The Horse Racing Law authorizes a thoroughbred racing association or fair to distribute the audiovisual signal and accept wagers on the results of out-of-state thoroughbred races conducted in the United States during the calendar period the association or fair is conducting a race meeting, including days on which there is no live racing being conducted by the association or fair, without the consent of the organization that represents horsemen and horsewomen participating in the race meeting and without regard to the amount of purses. Existing law prohibits the total number of thoroughbred races imported by associations or fairs on a statewide basis under these provisions from exceeding 50 races per day on days when live thoroughbred or fair racing is being conducted in the state, with the exception of prescribed races.

This bill would instead prohibit the total number of thoroughbred races imported by associations or fairs on a statewide basis under these provisions from exceeding 75 races per day on days when live thoroughbred or fair racing is being conducted in the state, with the exception of prescribed races.

Existing law requires any thoroughbred association or fair accepting wagers on the above-described out-of-state races to conduct the wagering in accordance with certain conditions. Existing law prohibits a thoroughbred association or fair from accepting wagers on the above-described out-of-state races commencing after 7 p.m., Pacific standard time, without the consent of the harness or quarter horse racing association that is then conducting a live racing meeting in the County of Orange or the County of Sacramento.

This bill would prohibit, when the total number of thoroughbred races imported by a thoroughbred association or fair on a statewide basis is between 51 and 75 races per day on days when live thoroughbred or fair racing is being conducted in the state, a thoroughbred association or fair from accepting wagers on the above-described out-of-state races commencing after 5 p.m., Pacific standard time, without the consent of the harness and quarter horse racing association that is then conducting a live racing meeting in the County of Orange or the County of Sacramento.

This bill would incorporate additional changes to Section 19596.2 of the Business and Professions Code proposed by Assembly Bill 1768 and Assembly Bill 1946, to be operative only if this bill and either or both of those bills are enacted and this bill is enacted last.

The Horse Racing Law authorizes a thoroughbred racing association or fair to distribute the audiovisual signal and accept wagers on the results of out-of-state thoroughbred races conducted in the United States during the calendar period the association or fair is conducting a race meeting, including days on which there is no live racing being conducted by the association or fair, without the consent of the organization that represents horsemen and horsewomen participating in the race meeting and without regard to the amount of purses. Existing law prohibits the total number of thoroughbred races imported by associations or fairs on a statewide basis under these provisions from exceeding 50 races per day on days when live thoroughbred or fair racing is being conducted in the state, with the exception of prescribed races.

This bill would instead prohibit the total number of thoroughbred races imported by associations or fairs on a statewide basis under these provisions from exceeding 75 races per day on days when live thoroughbred or fair racing is being conducted in the state, with the exception of prescribed races.

Existing law requires any thoroughbred association or fair accepting wagers on the above-described out-of-state races to conduct the wagering in accordance with certain conditions. Existing law prohibits a thoroughbred association or fair from accepting wagers on the above-described out-of-state races commencing after 7 p.m., Pacific standard time, without the consent of the harness or quarter horse racing association that is then conducting a live racing meeting in the County of Orange or the County of Sacramento.

This bill would prohibit, when the total number of thoroughbred races imported by a thoroughbred association or fair on a statewide basis is between 51 and 75 races per day on days when live thoroughbred or fair racing is being conducted in the state, a thoroughbred association or fair from accepting wagers on the above-described out-of-state races commencing after 5 p.m., Pacific standard time, without the consent of the harness and quarter horse racing association that is then conducting a live racing meeting in the County of Orange or the County of Sacramento.

This bill would incorporate additional changes to Section 19596.2 of the Business and Professions Code proposed by Assembly Bill 1768 and Assembly Bill 1946, to be operative only if this bill and either or both of those bills are enacted and this bill is enacted last.

The Horse Racing Law authorizes a thoroughbred racing association or fair to distribute the audiovisual signal and accept wagers on the results of out-of-state thoroughbred races conducted in the United States during the calendar period the association or fair is conducting a race meeting, including days on which there is no live racing being conducted by the association or fair, without the consent of the organization that represents horsemen and horsewomen participating in the race meeting and without regard to the amount of purses. Existing law prohibits the total number of thoroughbred races imported by associations or fairs on a statewide basis under these provisions from exceeding 50 per day on days when live thoroughbred or fair racing is being conducted in the state, with the exception of prescribed races.

This bill would instead prohibit the total number of thoroughbred races imported by associations or fairs on a statewide basis under these provisions from exceeding 75 per day on days when live thoroughbred or fair racing is being conducted in the state, with the exception of prescribed races.

Existing law requires any thoroughbred association or fair accepting wagers on the above-described out-of-state races to conduct the wagering in accordance with certain conditions. Existing law prohibits a thoroughbred association or fair from accepting wagers on the above-described out-of-state races commencing after 7 p.m., Pacific standard time, without the consent of the harness or quarter horse racing association that is then conducting a live racing meeting in the County of Orange or the County of Sacramento.

This bill would prohibit, when the total number of thoroughbred races imported by a thoroughbred association or fair on a statewide basis is between 51 and 75 races per day on days when live thoroughbred or fair racing is being conducted in the state, a thoroughbred association or fair from accepting wagers on the above-described out-of-state races commencing after 5 p.m., Pacific standard time, without the consent of the harness and quarter horse racing association that is then conducting a live racing meeting in the County of Orange or the County of Sacramento.

The Horse Racing Law authorizes a thoroughbred racing association or fair to distribute the audiovisual signal and accept wagers on the results of out-of-state thoroughbred races conducted in the United States during the calendar period the association or fair is conducting a race meeting, including days on which there is no live racing being conducted by the association or fair, without the consent of the organization that represents horsemen and horsewomen participating in the race meeting and without regard to the amount of purses. Existing law prohibits the total number of thoroughbred races imported by associations or fairs on a statewide basis under these provisions from exceeding 50 per day on days when live thoroughbred or fair racing is being conducted in the state, with the exception of prescribed races.

This bill would instead prohibit the total number of thoroughbred races imported by associations or fairs on a statewide basis under these provisions from exceeding 75 per day on days when live thoroughbred or fair racing is being conducted in the state, with the exception of prescribed races.

Existing law requires any thoroughbred association or fair accepting wagers on the above-described out-of-state races to conduct the wagering in accordance with certain conditions. Existing law prohibits a thoroughbred association or fair from accepting wagers on the above-described out-of-state races commencing after 7 p.m., Pacific standard time, without the consent of the harness or quarter horse racing association that is then conducting a live racing meeting in the County of Orange or the County of Sacramento.

This bill would prohibit, when the total number of thoroughbred races imported by a thoroughbred association or fair on a statewide basis is between 51 and 75 races per day on days when live thoroughbred or fair racing is being conducted in the state, a thoroughbred association or fair from accepting wagers on the above-described out-of-state races commencing after 5:30 5 p.m., Pacific standard time, without the consent of the harness and quarter horse racing association that is then conducting a live racing meeting in the County of Orange or the County of Sacramento.

