiction in which the betting
system is located do not permit the betting system to deduct the same
percentages as are deducted by the association that conducts the
racing, the board may, nonetheless, permit the inclusion of those
out-of-state wagers in the association's parimutuel pool if the board
determines it to be in the public interest of this state to do so.
(d) If wagers accepted by an association conducting racing within
the state and wagers accepted by a betting system located outside of
the state are combined in one parimutuel pool and the association and
the betting system both deduct the same total percentages as set
forth in subdivision (c), the breakage shall be allocated between the
association and the betting system on the basis of a calculation for
distribution approved by the board.
(e) If wagers accepted by an association conducting racing within
the state are combined in one parimutuel pool with wagers accepted by
a betting system located outside the state and the association and
the betting system deduct different percentages from the amount
handled in the parimutuel pool, the precise calculation and
distribution of payments on winning tickets and breakage between the
association and the betting system shall be on the basis of a
calculation for distribution approved by the board.
(f) The board shall report to the Department of Finance whenever
it approves a calculation for distribution pursuant to subdivision
(d) or (e) and the projected impact of that calculation, if any, on
state revenues.
(g) Breakage allocated pursuant to this section to an association
conducting racing within this state shall be distributed in the same
manner as would be breakage arising from wagers at the association in
the absence of a combined parimutuel pool. This section does not
apply to the disposition of breakage allocated to the betting system
located outside of the state.
(h) If wagers accepted by a betting system located outside of this
state are included in the parimutuel pool of an association
conducting racing in this state, funds in the parimutuel pool
attributable to unclaimed tickets relating to wagers accepted by the
association conducting racing within the state shall be distributed
in the same manner as unclaimed tickets relating to wagers accepted
by that association in the absence of a combined parimutuel pool.
Funds in the parimutuel pool attributable to unclaimed tickets
related to wagers accepted by the betting system located outside of
this state shall be allocated to that betting system, and this
section does not otherwise apply to the disposition of those funds at
that location outside of the state. Professions Code
is amended to read:
19605.7. The total percentage deducted from wagers at satellite
wagering facilities in the northern zone shall be the same as the
deductions for wagers at the racetrack where the racing meeting is
being conducted and shall be distributed as set forth in this
section. Amounts deducted under this section shall be distributed as
follows:
(a) For thoroughbred meetings, 2.5 percent of the amount handled
by the satellite wagering facility on conventional wagers and 4
percent on exotic wagers shall be distributed to the racing
association for payment to the state as a license fee, 2 percent
retained by the satellite wagering facility as a commission for the
right to do business, as a franchise, and such commission is not for
the use of any real property, 3 percent or the amount of actual
operating expenses, as determined by the board, whichever is less,
distributed to an organization described in Section 19608.2, and
four-tenths of 1 percent 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, and thirty-three hundredths of one-tenth
of 1 percent distributed to the California Center for Equine Health
and Performance and sixty-seven hundredths of one-tenth of 1 percent
distributed to the California Veterinary Diagnostic Laboratory
System, School of Veterinary Medicine, University of California at
Davis. It is the intent of the Legislature that the thirty-three
hundredths of one-tenth of 1 percent of funds distributed to the
California Center for Equine Health and Performance shall supplement,
and not supplant, other funding sources.
(b) For harness, quarter horse, Appaloosa, Arabian, or mixed breed
meetings, 1 percent of the amount handled by the satellite wagering
facility on conventional wagers and 1 percent on exotic wagers shall
be distributed to the racing association for payment to the state as
a license fee, for fair meetings, 1.5 percent of the amount handled
by the satellite wagering facility on conventional wagers and 3
percent on exotic wagers shall be distributed to the racing
association for payment to the state as a license fee, 2 percent
retained by the satellite wagering facility as a commission for the
right to do business, as a franchise, and such commission is not for
the use of any real property, and 6 percent of the amount handled by
the satellite wagering facility or the amount of actual operating
expenses, as determined by the board, whichever is less, distributed
to an organization described in Section 19608.2. In addition, in the
case of quarter horses, four-tenths of 1 percent shall be deposited
with the official registering agency pursuant to subdivision (b) of
Section 19617.7 and shall thereafter be distributed in accordance
with subdivisions (c), (d), and (e) of Section 19617.7; in the case
of Appaloosas, four-tenths of 1 percent shall be deposited with the
official registering agency pursuant to subdivision (b) of Section
19617.9 and shall thereafter be distributed in accordance with
subdivisions (c), (d), and (e) of Section 19617.9; in the case of
Arabians, four-tenths of 1 percent shall be held by the association
to be deposited with the official registering agency pursuant to
Section 19617.8, and shall thereafter be distributed in accordance
with Section 19617.8; in the case of standardbreds, four-tenths of 1
percent shall be distributed for the California Standardbred Sires
Stakes Program pursuant to Section 19619; in the case of
thoroughbreds, four-tenths of 1 percent shall 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; and thirty-three
hundredths of one-tenth of 1 percent shall be distributed to the
California Center for Equine Health and Performance and sixty-seven
hundredths of one-tenth of 1 percent distributed to the California
Veterinary Diagnostic Laboratory System, School of Veterinary
Medicine, University of California at Davis. It is the intent of the
Legislature that the thirty-three hundredths of one-tenth of 1
percent of funds distributed to the California Center for Equine
Health and Performance shall supplement, and not supplant, other
funding sources.
