The Horse Racing Law vests the California Horse Racing Board with jurisdiction and supervision over horse racing meetings in the state. The Horse Racing Law requires the board to issue licenses to associations and fairs that participate in horse racing meetings with parimutuel wagering and to allocate racing dates to those associations and fairs in accordance with that law. The Horse Racing law authorizes the board to issue a license to an association or a fair to conduct a horse racing meeting in accordance with its provisions at the track specified in the written application, as specified. Under the Horse Racing Law, the board may allocate racing weeks to an applicant, subject to specified limitations, and specify the racing days, dates, and hours for horse racing meetings that will be in the public interest and will subserve the purposes of that law. The Horse Racing Law requires the board to make allocations of racing weeks as it deems appropriate and specifies the maximum number of racing weeks that may be allocated for horse racing other than at fairs, including, for thoroughbred racing, a maximum of 44 weeks per year of racing weeks in the northern zone and a maximum of 49 weeks per year in the combined central and southern zones.

If the board does not license a thoroughbred race meet to be conducted by a racing association at a racetrack located in a specified location in the northern zone after July 1, 2024, this bill would deem a thoroughbred racing association, or racing fair, licensed to meet in the southern or central zone to be operating in the northern zone during certain racing weeks for the purpose of conducting all permissible forms of wagering in the northern zone and making and receiving required distributions from those wagers. The bill would require mandatory distributions to be made in accordance with requirements applicable to the northern zone, as specified, and would require amounts generated for purses and commissions to be distributed in accordance with prescribed requirements.

The Horse Racing Law authorizes the board to permit fairs to operate satellite wagering facilities at their fairgrounds, under certain conditions. In addition, the Horse Racing Law permits any fair in the Counties of Kern or Shasta, with the approval of the Department of Food and Agriculture and the authorization of the board, to operate one satellite wagering facility within the boundaries of the fair, as specified.

This bill would permit any fair in the County of Stanislaus, with the approval of the Department of Food and Agriculture and the authorization of the board, to operate one satellite wagering facility within the boundaries of the fair, on the same conditions as apply in the Counties of Kern and Shasta.

The Horse Racing Law vests the California Horse Racing Board with jurisdiction and supervision over horse racing meetings in the state. The Horse Racing Law requires the board to issue licenses to associations and fairs that participate in horse racing meetings with parimutuel wagering and to allocate racing dates to those associations and fairs in accordance with that law. The Horse Racing law authorizes the board to issue a license to an association or a fair to conduct a horse racing meeting in accordance with its provisions at the track specified in the written application, as specified. Under the Horse Racing Law, the board may allocate racing weeks to an applicant, subject to specified limitations, and specify the racing days, dates, and hours for horse racing meetings that will be in the public interest and will subserve the purposes of that law. The Horse Racing Law requires the board to make allocations of racing weeks as it deems appropriate and specifies the maximum number of racing weeks that may be allocated for horse racing other than at fairs, including, for thoroughbred racing, a maximum of 44 weeks per year of racing weeks in the northern zone and a maximum of 49 weeks per year in the combined central and southern zones.

If the board does not license a thoroughbred race meet to be conducted by a racing association at a racetrack located in a specified location in the northern zone after July 1, 2024, this bill would deem a thoroughbred racing association, or racing fair, licensed to meet in the southern or central zone to be operating in the northern zone during certain racing weeks for the purpose of conducting all permissible forms of wagering in the northern zone and making and receiving required distributions from those wagers. The bill would require mandatory distributions to be made in accordance with requirements applicable to the northern zone, as specified, and would require amounts generated for purses and commissions to be distributed in accordance with prescribed requirements.

The Horse Racing Law authorizes the board to permit fairs to operate satellite wagering facilities at their fairgrounds, under certain conditions. In addition, the Horse Racing Law permits any fair in the Counties of Kern or Shasta, with the approval of the Department of Food and Agriculture and the authorization of the board, to operate one satellite wagering facility within the boundaries of the fair, as specified.

This bill would permit any fair in the County of Stanislaus, with the approval of the Department of Food and Agriculture and the authorization of the board, to operate one satellite wagering facility within the boundaries of the fair, on the same conditions as apply in the Counties of Kern and Shasta.

The Horse Racing Law authorizes the Horse Racing Board to permit fairs to operate satellite wagering facilities at their fairgrounds, under certain conditions. In addition, existing law the Horse Racing Law permits any fair in the Counties of Kern or Shasta, with the approval of the Department of Food and Agriculture and the authorization of the board, to operate one satellite wagering facility within the boundaries of the fair, as specified.

This bill would permit any fair in the County of Stanislaus, with the approval of the Department of Food and Agriculture and the authorization of the board, to operate one satellite wagering facility within the boundaries of the fair, on the same conditions as apply in the Counties of Kern and Shasta.

The Horse Racing Law provides for the operation of horse racing in this state and wagering thereon. Under existing law, any time a fair conducts a program of parimutuel wagering, it may provide a program of mixed breed racing that includes thoroughbred racing, harness racing, quarter horse racing, Arabian racing, paint racing, Appaloosa racing, steeplechase races, barrel races, and show jumping races.

This bill would instead require a fair to provide this program of mixed breed racing if it conducts a program of parimutuel wagering.

CONCURRENCE IN SENATE AMENDMENTS

CSA2 Bill Id:AB 1074

Author:(Alanis)

As Amended Ver:September 8, 2023

Majority vote

SUMMARY

Original Committee of Reference: G. O.

Provides if the California Horse Racing Board (CHRB) does not license a thoroughbred race meet at a racetrack (Golden Gate Fields) located in the cities of Berkeley and Albany after July 1, 2024, and no live horse racing is being conducted in the northern zone, this bill would deem a thoroughbred racing association or racing fair in the southern or central zone, as specified, to be operating in the northern zone for the purpose of conducting all permissible forms of wagering in the northern zone and making and receiving required distributions from those wagers.

Additionally, this bill would permit a fair in the County of Stanislaus, with the approval of the Department of Food and Agriculture and the authorization of the CHRB, to operate one satellite wagering facility within the boundaries of the fair, under the same conditions as apply in the Counties of Kern and Shasta.

Senate Amendments

Current Committee Recommendation: Concur

1. Provide if the CHRB does not license a thoroughbred race meet to be conducted by a racing association at a racetrack located in the cities of Berkeley and Albany after July 1, 2024, a thoroughbred racing association, or racing fair, in the southern or central zone licensed by the board to conduct a thoroughbred race meet or fair meet shall, during racing weeks not allocated by the board for a race meet in the northern zone, be deemed to be operating in the northern zone for the purpose of conducting all permissible forms of wagering in the northern zone pursuant to existing law and making and receiving required distributions from those wagers, as specified.
2. Provide that the required distributions described above be made in accordance with the requirements applicable to a racing association in the northern zone and any consent or approval rights shall be exercised by the appropriate racing association or racing fair in the central or southern zone conducting racing.
3. Require that the amounts generated for purses and commissions pursuant to this bill be used to pay simulcast funding requirements and CHRB support that the thoroughbred racing associations and racing fair in the central or southern zones are required to make, as specified.
4. Require any remaining funds after those payments to be distributed to each thoroughbred racing association and racing fair in the central and southern zone proportionally based on their respective handle in the central and southern zone during the previous fiscal year and requires that money to be divided between purses and commissions in the same relative proportion as was generated in the central and southern zone during the previous fiscal year.

EXISTING LAW:

1. California Constitution Article IV, Section 19(b), provides that the Legislature may provide for the regulation of horse races and horse race meetings and wagering on the results. Permits the CHRB to issue licenses to associations and fairs that participate in horse racing meetings with pari-mutuel wagering and to allocate racing dates to those associations and fairs in accordance with law.
2. Allows the CHRB to make allocations of racing weeks as it deems appropriate and specifies the maximum number of racing weeks that may be allocated for horse racing other than at fairs, including, for thoroughbred racing, a maximum of 44 weeks per year of racing weeks in the northern zone and a maximum of 49 weeks per year in the combined central and southern zones.
3. Permits the CHRB to allocate up to four weeks of racing to a fair in the northern zone even if the fair is not conducting any type of fair activities.
4. Permits the San Mateo County Fair to conduct a live racing meeting in the northern zone at another site within or outside San Mateo County if its present site, Bay Meadows, closes.
5. Authorizes the Solano County Fair to conduct live racing meetings at another site within or outside Solano County, if the site of its 2002-racing meeting is no longer available for horse racing in any subsequent year.
6. Authorizes thoroughbred racing associations or fairs to accept and distribute the audiovisual signal and take wagers on the results of out-of-zone, out-of-state, international races, and via advance deposit wagering during the calendar period the association or fair is conducting live racing, including days on which there is no live racing being conducted by the association or fair.
7. Permits any fair in the Counties of Kern or Shasta, with the approval of CDFA and the authorization of the CHRB, to operate one satellite wagering facility within the boundaries of the fair, as specified.