The Horse Racing Law authorizes a thoroughbred racing association or fair to distribute the audiovisual signal and accept wagers on the results of out-of-state thoroughbred races conducted in the United States during the calendar period the association or fair is conducting a race meeting, including days on which there is no live racing being conducted by the association or fair, without the consent of the organization that represents horsemen and horsewomen participating in the race meeting and without regard to the amount of purses. Existing law prohibits the total number of thoroughbred races imported by associations or fairs on a statewide basis under these provisions from exceeding 50 per day on days when live thoroughbred or fair racing is being conducted in the state, with the exception of prescribed races.

This bill would repeal the above-described prohibition and the exceptions to that prohibition. The bill would also make conforming changes. instead prohibit the total number of thoroughbred races imported by associations or fairs on a statewide basis under these provisions from exceeding 75 per day on days when live thoroughbred or fair racing is being conducted in the state, with the exception of prescribed races.

Existing law requires any thoroughbred association or fair accepting wagers on the above-described out-of-state races to conduct the wagering in accordance with certain conditions. Existing law prohibits a thoroughbred association or fair from accepting wagers on the above-described out-of-state races commencing after 7 p.m., Pacific standard time, without the consent of the harness or quarter horse racing association that is then conducting a live racing meeting in the Counties of Orange or Sacramento. County of Orange or the County of Sacramento.

The Horse Racing Law authorizes a thoroughbred racing association or fair to distribute the audiovisual signal and accept wagers on the results of out-of-state thoroughbred races conducted in the United States during the calendar period the association or fair is conducting a race meeting, including days on which there is no live racing being conducted by the association or fair, without the consent of the organization that represents horsemen and horsewomen participating in the race meeting and without regard to the amount of purses. Existing law prohibits the total number of thoroughbred races imported by associations or fairs on a statewide basis under these provisions from exceeding 50 per day on days when live thoroughbred or fair racing is being conducted in the state, with the exception of prescribed races.

This bill would repeal the above-described prohibition and the exceptions to that prohibition. The bill would also make conforming changes.

Existing law requires any thoroughbred association or fair accepting wagers on the above-described out-of-state races to conduct the wagering in accordance with certain conditions. Existing law prohibits a thoroughbred association or fair from accepting wagers on the above-described out-of-state races commencing after 7 p.m., Pacific standard time, without the consent of the harness or quarter horse racing association that is then conducting a live racing meeting in the Counties of Orange or Sacramento.

This bill would repeal those provisions.

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 3261

Author:(Mike Fong)

As Amended Ver:August 28, 2024

Majority vote

SUMMARY

This bill would increase the current cap on the importation of out-of-state thoroughbred races by a thoroughbred association or fair, on days when live thoroughbred or fair racing is being conducted in the state from 50 to 75 races-per-day. Specifically, this bill:

1. Raise the limit on the importation of out-of-state thoroughbred races from 50 to 75 races-per-day on live race days by a thoroughbred association or fair, as specified.
2. Prohibit, when the total number of thoroughbred races imported by a thoroughbred association or fair on a statewide basis is between 51 and 75 races-per-day, a thoroughbred association or fair from accepting wagers on the above-described out-of-state races commencing after 5:00 p.m., PST, without the consent of the harness and quarter horse racing association that is then conducting a live racing meeting in the County of Orange or the County of Sacramento.
3. Make technical and conforming changes.
4. Incorporate additional changes to Section 19596.2 of the Business and Professions Code proposed by Assembly Bill 1768 and Assembly Bill 1946, to be operative only if this bill and either or both of those bills are enacted and this bill is enacted last.

Senate Amendments

1. Provide when the total number of out-of-state races imported is between 51 and 75 races-per-day, a thoroughbred association or fair when the races commence after 5:00 p.m. shall receive the consent of the harness or quarter horse racing association that is then conducting a live race meeting in the County of Orange or the County of Sacramento.
2. Address a chaptering conflict with AB 1768 and AB 1946.

COMMENTS

Background.

Existing law prohibits the total number of thoroughbred races imported by thoroughbred associations or fairs on a statewide basis from exceeding 50 per day on days when live thoroughbred or fair racing is being conducted in the state, with specified exceptions. On many days, there are more than 150 thoroughbred races conducted at racetracks throughout the country.

Without the 50-race limitation, thoroughbred associations and fairs could import more races for wagering purposes (or if not all, a significantly larger number of races than are currently imported), giving each wagering customer in the state greater choices in the races they would like to wager on. The 50-day limit forces thoroughbred associations and fairs to choose just 50 races, preventing customers' ability to wager on a race or races that did not make the selected list of 50.

It should be noted that there is no equivalent restriction on CHRB-licensed ADW operators who accept wagers from in-state residents. These licensed businesses normally provide all out-of-state thoroughbred races to their customers.

Satellite wagering. Satellite wagering via an off-track facility 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. Simulcast wagering today accounts for approximately 80 percent of the total handle each day at California racetracks.

Simulcasting. 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 wagering locations as possible, such as other racetracks, fair satellite facilities and Indian casinos. Revenues are increased 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.

Advanced Deposit Wagering. In 2001, AB 471 (Hertzberg), Chapter 198, Statutes of 2001 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 account wagering.

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, declining attendance, 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. Traditional take out, allocation and distribution formulas are no longer able to sustain ongoing operations.

As the value of racing operations declines, track ownership is struggling to maximize the necessary return on the 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 immediate jeopardy, along with breeding farms and precious open space in urban centers throughout California. Also at risk is a substantial amount of local and state revenue generated both directly and indirectly by the industry

According to the Author

According to the author's statement, "the 50 per-day cap on the number of thoroughbred races allowed to be imported by associations or fairs when live thoroughbred or fair racing is being conducted in the state disadvantages California's associations and fairs. Adjusting the limitation will put associations and fairs on a better competitive footing with the ADW businesses and give customers greater choices."

Arguments in Support

The Los Angeles Turf Club, Incorporated (LATC) writes that a material portion of "LATC's revenues come from simulcast wagering by our customers on out-of-state thoroughbred races imported into California for wagering purposes. The 50-race limit requires thoroughbred associations and fairs to import only 50 out-of-state races into California for our consumers to wager on. This inevitably angers some customers who wanted to wager on a race or races that did not make the selected list of 50."

Arguments in Opposition

None on file

FISCAL COMMENTS

According to the Senate Appropriations Committee, pursuant to Senate Rule 28.8, negligible state costs.

VOTES:

ASM GOVERNMENTAL ORGANIZATION: 20-0-2

YES: Blanca Rubio, Lackey, Addis, Bains, Lee, Davies, Dixon, Gabriel, Gipson, Haney, Jones-Sawyer, Low, McKinnor, Pacheco, Papan, Jim Patterson, Ramos, Soria, Valencia, Wallis

ABS, ABST OR NV: Cervantes, Ta

ASM APPROPRIATIONS: 15-0-0

YES: Wicks, Sanchez, Arambula, Bryan, Calderon, Wendy Carrillo, Dixon, Mike Fong, Friedman, Haney, Hart, Jim Patterson, Pellerin, Ta, Villapudua

ASSEMBLY FLOOR: 71-0-9

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

ABS, ABST OR NV: Addis, Alvarez, Cervantes, Megan Dahle, Flora, Vince Fong, Gipson, Irwin, Mathis

UPDATED

VERSION: August 28, 2024

CONSULTANT: Eric Johnson / G.O. / (916) 319-2531 FN: 0005021

 THIRD READING  

Bill No: AB 3261

Author: Mike Fong (D), et al.