(c) In addition to the distributions specified in subdivision (a)
and (b), for thoroughbred and fair meetings only, six-tenths of 1
percent of the total amount handled by each satellite wagering
facility authorized pursuant to Section 19605.1 and one-half of 1
percent of the total amount handled at each other satellite wagering
facility shall be allocated to the facility for promotion of that
meeting's program. For mixed breed meetings, 1 percent of the total
amount handled by each satellite wagering facility shall be
distributed to an organization described in Section 19608.2 for
promotion of the program at satellite wagering facilities. For
quarter horse meetings and harness meetings, one-half of 1 percent of
the total amount handled by each satellite wagering facility shall
be distributed to an organization described in Section 19608.2 for
the promotion of the program at satellite wagering facilities, and
one-half of 1 percent of the total amount handled by each satellite
wagering facility shall be distributed according to a written
agreement for each race meeting between the licensed racing
association and the organization representing the horsemen
participating in the meeting.
(d) In addition to the distributions specified in subdivisions
(a), (b), and (c), for thoroughbred meetings, four-tenths of 1
percent of the total amount handled at each satellite wagering
facility authorized pursuant to Section 19605.1 and one-half of 1
percent of the total amount handled at each other satellite wagering
facility shall be allocated to the association conducting the racing
program to reimburse it for any costs of offsite stabling and vanning
that are required pursuant to Section 19535. The amount of the
reimbursement payable to an association for offsite stabling shall
not exceed the actual cost to the association of maintaining stalls
at its racetrack plus the actual costs incurred by the association to
provide vanning and transportation of racehorses from offsite
stabling facilities to its racetrack.
(e) In addition to the distributions specified in subdivisions
(a), (b), and (c), for fair meetings, four-tenths of 1 percent of the
total amount handled at each satellite wagering facility authorized
pursuant to Section 19605.1 and one-half of 1 percent of the total
amount handled at each other satellite wagering facility shall be
allocated to the organization representing racing fairs to reimburse
fairs for the actual cost of providing offsite stabling and vanning
required by the board pursuant to Section 19535. If fairs contract
with associations to provide offsite stabling during fair meetings,
the cost incurred by fairs shall not exceed the actual cost to the
association of maintaining the stalls or the amount of reimbursement
funds made available pursuant to this subdivision, whichever is less.
In the event of a disagreement between an association and the
organization representing racing fairs or the organization
representing the majority of horsemen participating at the meeting
with respect to the actual cost of maintaining stalls, the board, at
the request of the association or the organization representing
racing fairs or the organization representing the majority of
horsemen participating at the meeting, shall determine within 60 days
the amount of actual costs incurred. For purposes of this
subdivision, "actual cost" does not include fixed overhead or
administrative expenses that would be incurred by the association in
the absence of an agreement to provide offsite stabling during fair
meetings.
(f) Any of the promotional funds distributed pursuant to
subdivision (c) that are not expended in the year in which they are
collected may be expended in the following year. If promotion funds
expended in any year exceed the amount collected for that year, the
funds expended in the following year shall be reduced by the excess
amount.
(g) Any of the stabling and vanning reimbursement funds
distributed pursuant to subdivision (d) that are not expended during
the meeting at which they are collected shall be allocated to the
organization representing racing fairs for additional payments to the
racing association to offset its costs of maintaining the stalls
contracted for by fairs pursuant to subdivision (e).
(h) Additionally, for thoroughbred, harness, quarter horse, mixed
breed, and fair meetings, thirty-three hundredths of 1 percent of the
total amount handled by each satellite wagering facility shall be
paid to the city or county in which the satellite wagering facility
is located pursuant to Section 19610.3 or 19610.4.
(i) Notwithstanding any other provision of law, a racing
association is responsible for the payment of the state license fee
as required by this section.
SEC. 2. Section 19605.71 of the Business and Professions Code is
amended to read:
19605.71. The total percentage deducted from wagers at satellite
wagering facilities in the central and southern zone shall be the
same as the percentage deducted from wagers at the racetrack where
the racing meeting is being conducted and shall be distributed as set
forth in this section. Amounts deducted by a satellite wagering
facility under this section shall be distributed as follows:
(a) For thoroughbred meetings, 2.5 percent of the amount handled
by the satellite wagering facility on conventional wagers and 4
percent on exotic wagers shall be distributed to the racing
association for payment to the state as a license fee, 2 percent
retained by the satellite wagering facility as a commission for the
right to do business, as a franchise, and such commission is not for
the use of any real property, 3 percent or the amount of actual
operating expenses, as determined by the board, whichever is less,
distributed to an organization described in Section 19608.2, and
four-tenths of 1 percent 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, and thirty-three hundredths of one-tenth
of 1 percent distributed to the California Center for Equine Health
and Performance and sixty-seven hundredths of one-tenth of 1 percent
distributed to the California Veterinary Diagnostic Laboratory
System, School of Veterinary Medicine, University of California at
Davis. It is the intent of the Legislature that the thirty-three
hundredths of one-tenth of 1 percent of funds distributed to the
California Center for Equine Health and Performance shall supplement,
and not supplant, other funding sources.