COMMENTS

Background.

California Horse Racing. Horse racing in California is comprised of horse owners, breeders, trainers, backstretch workers, racing associations and their employees, county fairs and district agricultural associations, as well as the bettors/fans, and the State of California. These parties are linked through the pari-mutuel pool, which represents the total money wagered on a horse race (handle) and is the primary source of funding for the industry.

Wagering on horse racing was approved by constitutional amendment in 1933, principally as a means to generate income for the state and to fund safety and maintenance projects at California's state and local fairgrounds. Racetracks are multi-faceted operations that feature various employment categories, many of which are represented by unions.

California horse racing is generally divided into two zones: the northern zone and the southern zone (for wagering purposes, the central and southern zones are combined into one region, referred to as the South in this analysis). The CHRB has traditionally assigned race dates to Santa Anita Park, Los Alamitos, and Del Mar Thoroughbred Club in the South and to Golden Gate Fields, the Alameda County Fair, the Sonoma County Fair, the Humboldt County Fair, the California Exposition and State Fair, and the Big Fresno Fair in the North. Cumulatively, there is nearly constant thoroughbred racing year-round at one of the locations in each of the two geographic zones.

For wagering purposes, bets made in California (in-person or online) remain in the respective zone where it is placed by the patron. A host track that is operating a live race meet during a specific period, in a designated zone generates track revenue and purse money from all wagers, as well as other mandated distributions in law (CHRB regulatory costs, backstretch retirement fund and workers' compensation, breeders incentives, local municipal tax, equine health research, and stabling and vanning). For instance, when Golden Gate Fields is the host in the northern zone, it generates track revenue and purse money from wagers placed in northern zone, whether the customer is wagering at Golden Gate Fields, a satellite wagering facility, out-of-state, or via advance deposit wagering.

It should be noted that since 1994, the North and South regions have exchanged their live racing signals for free to support the overall racing program in California.

Status of the Horse Racing Industry in California. The California horse racing industry's long-term health is threatened by a combination of factors, including competition from racing in other states, other forms of gaming within California, major racetrack closures (Bay Meadows Racecourse in San Mateo, California in 2008 and Hollywood Park racetrack in Inglewood, California in 2013), and the potential for higher return from development than operating revenues. As resources shrink, the industry is experiencing deficits in virtually every one of its revenue sources. In some instances, traditional takeout and distribution formulas are no longer able to sustain ongoing operations.

As the value of racing operations decline, track ownership is struggling to maximize the needed return on their investment and tempted by alternative uses of the property that yield higher returns. Consequently, the racing industry is suffering unprecedented instability and capital flight. Tens of thousands of industry jobs are in jeopardy, along with breeding farms and agricultural based operations throughout California. A substantial amount of local and state revenue, generated both directly and indirectly by the industry, is also at risk.

The Future of Golden Gate Fields and AB 1074. Golden Gate Fields is a racetrack located within the cities of Albany and Berkeley, California. The track is located between the shoreline of the San Francisco Bay and the Eastshore Freeway. The 140-acre facility was opened in 1941, and it has a one-mile synthetic track, a turf course, and ample barns for year-round use.

Golden Gate Fields is owned by the Stronach Group (1/ST Racing and Gaming), which also owns and operates Santa Anita Park racetrack in southern California, a prominent racetrack and a frequent host of the Breeders' Cup World Championship. On July 16 of this year, the Stronach Group announced the permanent closure of Golden Gate Fields at the end of the scheduled 2023 race meet. A press release issued by track's owner stated, "At the conclusion of the Golden Gate Fields meet, the company will focus on seamlessly transitioning horses from northern California to southern California with the goal of increasing field sizes and adding another day of racing to the weekly racing calendar at Santa Anita Park, come January 2024. This consolidation will provide expanded content opportunities and wagering prospects, and will serve to further elevate the overall customer experience at Santa Anita Park." The company plans to invest more than $30 million in improvements to Santa Anita in coming years.

The closure will affect hundreds of employees, owners, trainers, jockeys and stable workers who depend on the track for their livelihoods. Additionally, because only 12 weeks of live racing are allotted by the CHRB to be held at fair racetracks in the northern zone, and the remaining annual dates are assigned to be held at Golden Gate Fields, a pending closure will have a significant impact on the future of horse racing in northern California. In essence, if Golden Gate Fields closes at the end of 2023, thoroughbred racing in the northern zone appears to be facing a large gap in the racing calendar unless another entity or fair(s) applies to the CHRB to operate the dates, which have been traditionally allocated.

Furthermore, it is unclear under current law whether it is permissible to accept bets and distribute revenue from simulcasting and Advance Deposit Wagering (ADW) operations due to potential gaps in the racing calendar. According to the most recent CHRB annual report, the handle at Golden Gate Fields in 2022 totaled over $524 million for its 120 live race dates. This handle resulted in about $25 million in track commissions, purse funds, and other distributions that might need a legislative change to address and allocate if subsequent racing weeks in the northern zone are not assigned.

According to media reports, at the August 2023 CHRB meeting, representatives of the Stronach Group discussed the possibility of keeping Golden Gate Fields open for an additional six months until mid-2024 on the condition that the law governing the distribution of simulcasting proceeds be revised to benefit the tracks in southern California, where the company is attempting to consolidate its operations. Consequently, the need for this bill.

If/when Golden Gate Fields closes for racing purposes, this bill attempts to address the potential gap in racing dates in the northern zone by allowing a racing association in the southern zone that is the host in the South at the time that there is no live racing in the northern zone to be deemed to be operating in the northern zone for the purposes of conducting wagering and making and receiving required distributions from wagers in accordance with existing law.

Next year's racing calendar in northern California is still yet to be decided by the CHRB. If/when Golden Gate Fields closes, the Alameda County Fair, Sonoma County Fair, and California State Fair may play a larger role in race dates and/or the stabling and training of racehorses in future years. Some racing fairs have raised the possibility of expanding their racing operations while supporting the continuation of live horse racing in northern California for all associated participants.

Supporters note that the goal of this legislation is for Golden Gate Fields to remain open through June 2024, which will enable all of California's racing's stakeholders to plan for the future of horse racing in the state.

Additionally, this bill would authorize any fair in the County of Stanislaus, with the approval of the Department of Food and Agriculture and the authorization of the CHRB, to operate one satellite wagering facility within the boundaries of the fair. This provision is consistent with Assembly actions.

Satellite Wagering Facilities. Simulcasting is the process of transmitting the audio and video signal of a live racing performance from one facility to a satellite for re-transmission to other locations or venues where pari-mutuel wagering is permitted. Satellite wagering has been legal in California since 1985. It was authorized at a time when California racetracks were beginning to experience declining attendance and handle figures. The industry believed that making the product easier to access not only would expose and market horse racing to potential customers, but also would make it more convenient for the existing patrons to wager more often. Currently, there are 25 satellite-wagering facilities in California. In some cases, facilities are simulcast-only operations that do not have live racing.

Advanced Deposit Wagering. In 2001, SB 471 (Hertzberg), Chapter 198, authorized a racing association or fair to accept bets via the telephone or Internet during the period that they are conducting a live race meet. ADW is a form of wagering that allows for bettors to deposit funds, in advance of a horse race, into an account in order to wager online or over the phone. These wagers are commingled into pools at the host track where the races are run, and within the pari-mutuel wagering system regulated by the CHRB. Over the past five years, ADW betting has dramatically increased, while at the same time wagering has declined at the traditional outlets (on-track and satellite wagering locations in the state).

Racetrack Attendance. There has been a general decline in the number of people attending and wagering at live horse racetracks in California due to a number of factors, including increased competition from other forms of gaming, unwillingness of customers to travel a significant distance to racetracks and the availability of off-track wagering. The declining attendance at live horse racing events has prompted racetracks to rely on revenues from in-state and out-of-state satellite wagering and advance deposit wagering. Simply put, declining attendance has led to diminished on-track betting revenue, which in turn has led to smaller purses and reduced income for the respective recipients.

According to the Author

According to the author's office, "Horse racing has existed in Northern California since 1858, when America's oldest one-mile race track was built in Alameda County. In July, it was announced that Golden Gate Fields would be permanently closing at the end of 2023 and thus jeopardize the future of racing in Northern California. AB 1074 will keep Golden Gate Fields open until July 1, 2024 and allow for monies generated in the North to be split proportionally among racing associations and fairs in the central and southern zones when racing is not taking place in the North. This bill is a compromise between the State's horse racing interests and provides the industry with a period of transition to address the needs of the Northern California breeders, owners, trainers, and horseracing workforce."