Amended: 8/28/24 in Senate

Vote: 21

SENATE GOVERNMENTAL ORG. COMMITTEE: 15-0, 6/11/24

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

NO VOTE RECORDED: Smallwood-Cuevas

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

ASSEMBLY FLOOR: 71-0, 5/16/24 (Consent) - See last page for vote

SUBJECT: Horse racing: out-of-state thoroughbred races

SOURCE: Author

DIGEST:

This bill raises the existing limit on the importation of out-of-state thoroughbred races, for the purposes of accepting wagers on those races, from 50 to 75 out-of-state races-per-day; and, prohibits, when the total number of those races imported is between 51 and 75 races-per-day, a thoroughbred association or fair from accepting wagers on those races commencing after 5:00 p.m. without the consent of the harness or quarter horse racing association that is then conducting a live race meeting in the County of Orange or the County of Sacramento.

Senate Floor Amendments of 8/28/24 address chaptering conflicts with AB 1768 (Committee on Governmental Organization, 2023) and AB 1946 (Alanis, 2024).

ANALYSIS:

Existing law:

1. Provides that Article IV, Section 19(b) of the Constitution of the State of California authorizes the Legislature to provide for the regulation of horse races and grants the California Horse Racing Board (CHRB) the authority to regulate the various forms of horse racing authorized in this state.
2. Authorizes thoroughbred racing associations or fairs to distribute the audiovisual signal and accept wagers on the results of out-of-state and international thoroughbred races 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.
3. Limits the number of races that may be imported by associations and fairs to no more than 50 races-per-day on days when live thoroughbred or fair racing is being conducted in this state, with specified exceptions.
4. Requires any thoroughbred association or fair accepting wagers on the above-described out-of-state races to conduct the wagering in accordance with certain conditions.
5. Prohibits a thoroughbred association or fair from accepting wagers on the above-described out-of-state races commencing after 7 p.m., Pacific Standard Time (PST), without the consent of the harness or quarter horse racing association that is then conducting a live race meeting in the County of Orange or the County of Sacramento.

This bill:

1. Raises the limit on the importation of out-of-state thoroughbred races from 50 to 75 races-per-day on days, as specified.
2. Prohibits, when the total number of thoroughbred races imported by a thoroughbred association or fair on a statewide basis is between 51 and 75 races-per-day, a thoroughbred association or fair from accepting wagers on the above-described out-of-state races commencing after 5:00 p.m., PST, without the consent of the harness and quarter horse racing association that is then conducting a live racing meeting in the County of Orange or the County of Sacramento.

Background

Author’s Statement. According to the author’s statement, “the 50 per-day cap on the number of thoroughbred races allowed to be imported by associations or fairs when live thoroughbred or fair racing is being conducted in the state disadvantages California’s associations and fairs. Adjusting the limitation will put associations and fairs on a better competitive footing with the advanced deposit wagering businesses and give customers greater choices.”

Satellite Wagering Simulcasting. Satellite wagering via an off-track facility has been legal in California since the 1980s 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.

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.

Racetrack Attendance. Prior to the COVID-19 Pandemic, and closure of non-essential businesses in California, the horse racing industry had been witnessing a general decline in the number of people attending and wagering at live tracks in California for more than three decades 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 2024 edition of the Kentucky Derby set a record for commingled wagering and was up 10% over the record betting last year. Total betting, including the multi-race bets ending in the Derby, was $198.3 million, and was easily a record for any race ever run in North America. For the entire 14-race card on Saturday, May 4^th, total betting was a record $306.9 million and a total of 155 horses ran on this year’s card, while 143 horses ran in the 14 races last year. Attendance at the racetrack was 156,710, the highest number since 2018. The declining attendance at live horse racing events in California has prompted racetracks to rely on revenues from in-state and out-of-state satellite wagering and account wagering.

Distribution of Audiovisual Signals and Wagering. Thoroughbred racing associations and fairs in California can distribute the audiovisual signal and accept wagers on the results of out-of-state thoroughbred races during their own race meetings. This is allowed even on days when no live races are being held at their venues. There is a limit on the number of out-of-state races that can be imported into California for betting purposes. On days when there is live thoroughbred or fair racing happening in California, the total number of races imported from out-of-state must not exceed 50 races-per-day.

However, there are exemptions to this limit. Races that are part of specific major events like the Kentucky Derby, Breeder’s Cup, and other specified races can be imported without falling under the 50 race-per-day limit. Additional exceptions are made for importing races into certain geographical zones of California when no local live racing is occurring. Any wagering on these out-of-state races must comply with specific provisions of California’s Horse Racing Law that govern how betting should be conducted. Wagers on out-of-state races are not allowed after 7 p.m. PST unless there is consent from the local harness or quarter horse racing associations conducting live racing in either Orange or Sacramento County.

Without the 50-race limitation, thoroughbred associations and fairs could import more races for wagering purposes (or if not all, a significantly larger number of races than are currently imported), giving each wagering customer in the state greater choices in the races they would like to wager on. The 50-day limit forces Thoroughbred associations and fairs to choose just 50 races, preventing customers’ ability to wager on a race or races that did not make the selected list of 50.

It should be noted that there is no equivalent restriction on CHRB-licensed ADW operators who accept wagers from in-state residents. These licensed businesses normally provide all out-of-state Thoroughbred races to their customers.

Horse Racing in California. The horse racing industry in California is grappling with a multifaceted crisis that threatens its long-term viability. The industry’s stability is undermined by competition from horse racing, alternative forms of gaming, and the aftermath of negative public reaction to a spate of horse deaths in 2019. Declining attendance at race events exacerbates the situation, as does the lure of higher returns from real estate development compared to the revenue generated from racing operations. In 2023, it was announced that Golden Gate Fields in the San Francisco Bay Area would be closing permanently at the end of their 2024 meet.

This economic strain has led to deficits across nearly all industry revenue streams. Traditional financial models, including takeout rates and distribution formulas, are no longer sufficient to sustain ongoing operations. The decline in the profitability of racing operations has forced track owners to seek higher returns on their investments, often considering the sale or redevelopment of racetrack properties for more lucrative uses.

As a result, the industry faces unprecedented instability and capital flight. This instability jeopardizes thousands of jobs directly linked to horse racing, including those on breeding farms and other associated businesses. The closure of key racetracks, including Golden Gate Fields, highlights the precarious state of the industry. Also at risk is a substantial amount of local and state revenue generated both directly and indirectly by the industry.

This bill raises the limit on the total number of out-of-state races that can be imported into California for the purposes of accepting wagers on those out-of-state races from 50 to 75. Additionally, this bill stipulates that for any race that is imported over the current 50 race-per-day threshold, and is imported after 5:00 p.m., the thoroughbred association or fair must obtain the consent of both of the existing harness and quarter horse racing associations in Orange and Sacramento County, if those harness or quarter horse racing associations are conducting live racing on that date.

This bill includes language to avoid chaptering out conflicts with AB 1768 (Committee on Governmental Organization, 2023) and AB 1946 (Alanis, 2024).