(b) For harness, quarter horse, Appaloosa, Arabian, or mixed breed
meetings, 1 percent of the amount handled by the satellite wagering
facility on conventional wagers and 1 percent on exotic wagers shall
be distributed to the racing association for payment to the state as
a license fee, for fair meetings, 1.5 percent
of the amount handled by the satellite wagering
facility on conventional wagers and 3 percent on exotic wagers shall
be distributed to the racing association for payment to the state as
a license fee, 2 percent retained by the satellite wagering facility
as a commission for the right to do business, as a franchise, and
such commission is not for the use of any real property, and 6
percent of the amount handled by the satellite wagering facility or
the amount of actual operating expenses, as determined by the board,
whichever is less, distributed to an organization described in
Section 19608.2. In addition, in the case of quarter horses,
four-tenths of 1 percent shall be distributed as breeders' awards to
breeders of quarter horses pursuant to Section 19617.6; in the case
of Appaloosas, four-tenths of 1 percent shall be deposited with the
official registering agency pursuant to subdivision (b) of Section
19617.9 and shall thereafter be distributed in accordance with
subdivisions (c), (d), and (e) of Section 19617.9; in the case of
Arabians, four-tenths of 1 percent shall be held by the association
to be deposited with the official registering agency, pursuant to
Section 19617.8, and thereafter shall be distributed in accordance
with Section 19617.8; in the case of standardbreds, four-tenths of 1
percent shall be distributed for the California Standardbred Sires
Stakes Program pursuant to Section 19619; in the case of
thoroughbreds, four-tenths of 1 percent shall 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; and thirty-three
hundredths of one-tenth of 1 percent shall be distributed to the
California Center for Equine Health and Performance and sixty-seven
hundredths of one-tenth of 1 percent distributed to the California
Veterinary Diagnostic Laboratory System, School of Veterinary
Medicine, University of California at Davis. It is the intent of the
Legislature that the thirty-three hundredths of one-tenth of 1
percent of funds distributed to the California Center for Equine
Health and Performance shall supplement, and not supplant, other
funding sources.
(c) In addition, for thoroughbred meetings and harness, Appaloosa,
mixed breed, or fair meetings, 1 percent shall be distributed to an
organization described in Section 19608.2 for promotion of the
program at satellite wagering facilities. Notwithstanding any other
provision of law, on wagers made in the Counties of Orange and Los
Angeles on thoroughbred races conducted in the County of Orange or
Los Angeles, or both, excluding the 50th District Agricultural
Association, the amount deducted for promotion of the satellite
wagering program at satellite wagering facilities shall be one-half
of 1 percent. Any of the promotion funds that are not distributed in
the year in which they are collected may be distributed in the
following year. If promotion funds distributed in any year exceed
the amount collected for that year, the funds distributed in the
following year shall be reduced by the excess amount. For quarter
horse meetings, one-half of 1 percent of the total amount handled by
each satellite wagering facility shall be distributed to an
organization described in Section 19608.2 for the promotion of the
program at satellite wagering facilities, and one-half of 1 percent
of the total amount handled by each satellite wagering facility shall
be distributed according to a written agreement for each race
meeting between the licensed racing association and the organization
representing the horsemen participating in the meeting. To the
extent that funds representing a percentage greater than one-half of
1 percent of funds wagered on thoroughbred races conducted in the
Counties of Orange and Los Angeles have been distributed, prior to
July 27, 1992, to an organization described in Section 19608.2 for
promotion activities, but remain unused, those funds shall be
redistributed, 50 percent as commissions to the association that
conducts the racing meeting, and 50 percent as purses to the horsemen
participating in the racing meeting. Additionally, thirty-three
hundredths of 1 percent of the total amount handled by the satellite
wagering facility shall be paid to the city or county in which the
satellite wagering facility is located pursuant to Section 19610.3 or
19610.4.
(d) Notwithstanding any other provision of law, a racing
association is responsible for the payment of the state license fee
as required by this section.
SEC. 3. Section 19616.51 of the Business and Professions Code is
amended to read:
19616.51. (a) Notwithstanding any other provision of law, there
shall be no state license fee on any wager made in the state with a
licensed parimutuel clerk on horse races conducted by, or
disseminated by, a thoroughbred racing association or fair on or
after January 1, 1999.
(b) All other distributions from handle shall be as provided
elsewhere in this chapter. Additionally, any reduction in license
fees resulting from compliance with this section shall be distributed
47.5 percent as commissions, 47.5 percent as purses, and 5 percent
to the official registering agency for thoroughbreds to be
distributed pursuant to Section 19617.2.