Arguments in Support

The California Authority of Racing Fairs (CARF) writes, "Thoroughbred racing in California received a surprise announcement earlier this summer that Golden Gate Fields would be closing at the end of 2023. The announcement left CARF and its partners with little time to prepare Northern California for the transition. This left owners, trainers, breeders, employees, and others who call Northern California home with an uncertain future. Further, the language amended into AB 1074 is a compromise between thoroughbred racing stakeholders in the North and South. With this language, Golden Gate Fields will agree to remain open for the first 6 months of 2024, providing all stakeholders much needed time to implement a transition strategy. AB 1074 will provide CARF and its industry partners with the opportunity to show that racing in Northern California can survive and flourish with the Fairs leading the way."

1/ST Racing & Gaming writes, "AB 1074 represents a consensus approach to the distribution of parimutuel revenues in the event of the ultimate closure of Golden Gate Fields, located in Albany and Berkeley, California. The legislation provides clarity in lieu of uncertainty in that event and ensures funding for important regulatory efforts should there be unallocated race dates for thoroughbred racing in Northern California."

Arguments in Opposition

None on file.

FISCAL COMMENTS

Unknown.

VOTES

ASM GOVERNMENTAL ORGANIZATION: 22-0-0

YES: Santiago, Lackey, Aguiar-Curry, Berman, Bryan, Cervantes, Megan Dahle, Davies, Garcia, Gipson, Jones-Sawyer, Low, Mathis, McCarty, McKinnor, Jim Patterson, Quirk-Silva, Ramos, Robert Rivas, Blanca Rubio, Ta, Villapudua

ASM APPROPRIATIONS: 15-0-1

YES: Holden, Megan Dahle, Bryan, Calderon, Wendy Carrillo, Dixon, Mike Fong, Hart, Lowenthal, Mathis, Papan, Pellerin, Robert Rivas, Sanchez, Ortega

ABS, ABST OR NV: Weber

ASSEMBLY FLOOR: 76-0-4

YES: Addis, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Cervantes, Chen, Connolly, Megan Dahle, Davies, Dixon, Essayli, Flora, Mike Fong, Vince Fong, Friedman, Gabriel, Gallagher, Garcia, Gipson, Grayson, Haney, Hart, Holden, Hoover, Irwin, Jackson, Jones‑Sawyer, Lackey, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Jim Patterson, Joe Patterson, Pellerin, Petrie-Norris, Quirk‑Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Sanchez, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Rendon

ABS, ABST OR NV: Aguiar-Curry, Kalra, Mathis, Papan

SENATE FLOOR: 39-0-1

YES: Allen, Alvarado-Gil, Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Cortese, Dahle, Dodd, Durazo, Eggman, Glazer, Gonzalez, Grove, Hurtado, Jones, Laird, Limón, McGuire, Menjivar, Min, Newman, Nguyen, Niello, Ochoa Bogh, Padilla, Portantino, Roth, Rubio, Seyarto, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener, Wilk

ABS, ABST OR NV: Caballero

ASM GOVERNMENTAL ORGANIZATION: 18-0-4

YES: Santiago, Lackey, Aguiar-Curry, Berman, Cervantes, Megan Dahle, Davies, Gipson, Jones-Sawyer, Low, Mathis, McCarty, Jim Patterson, Quirk-Silva, Ramos, Blanca Rubio, Ta, Valencia

ABS, ABST OR NV: Bryan, Garcia, McKinnor, Villapudua

SENATE FLOOR: 38-0-2

YES: Allen, Alvarado-Gil, Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dahle, Dodd, Durazo, Glazer, Gonzalez, Grove, Hurtado, Jones, Limón, McGuire, Menjivar, Min, Newman, Nguyen, Niello, Ochoa Bogh, Padilla, Portantino, Roth, Rubio, Seyarto, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener, Wilk

ABS, ABST OR NV: Eggman, Laird

UPDATED

VERSION: September 8, 2023

CONSULTANT: Eric Johnson / G.O. / (916) 319-2531 FN: 0002457

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 1074

Author:(Alanis)

As Amended Ver:September 8, 2023

Majority vote

SUMMARY

Provides if the California Horse Racing Board (CHRB) does not license a thoroughbred race meet at a racetrack (Golden Gate Fields) located in the cities of Berkeley and Albany after July 1, 2024, and no live horse racing is being conducted in the northern zone, this bill would deem a thoroughbred racing association or racing fair in the southern or central zone, as specified, to be operating in the northern zone for the purpose of conducting all permissible forms of wagering in the northern zone and making and receiving required distributions from those wagers.

Additionally, the bill would permit a fair in the County of Stanislaus, with the approval of the Department of Food and Agriculture and the authorization of the CHRB, to operate one satellite wagering facility within the boundaries of the fair, under the same conditions as apply in the Counties of Kern and Shasta.

Senate Amendments

1. Provide if the CHRB does not license a thoroughbred race meet to be conducted by a racing association at a racetrack located in the cities of Berkeley and Albany after July 1, 2024, a thoroughbred racing association, or racing fair, in the southern or central zone licensed by the board to conduct a thoroughbred race meet or fair meet shall, during racing weeks not allocated by the board for a race meet in the northern zone, be deemed to be operating in the northern zone for the purpose of conducting all permissible forms of wagering in the northern zone pursuant to existing law and making and receiving required distributions from those wagers, as specified.
2. Provide that the required distributions described above be made in accordance with the requirements applicable to a racing association in the northern zone and any consent or approval rights shall be exercised by the appropriate racing association or racing fair in the central or southern zone conducting racing.
3. Require that the amounts generated for purses and commissions pursuant to this bill be used to pay simulcast funding requirements and CHRB support that the thoroughbred racing associations and racing fair in the central or southern zones are required to make, as specified.
4. Require any remaining funds after those payments to be distributed to each thoroughbred racing association and racing fair in the central and southern zone proportionally based on their respective handle in the central and southern zone during the previous fiscal year and requires that money to be divided between purses and commissions in the same relative proportion as was generated in the central and southern zone during the previous fiscal year.

Existing law:

1. Article IV, Section 19(b) of the Constitution of the State of California provides that the Legislature may provide for the regulation of horse races and horse race meetings and wagering on the results. Permits the CHRB to issue licenses to associations and fairs that participate in horse racing meetings with pari-mutuel wagering and to allocate racing dates to those associations and fairs in accordance with law.
2. Allows the CHRB to make allocations of racing weeks as it deems appropriate and specifies the maximum number of racing weeks that may be allocated for horse racing other than at fairs, including, for thoroughbred racing, a maximum of 44 weeks per year of racing weeks in the northern zone and a maximum of 49 weeks per year in the combined central and southern zones.
3. Permits the CHRB to allocate up to four weeks of racing to a fair in the northern zone even if the fair is not conducting any type of fair activities.
4. Permits the San Mateo County Fair to conduct a live racing meeting in the northern zone at another site within or outside San Mateo County if its present site, Bay Meadows, closes.
5. Authorizes the Solano County Fair to conduct live racing meetings at another site within or outside Solano County, if the site of its 2002-racing meeting is no longer available for horse racing in any subsequent year.
6. Authorizes thoroughbred racing associations or fairs to accept and distribute the audiovisual signal and take wagers on the results of out-of-zone, out-of-state, international races, and via advance deposit wagering during the calendar period the association or fair is conducting live racing, including days on which there is no live racing being conducted by the association or fair.
7. Permits any fair in the Counties of Kern or Shasta, with the approval of CDFA and the authorization of the CHRB, to operate one satellite wagering facility within the boundaries of the fair, as specified.

COMMENTS

Background.

California Horse Racing. Horse racing in California is comprised of horse owners, breeders, trainers, racing associations and their employees, county fairs and district agricultural associations, as well as the bettors/fans, and the State of California. These parties are linked through the pari-mutuel pool, which represents the total money wagered on a horse race (handle) and is the primary source of funding for the industry.

Wagering on horse racing was approved by constitutional amendment in 1933, principally as a means to generate income for the state and to fund safety and maintenance projects at California's state and local fairgrounds. Racetracks are multi-faceted operations that feature various employment categories, many of which are represented by unions.

California horse racing is generally divided into two zones: the northern zone and the southern zone (for wagering purposes, the central and southern zones are combined into one region, referred to as the South in this analysis). The CHRB has traditionally assigned race dates to Santa Anita Park, Los Alamitos, and Del Mar Thoroughbred Club in the South and to Golden Gate Fields, the Alameda County Fair, the Sonoma County Fair, the Humboldt County Fair, the California Exposition and State Fair, and the Big Fresno Fair in the North. Cumulatively, there is nearly constant thoroughbred racing year-round at one of the locations in each of the two geographic zones.

