AB 1173: Horse racing: advance deposit wagering: hub agreement arbitration.

Existing law, the Horse Racing Law, authorizes advance deposit wagering (ADW) to be conducted, with the approval of the California Horse Racing Board, in accordance with specified provisions of law. Existing law requires an ADW provider, as defined, as a condition of approval by the board to be an ADW provider, to include all wagers made in the appropriate parimutuel pool under a contractual agreement with the applicable host track and to deduct amounts from advance deposit wagers, as specified. Existing law authorizes the execution of hub agreements, defined as written agreements providing for contractual compensation paid with respect to advance deposit wagers placed by California residents on a particular breed of racing conducted outside of California.

Existing law establishes procedures for the arbitration of disputes arising from hub agreements. Existing law sets the contractual compensation received by the ADW provider as the contractual compensation specified in the hub agreement that is the subject of the hub agreement arbitration. Existing law specifies that the arbitrators decision is final and binding on the parties, and further provides that, if arbitration is requested, either party may bring an action in state court to compel a party to go into arbitration or to enforce the decision of the arbitrator.

This bill would change the contractual compensation received by the ADW provider to the average of the contractual compensation specified in the hub agreement that is the subject of the hub agreement arbitration and the contractual compensation set forth in the hub agreement arbitration notice. The bill would require the arbitrator to select the set of terms that most accurately reflects the then-existing market rate of compensation for the services provided by the ADW provider based on all relevant facts and circumstances relating to California resident ADW wagering. The bill would also delete the requirement that the arbitrators decision be final and binding on the parties, and instead authorize either party to bring an action in state court to review the arbitrators decision.