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					Bill No: AB 763 SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION Senator Roderick D. Wright, Chair 2009-2010 Regular Session Staff Analysis

AB 763 Author: Chesbro As Amended: June 2, 2009 Hearing Date: June 9, 2009 Consultant: Chris Lindstrom

SUBJECT Horse racing: Humboldt County Fair. DESCRIPTION AB 763, an urgency measure, allows the Humboldt County Fair (HCF) to import and accept wagers on up to eight races per day from out-of-state locations and allows the Del Mar Thoroughbred Club to import and accept wagers on an additional eight races per day from out-of-state locations during the period that HCF is conducting a live race meet. Specifically, the bill: 1) Provides that, in addition to the authorization to accept wagers on out-of-state and out-of-country races authorized by current law, during calendar periods when a thoroughbred association or fair in the northern zone and the HCF simultaneously conduct live race meetings, HCF and a thoroughbred association in the southern zone when conducting a live race meeting and only on days in which live races are being run, may accept wagers on the results of not more than eight out-of-state thoroughbred horse races, if all of the following conditions are met: a) HCF conducts at least six live races; and, b) HCF and the thoroughbred association in the southern zone accept wagers only on out-of-state thoroughbred races that commence before 4:30 p.m., Pacific Standard Time. 2) Allows HCF to contract with the thoroughbred association or fair in the southern zone to distribute the signal statewide on its behalf. 3) Becomes effective immediately upon enactment in order to alleviate economic uncertainty for HCF, preserve jobs, ensure that live horse racing continues in Humboldt County each year, and for this act to apply to the 2009 racing season.

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EXISTING LAW 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. Existing law provides that the California Horse Racing Board (CHRB) regulate the various forms of horse racing authorized in this state. Existing law limits the number of races that may be imported by a thoroughbred association or fair to no more than 32 races per day on days when live thoroughbred or fair racing is being conducted in this state, with specified exceptions. Provides that wagering on these races may occur without the consent of the horsemen/women participating in the meet, and without regard to the amount of purses involved with the races. Existing law exempts from that 32-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 Breeders' Cup, the Travers Stakes, or the Haskell Invitational. Existing law authorizes a thoroughbred racing association or fair to import out-of-country races during the calendar period the association or fair is conducting a race meeting. Limits the total number of out-of-country thoroughbred races on which wagers are allowed to be accepted statewide in any given year to no more than the number of out-ofcountry races that were imported and on which wagers were accepted in 1998. Provides that wagering on these races may occur without the consent of the horsemen/horsewomen participating in the meet. Existing law provides CHRB is authorized to permit a harness or quarter horse association conducting a race meeting to accept wagers on the results of up to eight outof-state or out-of-country harness or quarter horse races per day, if specified conditions are met. If only one breed is being raced on a given day, the racing association conducting live racing may import those races that would otherwise be simulcast by the association that is not racing, as specified. Existing law authorizes a licensed harness racing association that is conducting a live racing meeting in this state to accept wagers on the full card of races conducted by another racing association on the day that other association conducts the Breeder's Crown Stakes, the Meadowlands Pace, the Hambletonian, or the North American Cup. BACKGROUND Purpose of the bill. The sponsor of this bill, the Humboldt County Fair Association, is a nonprofit organization that has served as the management arm of the annual HCF in Ferndale for 114 years. Horse racing has been an integral and essential part of HCF since its inception in 1896. Due to recent and dramatic changes in horse racing, however, the fair faces the very real possibility of losing this important activity.

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HCF states, "The new revenues generated from this bill would be essential to our bottomline and would provide the basis for continuing with the great tradition of horse racing at the fair to be enjoyed by generations to come." HCF further states that revenues derived from this bill will not only support the fair, but the breeding, owning and racing of California horses and mules while supplementing the existing breeding incentive programs. This bill will allow HCF to import up to eight out-of-state races, which is similar to the right held by harness or quarter horse associations while operating a CHRB sanctioned live racing meet. After a record-breaking meet in 2007, when total handle exceeded $4.2 million, HCF finished 2008 with total handle of $3.6 million. One reason for the decline was a decrease in the number of horse races at the fair meet. HCF had a difficult time drawing horses from northern California’s limited supply because they operate at the same time as another fair. There were 442 runners for the 2008 meet, compared to 504 in 2007. This trend is common for all live horse racing meets in California. This bill will give HCF a marketing tool to increase on-track and off-track attendance because quality races from an out-of-state location would be able to be offered to their wagering patrons to offset less live races and overall wagering opportunities. Bottom line, this bill will give HCF a mechanism to increase track commissions and purses while operating a live race meet. Background. In the late 1990's, California racetracks began importing additional races from out-of-state and out-of-country locations to provide California's horse racing patrons with the opportunity to wager on quality races offered by racetracks throughout the country. Since the introduction of this practice (which, incidentally is authorized in many other states that likewise allow pari-mutuel wagering on horse races), wagering on these out-of-state races has been well received by the betting patron, even though overall wagering in California is in decline. In general, allowing wagering on races from out-ofstate locations has helped the industry offset a continued reduction in on-track wagering activity and a diminishing horse population. Under current law, a thoroughbred racing associations or fair is allowed to distribute the audiovisual signal and accept wagers on the results of out-of-state (up to 32 per day) and international thoroughbred races (unlimited) 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. Current law also allows harness or quarter horse associations conducting a live race meet to accept wagers (up to eight per day) on the results of out-of-state and out-of-country races, if specified conditions are met. HCF though has not been able to import additional races as other racing associations in California have been allowed to do and, in essence, have lost out on the opportunity to generate additional revenues for the fair and horsemen. Live fair racing in northern California. Historically, since the advent of pari-mutual wagering in California in 1933, various fairs throughout the state have been allocated racing dates by CHRB to be held in conjunction with their fair dates. Currently, CHRB allocates racing dates to seven fairs in northern California. The northern California fair circuit includes 69 days of thoroughbred and other breed racing on the grounds of the

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following fairs: San Joaquin County (Stockton); Alameda County (Pleasanton); Solano County (Vallejo); Sonoma County (Santa Rosa); Humboldt County (Ferndale); California Exposition and State Fair (Sacramento); and, the Big Fresno Fair (Fresno). PRIOR/RELATED LEGISLATION AB 136 (Silva), 2009-2010 Legislative Session. Would delete the limitation on the total number of out-of-state or out-of-country harness or quarter horse races that may be imported in a calendar year by a harness or quarter horse racing association. AB 3074 (Governmental Organization), Chapter 510, Statutes of 2008. Increases from 23 to 32, 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. AB 2048 (Silva), Chapter 439, Statutes of 2008. Allows a harness and quarter horse racing association to import an additional two races, from six to eight, on live racing days from out-of-state or out-of-country locations. SUPPORT: As of June 5, 2009: Del Mar Thoroughbred Club Humboldt County Board of Supervisors Humboldt County Fair Association (sponsor) OPPOSE: None on file as of June 5, 2009. FISCAL COMMITTEE: Senate Appropriations Committee

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