For wagering purposes, bets made in California (in-person or online) remain in the respective zone where it is placed by the patron. A host track that is operating a live race meet during a specific period, in a designated zone generates track revenue and purse money from all wagers, as well as other mandated distributions in law (CHRB regulatory costs, backstretch retirement fund and workers' compensation, breeders incentives, local municipal tax, equine health research, and stabling and vanning). For instance, when Golden Gate Fields is the host in the northern zone, it generates track revenue and purse money from wagers placed in northern zone, whether the customer is wagering at Golden Gate Fields, a satellite wagering facility, out-of-state, or via advance deposit wagering.

It should be noted that since 1994, the North and South regions have exchanged their live racing signals for free to support the overall racing program in California.

Status of the Horse Racing Industry in California. The California horse racing industry's long-term health is threatened by a combination of factors, including competition from racing in other states, other forms of gaming within California, major racetrack closures (Bay Meadows Racecourse in San Mateo, California in 2008 and Hollywood Park racetrack in Inglewood, California in 2013), and the potential for higher return from development than operating revenues. As resources shrink, the industry is experiencing deficits in virtually every one of its revenue sources. In some instances, traditional takeout and distribution formulas are no longer able to sustain ongoing operations.

As the value of racing operations decline, track ownership is struggling to maximize the needed return on their investment and tempted by alternative uses of the property that yield higher returns. Consequently, the racing industry is suffering unprecedented instability and capital flight. Tens of thousands of industry jobs are in jeopardy, along with breeding farms and agricultural based operations throughout California. A substantial amount of local and state revenue, generated both directly and indirectly by the industry, is also at risk.

The Future of Golden Gate Fields and AB 1074. Golden Gate Fields is a racetrack located within the cities of Albany and Berkeley, California. The track is located between the shoreline of the San Francisco Bay and the Eastshore Freeway. The 140-acre facility was opened in 1941, and it has a one-mile synthetic track, a turf course, and ample barns for year-round use.

Golden Gate Fields is owned by the Stronach Group (1/ST Racing and Gaming), which also owns and operates Santa Anita Park racetrack in southern California, a prominent racetrack and a frequent host of the Breeders' Cup World Championship. On July 16 of this year, the Stronach Group announced the permanent closure of Golden Gate Fields at the end of the scheduled 2023 race meet. A press release issued by track's owner stated, "At the conclusion of the Golden Gate Fields meet, the company will focus on seamlessly transitioning horses from northern California to southern California with the goal of increasing field sizes and adding another day of racing to the weekly racing calendar at Santa Anita Park, come January 2024. This consolidation will provide expanded content opportunities and wagering prospects, and will serve to further elevate the overall customer experience at Santa Anita Park." The company plans to invest more than $30 million in improvements to Santa Anita in coming years.

Because only 12 weeks of live racing are allotted by the CHRB to be held at fair racetracks in the northern zone, and the remaining annual dates are assigned to be held at Golden Gate Fields, a pending closure will have a significant impact on the future of horse racing in northern California. In essence, if Golden Gate Fields closes at the end of 2023, thoroughbred racing in the northern zone appears to be facing a large gap in the racing calendar unless another entity or fair(s) applies to the CHRB to operate the dates, which have been traditionally allocated.

Furthermore, it is unclear under current law whether it is permissible to accept bets and distribute revenue from simulcasting and Advance Deposit Wagering (ADW) operations due to potential gaps in the racing calendar. According to the most recent CHRB annual report, the handle at Golden Gate Fields in 2022 totaled over $524 million for its 120 live race dates. This handle resulted in about $25 million in track commissions, purse funds, and other distributions that might need a legislative change to address and allocate if subsequent racing weeks in the northern zone are not assigned.

According to media reports, at the August 2023 CHRB meeting, representatives of the Stronach Group discussed the possibility of keeping Golden Gate Fields open for an additional six months until mid-2024 on the condition that the law governing the distribution of simulcasting proceeds be revised to benefit the tracks in southern California, where the company is attempting to consolidate its operations. Consequently, the need for this bill.

If/when Golden Gate Fields closes for racing purposes, this bill attempts to address the potential gap in racing dates in the northern zone by allowing a racing association in the southern zone that is the host in the South at the time that there is no live racing in the northern zone to be deemed to be operating in the northern zone for the purposes of conducting wagering and making and receiving required distributions from wagers in accordance with existing law.

Next year's racing calendar in northern California is still yet to be decided by the CHRB. If/when Golden Gate Fields closes, the Alameda County Fair, Sonoma County Fair, and California State Fair may play a larger role in race dates and/or the stabling and training of racehorses in future years. Some racing fairs have raised the possibility of expanding their racing operations while supporting the continuation of live horse racing in northern California for all associated participants.

Supporters note that the goal of this legislation is for Golden Gate Fields to remain open through June 2024, which will enable all of California's racing's stakeholders to plan for the future of horse racing in the state.

Additionally, this bill would authorize any fair in the County of Stanislaus, with the approval of the Department of Food and Agriculture and the authorization of the CHRB, to operate one satellite wagering facility within the boundaries of the fair. This provision is consistent with Assembly actions.

Satellite Wagering Facilities. Simulcasting is the process of transmitting the audio and video signal of a live racing performance from one facility to a satellite for re-transmission to other locations or venues where pari-mutuel wagering is permitted. Satellite wagering has been legal in California since 1985. It was authorized at a time when California racetracks were beginning to experience declining attendance and handle figures. The industry believed that making the product easier to access not only would expose and market horse racing to potential customers, but also would make it more convenient for the existing patrons to wager more often. Currently, there are 25 satellite-wagering facilities in California. In some cases, facilities are simulcast-only operations that do not have live racing.

Advanced Deposit Wagering. In 2001, SB 471 (Hertzberg), Chapter 198, authorized a racing association or fair to accept bets via the telephone or Internet during the period that they are conducting a live race meet. ADW is a form of wagering that allows for bettors to deposit funds, in advance of a horse race, into an account in order to wager online or over the phone. These wagers are commingled into pools at the host track where the races are run, and within the pari-mutuel wagering system regulated by the CHRB. Over the past five years, ADW betting has dramatically increased, while at the same time wagering has declined at the traditional outlets (on-track and satellite wagering locations in the state).

Racetrack Attendance. There has been a general decline in the number of people attending and wagering at live horse racetracks in California due to a number of factors, including increased competition from other forms of gaming, unwillingness of customers to travel a significant distance to racetracks and the availability of off-track wagering. The declining attendance at live horse racing events has prompted racetracks to rely on revenues from in-state and out-of-state satellite wagering and advance deposit wagering. Simply put, declining attendance has led to diminished on-track betting revenue, which in turn has led to smaller purses and reduced income for the respective recipients.

According to the Author

According to the author's office, "Horse racing has existed in Northern California since 1858, when America's oldest one-mile race track was built in Alameda County. In July, it was announced that Golden Gate Fields would be permanently closing at the end of 2023 and thus jeopardize the future of racing in Northern California. AB 1074 will keep Golden Gate Fields open until July 1, 2024 and allow for monies generated in the North to be split proportionally among racing associations and fairs in the central and southern zones when racing is not taking place in the North. This bill is a compromise between the State's horse racing interests and provides the industry with a period of transition to address the needs of the Northern California breeders, owners, trainers, and horseracing workforce."

Arguments in Support

The California Authority of Racing Fairs (CARF) writes, "Thoroughbred racing in California received a surprise announcement earlier this summer that Golden Gate Fields would be closing at the end of 2023. The announcement left CARF and its partners with little time to prepare Northern California for the transition. This left owners, trainers, breeders, employees, and others who call Northern California home with an uncertain future. Further, the language amended into AB 1074 is a compromise between thoroughbred racing stakeholders in the North and South. With this language, Golden Gate Fields will agree to remain open for the first 6 months of 2024, providing all stakeholders much needed time to implement a transition strategy. AB 1074 will provide CARF and its industry partners with the opportunity to show that racing in Northern California can survive and flourish with the Fairs leading the way."

1/ST Racing & Gaming writes, "AB 1074 represents a consensus approach to the distribution of parimutuel revenues in the event of the ultimate closure of Golden Gate Fields, located in Albany and Berkeley, California. The legislation provides clarity in lieu of uncertainty in that event and ensures funding for important regulatory efforts should there be unallocated race dates for thoroughbred racing in Northern California."

Arguments in Opposition

None on file.

FISCAL COMMENTS

Unknown. This bill is keyed non-fiscal by the Legislative Counsel.