Related/Prior Legislation

AB 1946 (Alanis, 2024) adds the Whitney Stakes to the group of out-of-state horseraces that are exempt from the 50 races-per-day limit on imported races into California. (Pending at Engrossing and Enrolling)

AB 1768 (Committee on Governmental Organization, 2023) adds the Pegasus World Cup to the group of out-of-state horseraces that are exempt from the 50 races-per-day limit on imported races into California. (Pending at Engrossing and Enrolling

ACA 119 (Hornblower, Resolution Chapter 101, Statutes of 1933) placed Proposition 3 on the June 1933 ballot, which was approved by the voters and authorized the Legislature to provide for the regulation of horse races and horse race meetings and wagering on the results thereof.

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

SUPPORT: (Verified 8/28/24)

Los Angeles Turf Club

OPPOSITION: (Verified 8/28/24)

None received

ARGUMENTS IN SUPPORT: In support of this bill, the Los Angeles Turf Club writes, “[e]xisting law generally prohibits the total number of Thoroughbred races imported by associations or fairs on a statewide basis from exceeding 50 per day. The 50-race limitation requires the associations and fairs to choose just 50 out-of-state races to import into California for wagering by our customers. This inevitably angers some customers who wanted to wager on a race or races that didn’t make the selected list of 50.”

ASSEMBLY FLOOR: 71-0, 5/16/24

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

NO VOTE RECORDED: Addis, Alvarez, Cervantes, Megan Dahle, Flora, Vince Fong, Gipson, Irwin, Mathis

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

8/29/24 19:43:39

**** END ****

 CONSENT  

Bill No: AB 3261

Author: Mike Fong (D), et al.

Amended: 6/19/24 in Senate

Vote: 21

SENATE GOVERNMENTAL ORG. COMMITTEE: 15-0, 6/11/24

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

NO VOTE RECORDED: Smallwood-Cuevas

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

ASSEMBLY FLOOR: 71-0, 5/16/24 (Consent) - See last page for vote

SUBJECT: Horse racing: out-of-state thoroughbred races

SOURCE: Author

DIGEST:

This bill raises the existing limit on the importation of out-of-state thoroughbred races, for the purposes of accepting wagers on those races, from 50 to 75 out-of-state races-per-day; and, prohibits, when the total number of those races imported is between 51 and 75 races-per-day, a thoroughbred association or fair from accepting wagers on those races commencing after 5:00 p.m. without the consent of the harness or quarter horse racing association that is then conducting a live race meeting in the County of Orange or the County of Sacramento.

ANALYSIS:

Existing law:

1. Article IV, Section 19(b) of the Constitution of the State of California authorizes the Legislature to provide for the regulation of horse races and grants the California Horse Racing Board (CHRB) the authority to regulate the various forms of horse racing authorized in this state.
2. Authorizes thoroughbred racing associations or fairs to distribute the audiovisual signal and accept wagers on the results of out-of-state and international thoroughbred races 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.
3. Limits the number of races that may be imported by associations and fairs to no more than 50 races-per-day on days when live thoroughbred or fair racing is being conducted in this state, with specified exceptions.
4. Requires any thoroughbred association or fair accepting wagers on the above-described out-of-state races to conduct the wagering in accordance with certain conditions.
5. Prohibits a thoroughbred association or fair from accepting wagers on the above-described out-of-state races commencing after 7 p.m., Pacific Standard Time (PST), without the consent of the harness or quarter horse racing association that is then conducting a live race meeting in the County of Orange or the County of Sacramento.

This bill:

1. Raises the limit on the importation of out-of-state thoroughbred races from 50 to 75 races-per-day on days, as specified.
2. Prohibits, when the total number of thoroughbred races imported by a thoroughbred association or fair on a statewide basis is between 51 and 75 races-per-day, a thoroughbred association or fair from accepting wagers on the above-described out-of-state races commencing after 5:00 p.m., PST, without the consent of the harness and quarter horse racing association that is then conducting a live racing meeting in the County of Orange or the County of Sacramento.

Background

Author’s Statement. According to the author’s statement, “the 50 per-day cap on the number of thoroughbred races allowed to be imported by associations or fairs when live thoroughbred or fair racing is being conducted in the state disadvantages California’s associations and fairs. Adjusting the limitation will put associations and fairs on a better competitive footing with the advanced deposit wagering businesses and give customers greater choices.”

Satellite Wagering Simulcasting. Satellite wagering via an off-track facility has been legal in California since the 1980s 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.

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.

Racetrack Attendance. Prior to the COVID-19 Pandemic, and closure of non-essential businesses in California, the horse racing industry had been witnessing a general decline in the number of people attending and wagering at live tracks in California for more than three decades 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 2024 edition of the Kentucky Derby set a record for commingled wagering and was up 10% over the record betting last year. Total betting, including the multi-race bets ending in the Derby, was $198.3 million, and was easily a record for any race ever run in North America. For the entire 14-race card on Saturday, May 4^th, total betting was a record $306.9 million and a total of 155 horses ran on this year’s card, while 143 horses ran in the 14 races last year. Attendance at the racetrack was 156,710, the highest number since 2018. The declining attendance at live horse racing events in California has prompted racetracks to rely on revenues from in-state and out-of-state satellite wagering and account wagering.

Distribution of Audiovisual Signals and Wagering. Thoroughbred racing associations and fairs in California can distribute the audiovisual signal and accept wagers on the results of out-of-state thoroughbred races during their own race meetings. This is allowed even on days when no live races are being held at their venues. There is a limit on the number of out-of-state races that can be imported into California for betting purposes. On days when there is live thoroughbred or fair racing happening in California, the total number of races imported from out-of-state must not exceed 50 races-per-day.

However, there are exemptions to this limit. Races that are part of specific major events like the Kentucky Derby, Breeder’s Cup, and other specified races can be imported without falling under the 50 race-per-day limit. Additional exceptions are made for importing races into certain geographical zones of California when no local live racing is occurring. Any wagering on these out-of-state races must comply with specific provisions of California’s Horse Racing Law that govern how betting should be conducted. Wagers on out-of-state races are not allowed after 7 p.m. PST unless there is consent from the local harness or quarter horse racing associations conducting live racing in either Orange or Sacramento County.

Without the 50-race limitation, thoroughbred associations and fairs could import more races for wagering purposes (or if not all, a significantly larger number of races than are currently imported), giving each wagering customer in the state greater choices in the races they would like to wager on. The 50-day limit forces Thoroughbred associations and fairs to choose just 50 races, preventing customers’ ability to wager on a race or races that did not make the selected list of 50.

It should be noted that there is no equivalent restriction on CHRB-licensed ADW operators who accept wagers from in-state residents. These licensed businesses normally provide all out-of-state Thoroughbred races to their customers.

Horse Racing in California. The horse racing industry in California is grappling with a multifaceted crisis that threatens its long-term viability. The industry’s stability is undermined by competition from horse racing, alternative forms of gaming, and the aftermath of negative public reaction to a spate of horse deaths in 2019. Declining attendance at race events exacerbates the situation, as does the lure of higher returns from real estate development compared to the revenue generated from racing operations. In 2023, it was announced that Golden Gate Fields in the San Francisco Bay Area would be closing permanently at the end of their 2024 meet.

This economic strain has led to deficits across nearly all industry revenue streams. Traditional financial models, including takeout rates and distribution formulas, are no longer sufficient to sustain ongoing operations. The decline in the profitability of racing operations has forced track owners to seek higher returns on their investments, often considering the sale or redevelopment of racetrack properties for more lucrative uses.

As a result, the industry faces unprecedented instability and capital flight. This instability jeopardizes thousands of jobs directly linked to horse racing, including those on breeding farms and other associated businesses. The closure of key racetracks, including Golden Gate Fields, highlights the precarious state of the industry. Also at risk is a substantial amount of local and state revenue generated both directly and indirectly by the industry.

This bill raises the limit on the total number of out-of-state races that can be imported into California for the purposes of accepting wagers on those out-of-state races from 50 to 75. Additionally, this bill stipulates that for any race that is imported over the current 50 race-per-day threshold, and is imported after 5:00 p.m., the thoroughbred association or fair must obtain the consent of both of the existing harness and quarter horse racing associations in Orange and Sacramento County, if those harness or quarter horse racing associations are conducting live racing on that date.

Related/Prior Legislation

SB 536 (Rubio, 2023) adds the Delaware Handicap to the group of out-of-state horseraces that are exempt from the 50 races-per-day limit on imported races into California. (Pending in the Assembly Governmental Organization Committee)

AB 1946 (Alanis, 2024) adds the Whitney Stakes to the group of out-of-state horseraces that are exempt from the 50 races-per-day limit on imported races into California. (Pending on the Senate Floor)

AB 1074 (Alanis, Chapter 275, Statutes of 2023) provided if the 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, the bill deems 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.

AB 1768 (Committee on Governmental Organization, 2023) adds the Pegasus World Cup to the group of out-of-state horseraces that are exempt from the 50 races-per-day limit on imported races into California. (Pending on the Senate Inactive File)

AB 2969 (Committee on Governmental Organization, Chapter 503, Statutes of 2022) added the Blue Grass Stakes to the group of out-of-state horseraces that are exempt from the 50 races-per-day limit on imported races into California.

SB 471 (Hertzberg, Chapter 198, Statutes of 2001) authorized the CHRB to regulate and license the conduct of advance deposit wagering in California, as specified.

ACA 119 (Hornblower, Resolution Chapter 101, Statutes of 1933) placed Proposition 3 on the June 1933 ballot, which was approved by the voters and authorized the Legislature to provide for the regulation of horse races and horse race meetings and wagering on the results thereof.

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

SUPPORT: (Verified 6/28/24)

Los Angeles Turf Club, Incorporated

OPPOSITION: (Verified 6/28/24)

None received

ARGUMENTS IN SUPPORT: In support of this bill, the Los Angeles Turf Club writes, “[e]xisting law generally prohibits the total number of Thoroughbred races imported by associations or fairs on a statewide basis from exceeding 50 per day. The 50-race limitation requires the associations and fairs to choose just 50 out-of-state races to import into California for wagering by our customers. This inevitably angers some customers who wanted to wager on a race or races that didn’t make the selected list of 50.”

ASSEMBLY FLOOR: 71-0, 5/16/24

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

NO VOTE RECORDED: Addis, Alvarez, Cervantes, Megan Dahle, Flora, Vince Fong, Gipson, Irwin, Mathis

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

6/28/24 15:19:09

**** END ****

SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION

Senator Bill Dodd

Chair

2023 - 2024 Regular

Bill No: 3261 Hearing Date: 6/11/2024

SUBJECT: Horse racing: out-of-state thoroughbred races

DIGEST: This bill raises the existing limit on the importation of out-of-state thoroughbred races, for the purposes of accepting wagers on those races, from 50 to 75 out-of-state races-per-day; and, prohibits, when the total number of those races imported is between 51 and 75 races-per-day, a thoroughbred association or fair from accepting wagers on those races commencing after 5:30 p.m. without the consent of the harness or quarter horse racing association that is then conducting a live race meeting in the County of Orange or the County of Sacramento.

ANALYSIS:

Existing law:

1. Article IV, Section 19(b) of the Constitution of the State of California authorizes the Legislature to provide for the regulation of horse races and grants the California Horse Racing Board (CHRB) the authority to regulate the various forms of horse racing authorized in this state.
2. Authorizes thoroughbred racing associations or fairs to distribute the audiovisual signal and accept wagers on the results of out-of-state and international thoroughbred races 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.
3. Limits the number of races that may be imported by associations and fairs to no more than 50 races-per-day on days when live thoroughbred or fair racing is being conducted in this state, with specified exceptions.
4. Requires any thoroughbred association or fair accepting wagers on the above-described out-of-state races to conduct the wagering in accordance with certain conditions.
5. Prohibits a thoroughbred association or fair from accepting wagers on the above-described out-of-state races commencing after 7 p.m., Pacific standard time (PST), without the consent of the harness or quarter horse racing association that is then conducting a live race meeting in the County of Orange or the County of Sacramento.

This bill:

1. Raises the limit on the importation of out-of-state thoroughbred races from 50 to 75 races-per-day on days, as specified.
2. Prohibits, when the total number of thoroughbred races imported by a thoroughbred association or fair on a statewide basis is between 51 and 75 races-per-day, a thoroughbred association or fair from accepting wagers on the above-described out-of-state races commencing after 5:30 p.m., PST, without the consent of the harness and quarter horse racing association that is then conducting a live racing meeting in the County of Orange or the County of Sacramento.

Background

Author Statement. According to the author’s statement, “the 50 per-day cap on the number of thoroughbred races allowed to be imported by associations or fairs when live thoroughbred or fair racing is being conducted in the state disadvantages California’s associations and fairs. Adjusting the limitation will put associations and fairs on a better competitive footing with the advanced deposit wagering businesses and give customers greater choices.”

Satellite Wagering Simulcasting. Satellite wagering via an off-track facility has been legal in California since the 1980s 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.

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.

Racetrack Attendance. Prior to the COVID-19 Pandemic, and closure of non-essential businesses in California, the horse racing industry had been witnessing a general decline in the number of people attending and wagering at live tracks in California for more than three decades 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 2024 edition of the Kentucky Derby set a record for commingled wagering and was up 10% over the record betting last year. Total betting, including the multi-race bets ending in the Derby, was $198.3 million, and was easily a record for any race ever run in North America. For the entire 14-race card on Saturday, May 4^th, total betting was a record $306.9 million and a total of 155 horses ran on this year’s card, while 143 horses ran in the 14 races last year. Attendance at the racetrack was 156,710, the highest number since 2018. The declining attendance at live horse racing events in California has prompted racetracks to rely on revenues from in-state and out-of-state satellite wagering and account wagering.

Distribution of Audiovisual Signals and Wagering. Thoroughbred racing associations and fairs in California can distribute the audiovisual signal and accept wagers on the results of out-of-state thoroughbred races during their own race meetings. This is allowed even on days when no live races are being held at their venues. There is a limit on the number of out-of-state races that can be imported into California for betting purposes. On days when there is live thoroughbred or fair racing happening in California, the total number of races imported from out-of-state must not exceed 50 races-per-day.