VOTES:

ASM GOVERNMENTAL ORGANIZATION: 22-0-0

YES: Santiago, Lackey, Aguiar-Curry, Berman, Bryan, Cervantes, Megan Dahle, Davies, Garcia, Gipson, Jones-Sawyer, Low, Mathis, McCarty, McKinnor, Jim Patterson, Quirk-Silva, Ramos, Robert Rivas, Blanca Rubio, Ta, Villapudua

ASM APPROPRIATIONS: 15-0-1

YES: Holden, Megan Dahle, Bryan, Calderon, Wendy Carrillo, Dixon, Mike Fong, Hart, Lowenthal, Mathis, Papan, Pellerin, Robert Rivas, Sanchez, Ortega

ABS, ABST OR NV: Weber

ASSEMBLY FLOOR: 76-0-4

YES: Addis, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Cervantes, Chen, Connolly, Megan Dahle, Davies, Dixon, Essayli, Flora, Mike Fong, Vince Fong, Friedman, Gabriel, Gallagher, Garcia, Gipson, Grayson, Haney, Hart, Holden, Hoover, Irwin, Jackson, Jones-Sawyer, Lackey, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Jim Patterson, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Sanchez, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Rendon

ABS, ABST OR NV: Aguiar-Curry, Kalra, Mathis, Papan

SENATE FLOOR: 39-0-1

YES: Allen, Alvarado-Gil, Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Cortese, Dahle, Dodd, Durazo, Eggman, Glazer, Gonzalez, Grove, Hurtado, Jones, Laird, Limón, McGuire, Menjivar, Min, Newman, Nguyen, Niello, Ochoa Bogh, Padilla, Portantino, Roth, Rubio, Seyarto, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener, Wilk

ABS, ABST OR NV: Caballero

SENATE FLOOR: 38-0-2

YES: Allen, Alvarado-Gil, Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dahle, Dodd, Durazo, Glazer, Gonzalez, Grove, Hurtado, Jones, Limón, McGuire, Menjivar, Min, Newman, Nguyen, Niello, Ochoa Bogh, Padilla, Portantino, Roth, Rubio, Seyarto, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener, Wilk

ABS, ABST OR NV: Eggman, Laird

UPDATED

VERSION: September 8, 2023

CONSULTANT: Eric Johnson / G.O. / (916) 319-2531 FN: 0002443

 THIRD READING  

Bill No: AB 1074

Author: Alanis (R), et al.

Amended: 9/8/23 in Senate

Vote: 21

SENATE GOVERNMENTAL ORG. COMMITTEE: 15-0, 6/27/23

AYES: Dodd, Wilk, Alvarado-Gil, Archuleta, Ashby, Bradford, Glazer, Jones, Nguyen, Ochoa Bogh, Padilla, Portantino, Roth, Rubio, Seyarto

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

SENATE FLOOR: 38-0, 8/17/23 (Consent)

AYES: Allen, Alvarado-Gil, Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dahle, Dodd, Durazo, Glazer, Gonzalez, Grove, Hurtado, Jones, Limón, McGuire, Menjivar, Min, Newman, Nguyen, Niello, Ochoa Bogh, Padilla, Portantino, Roth, Rubio, Seyarto, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener, Wilk

NO VOTE RECORDED: Eggman, Laird

ASSEMBLY FLOOR: 76-0, 5/25/23 (Consent) - See last page for vote

SUBJECT: Horse racing

SOURCE: California Authority of Racing Fairs

DIGEST:

This bill deems a thoroughbred racing association or racing fair in the Southern or Central zone as operating in the Northern zone for purposes of conducting wagering and making and receiving required distributions from those wagers if or when there is no live thoroughbred racing occurring in the Northern zone after July 1, 2024, as specified; and, authorizes any fair in the County of Stanislaus, with the approval of the Department of Food and Agriculture (CDFA) and the authorization of the California Horse Racing Board (CHRB), to operate one satellite wagering facility within the boundaries of the fair, as specified.

Senate Floor Amendments of 9/8/23, for racing weeks not allocated by the CHRB in the Northern zone, deem a racing association in the Southern or Central zone as operating in the Northern zone for purposes of conducting wagering in the Northern zone and making and receiving required distributions from those wagers, as specified.

ANALYSIS:

Existing law:

1. Vest, pursuant to Horse Racing Law, the CHRB with jurisdiction and supervision over horse racing meetings in the state and requires the CHRB to issue licenses to associations and fairs that participate in horse racing meetings with parimutuel wagering and to allocate racing dates to those associations and fairs in accordance with law.
2. Authorizes the CHRB to issue a license to an association or a fair to conduct a horse racing meeting in accordance with its provisions at the track specified in the written application, as specified.
3. Authorizes the CHRB to allocate racing weeks to an applicant, subject to specified limitations, and specify the racing days, dates, and hours for horse racing meetings that will be in the public interest and will subserve the purposes of that law.
4. Requires CHRB to make allocations of racing weeks as it deems appropriate and specifies the maximum number of racing weeks that may be allocated for horse racing other than at fairs, including, for thoroughbred racing, a maximum of 44 weeks per year of racing weeks in the Northern zone and a maximum of 49 weeks per year in the combined Central and Southern zones.
5. Permits any fair in the Counties of Kern or Shasta, with the approval of CDFA and the authorization of the CHRB, to operate one satellite wagering facility within the boundaries of the fair, as specified.

This bill:

1. Provides that if the CHRB does not license a thoroughbred race meet in the cities of Berkeley and Albany after July 1, 2024, a thoroughbred racing association, or racing fair, in the Southern or Central zone shall be deemed to be operating in the Northern zone during racing weeks not allocated in the North for the purpose of conducting all permissible forms of wagering in the Northern zone pursuant to existing law and making and receiving required distributions from those wagers, as specified.
   
2. Provides that the required distributions described above be made in accordance with the requirements applicable to a racing association in the Northern zone and any consent or approval rights shall be exercised by the appropriate racing association or racing fair in the Central or Southern zone conducting racing.
   
3. Requires that the amounts generated for purses and commissions pursuant to this bill be used to pay simulcast funding requirements and CHRB support that the thoroughbred racing associations and racing fair in the Central or Southern zones are required to make, as specified.
   
4. Requires any remaining funds after those payments to be distributed to each thoroughbred racing association and racing fair in the Central and Southern zone proportionally based on their respective handle in the Central and Southern zone during the previous fiscal year and requires that money to be divided between purses and commissions in the same relative proportion as was generated in the Central and Southern zone during the previous fiscal year.
   
5. Authorizes any fair in the County of Stanislaus, with the approval of the CDFA and the authorization of the CHRB, to operate one satellite wagering facility within the boundaries of the fair, on the same conditions as apply in the Counties of Kern and Shasta.

Comments

Author Statement. According to the author’s office, “Horse racing has existed in Northern California since 1858, when America’s oldest one-mile race track was built in Alameda County. In July, it was announced that Golden Gate Fields would be permanently closing at the end of 2023 and thus jeopardize the future of racing in Northern California. AB 1074 will keep Golden Gate Fields open until July 1, 2024 and allow for monies generated in the North to be split proportionally among racing associations and fairs in the Central and Southern zones when racing is not taking place in the North.  This legislation is a compromise between the State’s horse racing interests and provides the industry with a period of transition to address the needs of the Northern California breeders, owners, trainers, and horseracing workforce.”    

California Horse Racing. Horse racing in California is comprised of horse owners, breeders, trainers, racing associations and their employees, county fairs and district agricultural associations, as well as the bettors/fans, and the State of California. These parties are linked through the parimutuel pool, which represents the total money wagered on a horse race (handle) and is the primary source of funding for the industry.

Wagering on horse racing was approved by constitutional amendment in 1933, principally as a means to generate income for the state and to fund safety and maintenance projects at California’s state and local fairgrounds. Racetracks are multi-faceted operations that feature various employment categories, many of which are represented by unions.

California horse racing is generally split into two zones: the Northern zone and the Southern zone (for wagering, the Central and Southern zones are grouped into one zone referred to as Southern in this analysis). The Southern zone racing dates are assigned by the CHRB to Santa Anita, Los Alamitos, and Del Mar on an annual basis while the Northern zone racing dates are similarly assigned to Golden Gate Fields, the Pleasanton Fair, the Cal Expo State fair, the Santa Rosa fair, the Ferndale fair, and the Fresno fair. Cumulatively, there is nearly constant thoroughbred racing year-round at one of the locations in each of the two geographic zones.

Money wagered in California (in-person or online) stays in the zone where it is wagered. The host track running race dates during that time in the zone collects track revenue and purse money from that wager as well as other mandated distributions. For example, when Golden Gate Fields is the host in the Northern zone, it collects revenue and purse money for all wagers placed in Northern California, whether the customer is wagering on races at Golden Gate Fields, a Southern zone track that is concurrently racing, or any out of state track. Each of California’s two geographic zones provide one another with their racing signal free of charge for the benefit of one another.

Satellite Wagering Facilities. Simulcasting is the process of transmitting the audio and video signal of a live racing performance from one facility to a satellite for re-transmission to other locations or venues where pari-mutuel wagering is permitted. Simulcasting provides racetracks with the opportunity to increase revenues by exporting their live racing content to as many wagering locations as possible, such as other racetracks, fair satellite facilities, and Indian casinos. Revenues increase because simulcasting provides racetracks that export their live content with additional customers in multiple locations who would not have otherwise been able to place wagers on the live racing event. In some cases, facilities are simulcast-only facilities that do not have live racing.