However, there are exemptions to this limit. Races that are part of specific major events like the Kentucky Derby, Breeder’s Cup, and other specified races can be imported without falling under the 50 race-per-day limit. Additional exceptions are made for importing races into certain geographical zones of California when no local live racing is occurring. Any wagering on these out-of-state races must comply with specific provisions of California’s Horse Racing Law that govern how betting should be conducted. Wagers on out-of-state races are not allowed after 7 p.m. PST unless there is consent from the local harness or quarter horse racing associations conducting live racing in either Orange or Sacramento County.

Without the 50-race limitation, thoroughbred associations and fairs could import more races for wagering purposes (or if not all, a significantly larger number of races than are currently imported), giving each wagering customer in the state greater choices in the races they would like to wager on. The 50-day limit forces Thoroughbred associations and fairs to choose just 50 races, preventing customers’ ability to wager on a race or races that did not make the selected list of 50.

It should be noted that there is no equivalent restriction on CHRB-licensed ADW operators who accept wagers from in-state residents. These licensed businesses normally provide all out-of-state Thoroughbred races to their customers.

Horse Racing in California. The horse racing industry in California is grappling with a multifaceted crisis that threatens its long-term viability. The industry’s stability is undermined by competition from horse racing, alternative forms of gaming, and the aftermath of negative public reaction to a spate of horse deaths in 2019. Declining attendance at race events exacerbates the situation, as does the lure of higher returns from real estate development compared to the revenue generated from racing operations. In 2023, it was announced that Golden Gate Fields in the San Francisco Bay Area would be closing permanently at the end of their 2024 meet.

This economic strain has led to deficits across nearly all industry revenue streams. Traditional financial models, including takeout rates and distribution formulas, are no longer sufficient to sustain ongoing operations. The decline in the profitability of racing operations has forced track owners to seek higher returns on their investments, often considering the sale or redevelopment of racetrack properties for more lucrative uses.

As a result, the industry faces unprecedented instability and capital flight. This instability jeopardizes thousands of jobs directly linked to horse racing, including those on breeding farms and other associated businesses. The closure of key racetracks, including Golden Gate Fields, highlights the precarious state of the industry. Also at risk is a substantial amount of local and state revenue generated both directly and indirectly by the industry.

This bill raises the limit on the total number of out-of-state races that can be imported into California for the purposes of accepting wagers on those out-of-state races from 50 to 75. Additionally, this bill stipulates that for any race that is imported over the current 50 race-per-day threshold, and is imported after 5:30 p.m., the thoroughbred association or fair must obtain the consent of both of the existing harness and quarter horse racing associations in Orange and Sacramento County, if those harness or quarter horse racing associations are conducting live racing on that date.

Prior/Related Legislation

SB 536 (Rubio, 2023) adds the Delaware Handicap to the group of out-of-state horseraces that are exempt from the 50 races-per-day limit on imported races into California. (Pending in the Assembly Governmental Organization Committee)

AB 1946 (Alanis, 2024) adds the Whitney Stakes to the group of out-of-state horseraces that are exempt from the 50 races-per-day limit on imported races into California. (Pending on the Senate Floor)

AB 1074 (Alanis, Chapter 275, Statutes of 2023) provided if the 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 deems 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.

AB 1768 (Committee on Governmental Organization, 2023) adds the Pegasus World Cup to the group of out-of-state horseraces that are exempt from the 50 races-per-day limit on imported races into California. (Pending on the Senate Inactive File)

AB 2969 (Committee on Governmental Organization, Chapter 503, Statutes of 2022) added the Blue Grass Stakes to the group of out-of-state horseraces that are exempt from the 50 races-per-day limit on imported races into California.

SB 471 (Hertzberg, Chapter 198, Statutes of 2001) authorized the CHRB to regulate and license the conduct of advance deposit wagering in California, as specified.

ACA 119 (Hornblower, Resolution Chapter 101, Statutes of 1933) placed Proposition 3 on the June 1933 ballot, which was approved by the voters and authorized the Legislature to provide for the regulation of horse races and horse race meetings and wagering on the results thereof.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT:

Los Angeles Turf Club, Incorporated

OPPOSITION:

None received

ARGUMENTS IN SUPPORT: In support of the bill, the Los Angeles Turf Club writes, “[e]xisting law generally prohibits the total number of Thoroughbred races imported by associations or fairs on a statewide basis from exceeding 50 per day. The 50-race limitation requires the associations and fairs to choose just 50 out-of-state races to import into California for wagering by our customers. This inevitably angers some customers who wanted to wager on a race or races that didn’t make the selected list of 50.”

Date of Hearing: May 8, 2024

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Buffy Wicks, Chair

ABPCA Bill Id:AB 3261

Author:(Mike Fong) – As Amended Ver:April 24, 2024

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

SUMMARY:

This bill increases the cap, from 50 per day, to 75 per day, on the number of thoroughbred races an association or fair may import on days when live thoroughbred or fair racing is being conducted in the state.

This bill prohibits the acceptance of a wager on an additional imported race beginning after 5:30 p.m., Pacific Standard Time, without the consent of specified associations in the counties of Orange and Sacramento.

FISCAL EFFECT:

Minor and absorbable costs to California Horse Racing Board (CHRB). Additionally, 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.

COMMENTS:

1. Purpose. According to the author:

The current 50 per-day cap on the number of Thoroughbred races allowed to be imported by associations or fairs when live thoroughbred or fair racing is being conducted in the state disadvantages California’s associations and fairs. Removing the limitation will put associations and fairs on equal competitive footing with the advanced deposit wagering businesses and give customers greater choices.

This bill is supported by the Los Angeles Turf Club, which operates live thoroughbred racing at Santa Anita Park.

1. Horse Racing Wagering. Existing law limits to 50 per day the number of imported thoroughbred races that may be wagered on at an association or fair. These limits were imposed decades ago under the premise that importing races would detract from wagering on live racing. Today, however, California’s horse racing industry is struggling to generate new fans and horse owners, in light of increased competition from other forms of gambling and the availability of off-track satellite, phone, and internet wagering.

On many days, there are well over 150 thoroughbred races conducted at tracks through the country. Additionally, there is no equivalent per-day import restriction on advanced deposit wagering (online wagering) businesses. In light of this competitive disadvantage, this bill raises the existing limit on imported thoroughbred races to 75 per day to offer association and fair patrons additional opportunities to wager.

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

Date of Hearing: April 17, 2024

ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION

Blanca Rubio, Chair

ABPCA Bill Id:AB 3261 (

Author:Mike Fong) – As Introduced Ver:February 16, 2024

SUBJECT: Horse racing: out-of-state thoroughbred races

SUMMARY: This bill would repeal a provision in the Horse Racing Law that limits the number of out-of-state thoroughbred races (50 per day) that a Thoroughbred racing association or fair may accept, distribute, and accept wagers on during the calendar period the association or fair is conducting a live race meeting, as specified. Specifically, this bill:

1) Provides a Thoroughbred racing association or fair may distribute the audiovisual signal and accept wagers on the results of out-of-state thoroughbred races conducted in the United States without a importation cap during the calendar period the association or fair is conducting a race meeting, including days on which there is no live racing being conducted by the association or fair, as specified.

2) Repeals a requirement in current law that a Thoroughbred association or fair may only accept wagers on out-of-state races commencing after 7 p.m. with the consent of the harness or quarter horse racing association that is then conducting a live racing meeting in the Counties of Orange or Sacramento.

3) Makes technical and conforming changes.

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.

2) Grants the California Horse Racing Board (CHRB) the authority to regulate the various forms of horse racing authorized in this state.

3) Authorizes thoroughbred racing associations or fairs to distribute the audiovisual signal and accept wagers on the results of out-of-state and international thoroughbred races 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.

4) Limits the number of races that may be imported by associations and fairs to no more than 50 races per day on days when live thoroughbred or fair racing is being conducted in this state, with specified exceptions. (California Business and Professions Code § 19596.2)

5) Exempts from that 50-race per day limit races imported that are part of the race card of certain prominent races, including the Kentucky Derby, the Kentucky Oaks, the Preakness Stakes, the Belmont Stakes, the Jockey Club Gold Cup, the Travers Stakes, the Arlington Million, the Breeders’ Cup, the Dubai World Cup, the Arkansas Derby, the Apple Blossom Handicap, the Blue Grass Stakes, or the Haskell Invitational. (California Business and Professions Code § 19596.2)

6) Provides that the CHRB may authorize a racing association licensed to conduct a Thoroughbred race meet to include up to six non-Thoroughbred races per calendar year pursuant to specified conditions.

7) Authorizes the CHRB to regulate and license the conduct of advance deposit wagering (ADW) in California. ADW permits residents of California and other states to place wagers on horse races nationally and internationally using wagering systems licensed by the board, including the placement of wagers over the telephone and other electronic media, including the Internet.

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

COMMENTS:

Purpose of the bill. According to the author’s office, “The current 50 per-day cap on the number of Thoroughbred races allowed to be imported by associations or fairs when live thoroughbred or fair racing is being conducted in the state disadvantages California’s associations and fairs. Removing the limitation will put associations and fairs on equal competitive footing with the advanced deposit wagering businesses and give customers greater choices.

Background.

Existing law prohibits the total number of Thoroughbred races imported by Thoroughbred associations or fairs on a statewide basis from exceeding 50 per day on days when live Thoroughbred or fair racing is being conducted in the state, with specified exceptions. On many days, there are well over 150 Thoroughbred races conducted at racetracks throughout the country.

Without the 50-race limitation, Thoroughbred associations and fairs could import more races for wagering purposes (or if not all, a significantly larger number of races than are currently imported), giving each wagering customer in the state greater choices in the races they would like to wager on. The 50-day limit forces Thoroughbred associations and fairs to choose just 50 races, preventing customers’ ability to wager on a race or races that did not make the selected list of 50.

It should be noted that there is no equivalent restriction on CHRB-licensed ADW operators who accept wagers from in-state residents. These licensed businesses normally provide all out-of-state Thoroughbred races to their customers.

Satellite wagering. Satellite wagering via an off-track facility 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. Simulcast wagering today accounts for approximately 80 percent of the total handle each day at California racetracks.

Simulcasting. 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 wagering locations as possible, such as other racetracks, fair satellite facilities and Indian casinos. Revenues are increased 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.

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 account wagering.

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, declining attendance, 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. Traditional take out, allocation and distribution formulas are no longer able to sustain ongoing operations.

As the value of racing operations declines, track ownership is struggling to maximize the necessary return on the 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 immediate jeopardy, along with breeding farms and precious open space in urban centers throughout California. Also at risk is a substantial amount of local and state revenue generated both directly and indirectly by the industry.

In support. The Los Angeles Turf Club, Incorporated (LATC) writes that a material portion of LATC’s revenues come from simulcast wagering by our customers on out-of-state Thoroughbred races imported into California for wagering purposes. The 50-race limit requires Thoroughbred associations and fairs to import only 50 out-of-state races into California for our consumers to wager on. This inevitably angers some customers who wanted to wager on a race or races that did not make the selected list of 50. For ADW companies that take bets from in-state customers, there is no such restriction. This gives the ADW providers a competitive edge over Thoroughbred associations and fairs.

Policy consideration. To achieve the intent of the bill while maintaining prior consent protocols for the nighttime racing industry who may be financial impacted by the importation of additional out-of-state races, the author might consider amending the measure to address the number of out-of-state races that can be imported from 50 to 75 but also stipulating that for any race that is imported over the current 50-race threshold and imported after 5:30 p.m., a Thoroughbred or fair association must obtain the consent of both the harness and quarter horse racing association, if they are operating a live race meet on that specific day. All prior authorizations and stipulations within current law (BPC Section 19596.2) would likewise be reinstituted into the bill.

Related legislation. AB 1768 (Committee on Governmental Organization) of 2023. This bill would add the Pegasus World Cup to the group of races which are exempt from the 50-race per day limit on imported races in California. (Senate Floor Inactive File)

AB 1946 (Alanis) of 2024. This bill would add the "Stephen Foster Stakes” to the group of stake races which are exempt from the 50-race per day limit on imported races in California. (Pending on the Assembly floor)

Prior legislation. AB 1074 (Alanis), Chapter 275, Statutes of 2023. Provided if the 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

AB 2969 (Committee on Governmental Organization), Chapter 503, Statutes of 2022. Added the Blue Grass Stakes to the group of out-of-state horseraces that are exempt from the 50-race per day limit on imported races in California.

AB 558 (Low), Chapter 3, Statutes of 2016. Provided that CHRB may authorize a racing association licensed to conduct a Thoroughbred race meet to include up to six non-Thoroughbred races per calendar year pursuant to specified conditions.

AB 707 (Garrick), Chapter 84, Statutes of 2011. Increased from 32 to 50, the limitation on the total number of out-of-state thoroughbred races that may be imported per day by a thoroughbred association or fair that is conducting a live race meet with approval by the CHRB.

SB 1072 (R. Calderon), Chapter 238, Statutes of 2010. Among other things, authorized the CHRB to license entities to operate “exchange wagering” systems, as defined, which accept exchange wagers from individuals residing either within or outside of this state on horse races run in California or other states.

SB 379 (Denham), Chapter 443, Statutes of 2007. Added the “Dubai World Cup” to a specified day of races that would be exempted from the 23-race day limit on imported races for satellite wagering.

AB 765 (Evans), Chapter 613, Statutes of 2007. Among other things, reauthorized horse racing's Advance Deposit Wagering law, which was due to "sunset" on January 1, 2008.

SB 471 (Hertzberg), Chapter 198, Statutes of 2001. The bill authorized the CHRB to regulate and license the conduct of advance deposit wagering in California. ADW permits residents of California and other states to place wagers on horse races nationally and internationally using wagering systems licensed by the board, including the placement of wagers over the telephone and other electronic media, including the Internet.

REGISTERED SUPPORT / OPPOSITION:

Support

Los Angeles Turf Club, Incorporated

Opposition

None on file

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

Date of Hearing: April 17, 2024

ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION

Blanca Rubio, Chair

ABPCA Bill Id:AB 3261 (

Author:Mike Fong) – As Introduced Ver:February 16, 2024

SUBJECT: Horse racing: out-of-state thoroughbred races

SUMMARY: This bill would repeal a provision in the Horse Racing Law that limits the number of out-of-state thoroughbred races (50 per day) that a Thoroughbred racing association or fair may accept, distribute, and accept wagers on during the calendar period the association or fair is conducting a live race meeting, as specified. Specifically, this bill:

1) Provides a Thoroughbred racing association or fair may distribute the audiovisual signal and accept wagers on the results of out-of-state thoroughbred races conducted in the United States without a importation cap during the calendar period the association or fair is conducting a race meeting, including days on which there is no live racing being conducted by the association or fair, as specified.