California has allowed off-track betting in satellite wagering facilities throughout the state for over 30 years. Satellite wagering was authorized at a time when California racetracks were beginning to experience declining attendance and handle figures. At the time, it was believed that making the product easier to access would expose and market horse racing to additional customers and make it more convenient for existing patrons to wager more often. According to the 52^nd Annual Report of the California Horse Racing Board, the CHRB currently regulates 23 simulcast-only wagering facilities in the state.

Advanced Deposit Wagering. ADW is a form of wagering that allows for bettors to deposit funds, in advance of a horse race, into an account in order to wager online or over the phone. These wagers are commingled into pools at the host track where the races are run, and within the pari-mutuel wagering system regulated by the CHRB.

Golden Gate Fields. Golden Gate Fields is a horse racing track located within the cities of Albany and Berkeley, California. The track is located between the shoreline of the San Francisco Bay and the Eastshore Freeway. The track was opened in 1941, is located on 140 acres, features a one-mile synthetic track and a turf course, and includes stalls for 1,420 horses.

Golden Gate Fields is owned by the Stronach Group’s 1/ST Racing, which also owns and operates the Santa Anita Park track in Southern California. On July 16 of this year, the Stronach Group announced the permanent closure of Golden Gate Fields at the end of the scheduled 2023 race meet. The last day of racing at Golden Gate Fields is scheduled for December 2023. For the 2023 racing year, the fairs in the Northern zone were assigned 12 weeks amongst themselves, with the remainder the year’s weeks assigned to Golden Gate Fields.

When Golden Gate Fields closes at the end of this year, thoroughbred racing in the Northern zone appears to be facing a significant gap in the racing calendar unless a Southern host assumes the annual dates previously assigned to Golden Gate Fields or those dates are assigned to expand fair racing in the North. Under existing law, a potential gap in racing dates for the Northern zone leaves the authority to collect and distribute funds wagered in the North remains unclear. According to the most recent CHRB annual report, the handle at Golden Gate Fields in 2022 totaled over $524 million for its 120 programs, only $7 million below 2021, which hosted 13 more programs. That handle generated approximately $25 million in track commissions and purse funds that require a legislative change to address and distribute if future racing weeks go unassigned in the Northern zone.

This bill attempts to address the potential gap in racing dates in the Northern zone by requiring a racing association in the Southern zone that is the host in the South at the time that there is no live racing in the Northern zone to be deemed to be operating in the Northern zone for the purposes of conducting wagering and making and receiving required distributions from wagers in accordance with existing law. It is expected that if this bill becomes law, Golden Gate Fields will stay open an additional six months, until July 2024.

Additionally, this bill authorizes any fair in the County of Stanislaus, with the approval of CDFA and the authorization of the CHRB, to operate one satellite wagering facility within the boundaries of the fair.

Related/Prior Legislation

SB 624 (Alvarado-Gil, 2023) allows CDFA to receive reimbursement for the cost of allocating revenue received from sales tax collected on state-designated fairgrounds to fairs, not to exceed five percent of the funds. (Held on the Assembly Revenue and Tax Committee Suspense File)

AB 1174 (Joe Patterson, 2023) requires agreements between horse racing association or fairs and minisatellite wagering facilities in California to explicitly specify which live in-state races will be made available to these wagering sites, as specified. (Pending in the Senate Governmental Organization Committee)

AB 1768 (Committee on Governmental Organization, 2023) exempts from the 50 imported race per day limitation, races imported that are part of the race card of the Pegasus World Cup. (Pending on the Senate Floor)

SB 820 (Committee on Governmental Organization, Chapter 393, Statutes of 2022) made specified changes related to the calculation of revenues for California fairs derived from sales tax collected on state-designated fairgrounds.

AB 471 Hertzberg, Chapter 198, Statutes of 2001) among other things, authorized the CHRB to permit racing associations to accept ADW wagers, as specified.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

SUPPORT: (Verified 9/11/23)

California Authority of Racing Fairs

California Thoroughbred Breeders Association

OPPOSITION: (Verified 9/11/23)

None received

ARGUMENTS IN SUPPORT: In support of the bill, the California Authority of Racing Fairs (CARF) writes that, “[t]horoughbred racing in California received a surprise announcement earlier this summer, Golden Gate Fields would be closing at the end of 2023. The announcement left CARF and its partners with little time to prepare Northern California for the transition. This left owners, trainers, breeders, employees, and others who call Northern California home with an uncertain future.”

Further, “[t]he language amended into AB 1074 is a compromise between thoroughbred racing stakeholders in the north and south. With this language, Golden Gate Fields will agree to remain open for the first 6 months of 2024, providing all stakeholders much needed time to implement a transition strategy. After July 1, 2024, the language provides that host monies generated in the north will be split proportionally among racing associations and fairs in the central and southern zones when racing is not happening in the north.”

Finally, “[r]acing in California started in Northern California at Alameda. It started because the Network of California Fairs provided the opportunity. AB 1074 will provide CARF and its industry partners with the opportunity to show that racing in Northern California can survive and flourish with the Fairs leading the way.”

ASSEMBLY FLOOR: 76-0, 5/25/23

AYES: Addis, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Cervantes, Chen, Connolly, Megan Dahle, Davies, Dixon, Essayli, Flora, Mike Fong, Vince Fong, Friedman, Gabriel, Gallagher, Garcia, Gipson, Grayson, Haney, Hart, Holden, Hoover, Irwin, Jackson, Jones-Sawyer, Lackey, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Jim Patterson, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Sanchez, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Rendon

NO VOTE RECORDED: Aguiar-Curry, Kalra, Mathis, Papan

Prepared by: Brian Duke / G.O. / (916) 651-1530

9/11/23 17:50:56

**** END ****

 CONSENT  

Bill No: AB 1074

Author: Alanis (R)

Amended: 4/20/23 in Assembly

Vote: 21

SENATE GOVERNMENTAL ORG. COMMITTEE: 15-0, 6/27/23

AYES: Dodd, Wilk, Alvarado-Gil, Archuleta, Ashby, Bradford, Glazer, Jones, Nguyen, Ochoa Bogh, Padilla, Portantino, Roth, Rubio, Seyarto

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

ASSEMBLY FLOOR: 76-0, 5/25/23 (Consent) - See last page for vote

SUBJECT: Horse racing: fairs: satellite wagering facilities

SOURCE: California Authority of Racing Fairs

DIGEST:

This bill authorizes any fair in the County of Stanislaus, with the approval of the Department of Food and Agriculture (CDFA) and the authorization of the California Horse Racing Board (CHRB), to operate one satellite wagering facility within the boundaries of the fair, as specified.

ANALYSIS:

Existing law:

1. Authorizes the CHRB to permit fairs to operate satellite wagering facilities at their fairgrounds, under certain conditions.
2. Permits any fair in the Counties of Kern or Shasta, with the approval of CDFA and the authorization of the CHRB, to operate one satellite wagering facility within the boundaries of the fair, as specified.

This bill authorizes any fair in the County of Stanislaus, with the approval of CDFA and the authorization of the CHRB, to operate one satellite wagering facility within the boundaries of the fair, on the same conditions as apply in the Counties of Kern and Shasta.

Background

Author Statement. According to the author’s office, “AB 1074 will give the Stanislaus County Fairgrounds added flexibility to operate a satellite wagering facility inside the fair's district boundaries. By expanding these operations, the fair will can increase foot traffic and engagement by horse racing enthusiasts while bringing in increased tax revue from race winnings. AB 1074 give the fair another tool with which to decide the future course of satellite wagering operations.”

Satellite Wagering Facilities. Simulcasting is the process of transmitting the audio and video signal of a live racing performance from one facility to a satellite for re-transmission to other locations or venues where pari-mutuel wagering is permitted. Simulcasting provides racetracks with the opportunity to increase revenues by exporting their live racing content to as many wagering locations as possible, such as other racetracks, fair satellite facilities, and Indian casinos. Revenues increase because simulcasting provides racetracks that export their live content with additional customers in multiple locations who would not have otherwise been able to place wagers on the live racing event. In some cases, facilities are simulcast-only facilities that do not have live racing.

California has allowed off-track betting in satellite wagering facilities throughout the state for over 30 years. Satellite wagering was authorized at a time when California racetracks were beginning to experience declining attendance and handle figures. At the time, it was believed that making the product easier to access would expose and market horse racing to additional customers and make it more convenient for existing patrons to wager more often. According to the 52^nd Annual Report of the California Horse Racing Board, the CHRB currently regulates 23 simulcast-only wagering facilities in the state.