2) Repeals a requirement in current law that a Thoroughbred association or fair may only accept wagers on out-of-state races commencing after 7 p.m. with the consent of the harness or quarter horse racing association that is then conducting a live racing meeting in the Counties of Orange or Sacramento.

3) Makes technical and conforming changes.

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.

2) Grants the California Horse Racing Board (CHRB) the authority to regulate the various forms of horse racing authorized in this state.

3) Authorizes thoroughbred racing associations or fairs to distribute the audiovisual signal and accept wagers on the results of out-of-state and international thoroughbred races 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.

4) Limits the number of races that may be imported by associations and fairs to no more than 50 races per day on days when live thoroughbred or fair racing is being conducted in this state, with specified exceptions. (California Business and Professions Code § 19596.2)

5) Exempts from that 50-race per day limit races imported that are part of the race card of certain prominent races, including the Kentucky Derby, the Kentucky Oaks, the Preakness Stakes, the Belmont Stakes, the Jockey Club Gold Cup, the Travers Stakes, the Arlington Million, the Breeders’ Cup, the Dubai World Cup, the Arkansas Derby, the Apple Blossom Handicap, the Blue Grass Stakes, or the Haskell Invitational. (California Business and Professions Code § 19596.2)

6) Provides that the CHRB may authorize a racing association licensed to conduct a Thoroughbred race meet to include up to six non-Thoroughbred races per calendar year pursuant to specified conditions.

7) Authorizes the CHRB to regulate and license the conduct of advance deposit wagering (ADW) in California. ADW permits residents of California and other states to place wagers on horse races nationally and internationally using wagering systems licensed by the board, including the placement of wagers over the telephone and other electronic media, including the Internet.

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

COMMENTS:

Purpose of the bill. According to the author’s office, “The current 50 per-day cap on the number of Thoroughbred races allowed to be imported by associations or fairs when live thoroughbred or fair racing is being conducted in the state disadvantages California’s associations and fairs. Removing the limitation will put associations and fairs on equal competitive footing with the advanced deposit wagering businesses and give customers greater choices.

Background.

Existing law prohibits the total number of Thoroughbred races imported by Thoroughbred associations or fairs on a statewide basis from exceeding 50 per day on days when live Thoroughbred or fair racing is being conducted in the state, with specified exceptions. On many days, there are well over 150 Thoroughbred races conducted at racetracks throughout the country.

Without the 50-race limitation, Thoroughbred associations and fairs could import more races for wagering purposes (or if not all, a significantly larger number of races than are currently imported), giving each wagering customer in the state greater choices in the races they would like to wager on. The 50-day limit forces Thoroughbred associations and fairs to choose just 50 races, preventing customers’ ability to wager on a race or races that did not make the selected list of 50.

It should be noted that there is no equivalent restriction on CHRB-licensed ADW operators who accept wagers from in-state residents. These licensed businesses normally provide all out-of-state Thoroughbred races to their customers.

Satellite wagering. Satellite wagering via an off-track facility 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. Simulcast wagering today accounts for approximately 80 percent of the total handle each day at California racetracks.

Simulcasting. 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 wagering locations as possible, such as other racetracks, fair satellite facilities and Indian casinos. Revenues are increased 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.

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 account wagering.

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, declining attendance, 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. Traditional take out, allocation and distribution formulas are no longer able to sustain ongoing operations.

As the value of racing operations declines, track ownership is struggling to maximize the necessary return on the 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 immediate jeopardy, along with breeding farms and precious open space in urban centers throughout California. Also at risk is a substantial amount of local and state revenue generated both directly and indirectly by the industry.

In support. The Los Angeles Turf Club, Incorporated (LATC) writes that a material portion of LATC’s revenues come from simulcast wagering by our customers on out-of-state Thoroughbred races imported into California for wagering purposes. The 50-race limit requires Thoroughbred associations and fairs to import only 50 out-of-state races into California for our consumers to wager on. This inevitably angers some customers who wanted to wager on a race or races that did not make the selected list of 50. For ADW companies that take bets from in-state customers, there is no such restriction. This gives the ADW providers a competitive edge over Thoroughbred associations and fairs.

Policy consideration. To achieve the intent of the bill while maintaining prior consent protocols for the nighttime racing industry who may be financial impacted by the importation of additional out-of-state races, the author might consider amending the measure to address the number of out-of-state races that can be imported from 50 to 75 but also stipulating that for any race that is imported over the current 50-race threshold and imported after 5:30 p.m., a Thoroughbred or fair association must obtain the consent of both the harness and quarter horse racing association, if they our operating a live race meet on that specific day. All prior authorizations and stipulations within current law (BPC Section 19596.2) would likewise be reinstituted into the bill.

Related legislation. AB 1768 (Committee on Governmental Organization) of 2023. This bill would add the Pegasus World Cup to the group of races which are exempt from the 50-race per day limit on imported races in California. (Senate Floor Inactive File)

AB 1946 (Alanis) of 2024. This bill would add the "Stephen Foster Stakes” to the group of stake races which are exempt from the 50-race per day limit on imported races in California. (Pending on the Assembly floor)

Prior legislation. AB 1074 (Alanis), Chapter 275, Statutes of 2023. Provided if the 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

AB 2969 (Committee on Governmental Organization), Chapter 503, Statutes of 2022. Added the Blue Grass Stakes to the group of out-of-state horseraces that are exempt from the 50-race per day limit on imported races in California.

AB 558 (Low), Chapter 3, Statutes of 2016. Provided that CHRB may authorize a racing association licensed to conduct a Thoroughbred race meet to include up to six non-Thoroughbred races per calendar year pursuant to specified conditions.

AB 707 (Garrick), Chapter 84, Statutes of 2011. Increased from 32 to 50, the limitation on the total number of out-of-state thoroughbred races that may be imported per day by a thoroughbred association or fair that is conducting a live race meet with approval by the CHRB.

SB 1072 (R. Calderon), Chapter 238, Statutes of 2010. Among other things, authorized the CHRB to license entities to operate “exchange wagering” systems, as defined, which accept exchange wagers from individuals residing either within or outside of this state on horse races run in California or other states.

SB 379 (Denham), Chapter 443, Statutes of 2007. Added the “Dubai World Cup” to a specified day of races that would be exempted from the 23-race day limit on imported races for satellite wagering.

AB 765 (Evans), Chapter 613, Statutes of 2007. Among other things, reauthorized horse racing's Advance Deposit Wagering law, which was due to "sunset" on January 1, 2008.

SB 471 (Hertzberg), Chapter 198, Statutes of 2001. The bill authorized the CHRB to regulate and license the conduct of advance deposit wagering in California. ADW permits residents of California and other states to place wagers on horse races nationally and internationally using wagering systems licensed by the board, including the placement of wagers over the telephone and other electronic media, including the Internet.

REGISTERED SUPPORT / OPPOSITION:

Support

Los Angeles Turf Club, Incorporated

Opposition

None on file

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