Among the state-designated or county fairs that have been given the legal permission to locate additional satellite wagering facilities away from their respective fairgrounds but still within the fair district are the San Joaquin County Fair, Shasta County Fair, Kern County Fair, Los Angeles County Fair, California Exposition and State Fair, Fresno District Fair, Alameda County Fair, San Mateo County Fair, and Solano County Fair. So far, only the Fresno County Fair has taken advantage of this exemption by leasing space in a Fresno downtown card club.

This bill authorizes any fair in the County of Stanislaus, with the approval of CDFA and the authorization of the CHRB, to operate one satellite wagering facility within the boundaries of the fair.

Related/Prior Legislation

SB 624 (Alvarado-Gil, 2023) allows CDFA to receive reimbursement for the cost of allocating revenue received from sales tax collected on state-designated fairgrounds to fairs, not to exceed five percent of the funds. (Pending on the Assembly Revenue and Tax Committee Suspense File)

AB 1174 (Joe Patterson, 2023) requires agreements between horse racing association or fairs and minisatellite wagering facilities in California to explicitly specify which live in-state races will be made available to these wagering sites, as specified. (Pending in the Senate Governmental Organization Committee)

AB 1768 (Committee on Governmental Organization, 2023) exempts from the 50 imported race per day limitation, races imported that are part of the race card of the Pegasus World Cup. (Pending on the Senate Floor)

SB 820 (Committee on Governmental Organization, Chapter 393, Statutes of 2022) made specified changes related to the calculation of revenues for California fairs derived from sales tax collected on state-designated fairgrounds.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

SUPPORT: (Verified 8/14/23)

California Authority of Racing Fairs (source)

OPPOSITION: (Verified 8/14/23)

None received

ARGUMENTS IN SUPPORT: In support of this bill, the California Authority of Racing Fairs writes that this bill “would allow any fair in the County of Stanislaus, with the approval of the California Department of the Food and Agriculture and the board, to operate one satellite wagering facility within the boundaries of the fair. This same authority already exists in Kern and Shasta Counties.”

ASSEMBLY FLOOR: 76-0, 5/25/23

AYES: Addis, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Cervantes, Chen, Connolly, Megan Dahle, Davies, Dixon, Essayli, Flora, Mike Fong, Vince Fong, Friedman, Gabriel, Gallagher, Garcia, Gipson, Grayson, Haney, Hart, Holden, Hoover, Irwin, Jackson, Jones-Sawyer, Lackey, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Jim Patterson, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Sanchez, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Rendon

NO VOTE RECORDED: Aguiar-Curry, Kalra, Mathis, Papan

Prepared by: Brian Duke / G.O. / (916) 651-1530

8/16/23 10:24:54

**** END ****

SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION

Senator Bill Dodd

Chair

2023 - 2024 Regular

Bill No: 1074 Hearing Date: 6/27/2023

SUBJECT: Horse racing: fairs: satellite wagering facilities

DIGEST: This bill authorizes any fair in the County of Stanislaus, with the approval of the Department of Food and Agriculture (CDFA) and the authorization of the California Horse Racing Board (CHRB), to operate one satellite wagering facility within the boundaries of the fair, as specified.

ANALYSIS:

Existing law:

1. Authorizes the CHRB to permit fairs to operate satellite wagering facilities at their fairgrounds, under certain conditions.
2. Permits any fair in the Counties of Kern or Shasta, with the approval of CDFA and the authorization of the CHRB, to operate one satellite wagering facility within the boundaries of the fair, as specified.

This bill authorizes any fair in the County of Stanislaus, with the approval of CDFA and the authorization of the CHRB, to operate one satellite wagering facility within the boundaries of the fair, on the same conditions as apply in the Counties of Kern and Shasta.

Background

Author Statement. According to the author’s office, “AB 1074 will give the Stanislaus County Fairgrounds added flexibility to operate a satellite wagering facility inside the fair's district boundaries. By expanding these operations, the fair will can increase foot traffic and engagement by horse racing enthusiasts while bringing in increased tax revue from race winnings. AB 1074 give the fair another tool with which to decide the future course of satellite wagering operations.”

Satellite Wagering Facilities. Simulcasting is the process of transmitting the audio and video signal of a live racing performance from one facility to a satellite for re-transmission to other locations or venues where pari-mutuel wagering is permitted. Simulcasting provides racetracks with the opportunity to increase revenues by exporting their live racing content to as many wagering locations as possible, such as other racetracks, fair satellite facilities, and Indian casinos. Revenues increase because simulcasting provides racetracks that export their live content with additional customers in multiple locations who would not have otherwise been able to place wagers on the live racing event. In some cases, facilities are simulcast-only facilities that do not have live racing.

California has allowed off-track betting in satellite wagering facilities throughout the state for over 30 years. Satellite wagering was authorized at a time when California racetracks were beginning to experience declining attendance and handle figures. At the time, it was believed that making the product easier to access would expose and market horse racing to additional customers and make it more convenient for existing patrons to wager more often. According to the 52^nd Annual Report of the California Horse Racing Board, the CHRB currently regulates 23 simulcast-only wagering facilities in the state.

Among the state-designated or county fairs that have been given the legal permission to locate additional satellite wagering facilities away from their respective fairgrounds but still within the fair district are the San Joaquin County Fair, Shasta County Fair, Kern County Fair, Los Angeles County Fair, California Exposition and State Fair, Fresno District Fair, Alameda County Fair, San Mateo County Fair, and Solano County Fair. So far, only the Fresno County Fair has taken advantage of this exemption by leasing space in a Fresno downtown card club.

This bill authorizes any fair in the County of Stanislaus, with the approval of CDFA and the authorization of the CHRB, to operate one satellite wagering facility within the boundaries of the fair.

Prior/Related Legislation

SB 624 (Alvarado-Gil, 2023) allows CDFA to receive reimbursement for the cost of allocating revenue received from sales tax collected on state-designated fairgrounds to fairs, not to exceed five percent of the funds. (Pending in the Assembly Agriculture Committee)

AB 1174 (Joe Patterson, 2023) requires agreements between horse racing association or fairs and minisatellite wagering facilities in California to explicitly specify which live in-state races will be made available to these wagering sites, as specified. (Pending in the Senate Governmental Organization Committee)

AB 1768 (Governmental Organization Committee, 2023) exempts from the 50 imported race per day limitation, races imported that are part of the race card of the Pegasus World Cup. (Pending in the Senate Governmental Organization Committee)

SB 820 (Governmental Organization Committee, Chapter 393, Statutes of 2022) made specified changes related to the calculation of revenues for California fairs derived from sales tax collected on state-designated fairgrounds.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT:

California Authority of Racing Fairs (Source)

OPPOSITION:

None received

ARGUMENTS IN SUPPORT: In support of the bill, the California Authority of Racing Fairs writes that this bill “would allow any fair in the County of Stanislaus, with the approval of the California Department of the Food and Agriculture and the board, to operate one satellite wagering facility within the boundaries of the fair. This same authority already exists in Kern and Shasta Counties.”

Date of Hearing: May 17, 2023

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Chris Holden, Chair

ABPCA Bill Id:AB 1074

Author:(Alanis) – As Amended Ver:April 20, 2023

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill authorizes a fair in the County of Stanislaus to operate one satellite wagering facility within the district boundaries of the fair.

The facility can only operate if approved by the Department of Food and Agriculture (CDFA) and California Horse Racing Board (CHRB) and is subject to the same conditions that apply in the counties of Kern and Shasta.

FISCAL EFFECT:

1. Minor and absorbable costs to CDFA and CHRB to authorize the satellite wagering facility.
2. Potential minor revenue increase to fund CHRB and the Kenneth L. Maddy Equine Analytical Chemistry Laboratory at the University of California, Davis, due to increased wagering opportunities.

Additionally, to the extent the satellite wagering facility has food services, which would presumably increase sales tax collected on fairgrounds, this bill could result in a nominal increase in the portion of sales tax revenue returned to support fairs pursuant to AB 1499 (Gray), Chapter 798, Statutes of 2017.

COMMENTS:

1. Purpose. The author intends this bill to give the Stanislaus County Fair added flexibility to possibly relocate a satellite wagering facility inside the fair’s district boundaries, such as to a location that has more foot traffic, if doing so proves to be more profitable. This bill is supported by the California Authority of Racing Fairs.
2. Background.

Satellite Wagering. Simulcasting provides racetracks with the opportunity to increase revenues by exporting their live racing content to as many satellite wagering locations as possible. This type of wagering was authorized over 30 years ago in light of declining attendance at racetracks, with the intent of making horseracing easier to access and market, as well as making it more convenient for existing patrons to wager more often. There are currently 25 satellite wagering facilities in California. Each satellite wagering facility receives 2% of the handle generated from its operation, which constitutes approximately half of the facility’s operating revenue. The other half of the facility’s revenue stems from admissions, parking, and concessions.

Stanislaus County Fair. Existing law allows the California Exposition and State Fair and eight county fairs to locate additional satellite wagering facilities away from their respective fairgrounds, but still within the fair district. Thus far, only the Fresno County Fair has utilized this exemption by leasing space in a downtown Fresno card club.

In April 1994, a satellite wagering facility opened at the Stanislaus County Fair, offering year-round simulcast betting on up to twelve racetracks across the country. However, the facility shut down in 2016 because of a persistent decline in revenue. This bill authorizes a fair in the County of Stanislaus to operate a satellite wagering facility outside the fairgrounds, but within the district boundaries of the fair.

Analysis Prepared by: Irene Ho / APPR. / (916) 319-2081

Date of Hearing: April 26, 2023

ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION

Miguel Santiago, Chair

ABPCA Bill Id:AB 1074 (

Author:Alanis) – As Amended Ver:April 20, 2023

SUBJECT: Horse racing: fairs: satellite wagering facilities.

SUMMARY: This bill would permit a fair in the County of Stanislaus, with the approval of the Department of Food and Agriculture and the authorization of the California Horse Racing Board (CHRB), to operate one satellite wagering facility within the boundaries of the fair, under the same conditions as apply in the Counties of Kern and Shasta.

EXISTING LAW:

1) Provides that the CHRB regulate the various forms of horse racing authorized in this state.

2) Authorizes CHRB to permit licensed racing associations, county fairs, and district agricultural associations to operate satellite wagering facilities, as specified.

3) Authorizes an association licensed to conduct a racing meeting to also operate a satellite wagering facility at its racetrack enclosure, under specified conditions that differ between the northern zone and the central and southern zones, and provides specific guidelines for the operation and location of these facilities.

4) Authorizes fairs to contract for the operation and management of not more than three satellite wagering facilities that are licensed jointly to the 1a District Agricultural Association and the 5th District Agricultural Association and that are located on the fairgrounds of the 1a District Agricultural Association or within the boundaries of the City and County of San Francisco with an individual racing association or a partnership, joint venture, or other affiliation of two or more racing associations that are licensed to conduct thoroughbred meetings within the northern zone.

5) Permits fairs in the Counties of San Joaquin, Sacramento, Humboldt, Shasta, Kern, and Fresno, with the approval of CHRB and the California Department of Food and Agriculture (CDFA), to operate a satellite wagering facility on leased premises within the boundaries of the fair.

6) Provides that the San Mateo County Fair may operate a satellite wagering facility on its fairgrounds or on leased premises in San Mateo County contingent upon the closure of a racing association licensed in the year 2002 to conduct a thoroughbred race meeting in that county.

7) Authorizes CHRB to approve the Solano County Fair to operate a satellite wagering facility on the fairgrounds or on leased premises in Solano County, if the fair ceases to conduct live horse racing at the site of its 2002 racing meeting, as specified.

8) Prohibits a satellite wagering facility from being established if the proposed facility is within 20 miles of an existing satellite wagering facility or any track where live racing occurs.

FISCAL EFFECT: This bill is keyed fiscal by Legislative Counsel.

COMMENTS:

Purpose of this bill. Horse racing at California's network fairs is rich in tradition and history. With its roots established long before the turn of the century, horse racing and fairs have been synonymous over the years. The Stanislaus County Fair's satellite wagering facility in Turlock opened in April 1994 but shut down in 2016 as a result of a persistent decline in revenue. The fair's satellite betting operation offered year-round simulcast betting on up twelve racetracks across the country.

According to the author's office, this bill will give the Fair added flexibility to possibly relocate a satellite wagering facility inside the fair's district boundaries if it proves to be more profitable. The key to covering the costs required to run such an operation may be to operate a satellite facility at a location within the county that has more foot traffic and is more easily accessible to the general public. The legislation's objective is to give the Fair a tool with which to decide the future course of satellite betting operations.

When the Turlock Turf Club was open, more than 17,000 regular customers wagered more than $5.1 million in handle each year.

Simulcasting and satellite wagering facilities. Simulcasting is the process of transmitting the audio and video signal of a live racing performance from one facility to a satellite for retransmission to other locations or venues where pari-mutuel wagering is permitted. Simulcasting provides racetracks with the opportunity to increase revenues by exporting their live racing content to as many satellite wagering locations as possible, such as other racetracks, fairs, and Indian casinos. Satellite wagering facilities accept wagers on races broadcast via simulcast from in-state and out-of-state racetracks. These locations in turn also receive a great deal of revenue from satellite wagering. In some cases, facilities are simulcast-only facilities that do not have live racing.

California has allowed off-track betting in satellite wagering facilities throughout the state for over 30 years. Satellite wagering was authorized at a time when California racetracks were beginning to experience declining attendance and handle figures. At the time, it was believed that making the product easier to access would expose and market horse racing to additional customers and make it more convenient for existing patrons to wager more often. Currently, there are 25 satellite-wagering facilities in California. Each satellite wagering facility receives 2% of the handle generated from its operation. In the pari-mutuel reports, this is shown as a Location Fee. This constitutes approximately half of the gross operating revenue. Admissions, parking, and concessions constitute the other half.

Among the state-designated or county fairs that have been given the legal permission to locate additional satellite wagering facilities away from their respective fairgrounds but still within the fair district are the San Joaquin County Fair, Shasta County Fair, Kern County Fair, Los Angeles County Fair, California Exposition and State Fair, Fresno District Fair, Alameda County Fair, San Mateo County Fair, and Solano County Fair. So far, only the Fresno County Fair has taken advantage of this exemption by leasing space in a Fresno downtown card club.

In 2007, AB 241 (Price), Chapter 594, Statutes of 2007, was enacted to authorize the creation of 15 additional "mini-satellites" in each racing zone for a total of 45. The legislation's stated goals were to increase the handle, or the amount wagered on horse races, and to make the sport of horse racing even more accessible to potential California bettors. Ten mini-satellites have been launched across the state so far.

In addition to satellite wagering California racing enthusiasts are able to wager on horse races via the Internet, telephone or other electronic media through Advance Deposit Wagering (ADW).

Attendance declines. There has been a general decline in the number of people attending and wagering at satellite wagering facilities in California due to a number of factors, including increased competition from other forms of gaming, unwillingness of customers to travel a significant distance to racetracks and the availability of advanced deposit wagering. Declining attendance has caused operations to be scaled back or facilities closed.

Prior legislation. AB 460 (Bigelow), Chapter 817, Statutes of 2017. Authorizes a fair to contract with two or more fairs that are licensed to conduct thoroughbred meetings or simulcast wagering within the northern zone for the operation and management of a satellite wagering facility, as specified.

AB 270 (Perea), Chapter 393, Statutes of 2011. Created an exception in law by authorizing a satellite wagering facility, located on a fairground, to elect not to be subject to the requirements related to a satellite facility supervisor if the board of directors of the fair, after a public hearing, deems those requirements to be not economically feasible.

SB 1439 (Price) of 2010. Would have decreased the exclusion zone in which a "mini-satellite" horse racing wagering facility can be situated in proximity to an existing horse racing satellite wagering facility or live horse racing racetrack from a 20 to 15 mile radius. (Failed passage on Senate Floor)

AB 2215 (Fuentes), Chapter 255, Statutes of 2010. Among other things, authorized a mini-satellite wagering facility to enter into an agreement with an advance deposit wagering (ADW) provider to accept and facilitate the placement of any wager at its facility that a California resident could make through that ADW provider.

AB 241 (Price), Chapter 594, Statutes of 2007. Increased up to 45 mini-satellite wagering sites throughout the State, as defined, that would be able to offer wagering on horse racing via satellite wagering in the northern, central and southern racing zones, as specified. This bill authorized any fair to operate a satellite wagering facility on leased premises within the boundaries of that fair, as specified.

AB 401 (Jerome Horton), Chapter 556, Statutes of 2003. Permits the California Exposition and State Fair, with the approval of CDFA and the authorization of CHRB, to operate one satellite wagering facility within the boundaries of that fair in addition to any facility otherwise

AB 1316 (Dickerson) Chapter 872, Statutes of 2002. Authorized a fair in Shasta County to operate one satellite wagering facility within the boundaries of the fair as specified.

AB 2554 (Thomson) Chapter 874, Statutes of 2002. Authorizes the CHRB to approve the Solano County Fair to operate a satellite wagering facility on the fairgrounds or on leased premises in Solano County as specified.

AB 2338 (Papan) Chapter 1063, Statutes of 2002. Provides that the San Mateo County Fair may operate a satellite wagering facility on its fairgrounds or on leased premises in San Mateo County contingent upon the closure of a racing association as specified.

REGISTERED SUPPORT / OPPOSITION:

Support

California Authority of Racing Fairs

Opposition

None on file

Analysis Prepared by: Eric Johnson / G.O. / (916) 319-2531