AB 493 Horse racing. BILL NUMBER: AB 493 AMENDED 06/24/99 BILL TEXT AMENDED IN SENATE JUNE 24, 1999 AMENDED IN ASSEMBLY APRIL 27, 1999 INTRODUCED BY Assembly Member Floyd FEBRUARY 18, 1999 An act to amend Sections 19403.5, 19410.8, 19415.8, {- and 19533 -} {+ 19533, 19602, and 19613.05 +} of the Business and Professions Code, relating to horse racing. LEGISLATIVE COUNSEL'S DIGEST AB 493, as amended, Floyd. Horse racing {- : barrel, show jumping, and steeplechase racing -} . (1) Existing law authorizes the California State Fair, county fairs, and district agricultural association fairs to provide a program of mixed breed racing that includes, regardless of breed, steeplechase, barrel, and show jumping races, with parimutuel wagering authorized thereupon. Existing law also defines steeplechase, barrel, and show jumping races, and requires these races to be conducted in accordance with the rules and requirements of specified respective national associations. This bill would instead provide that these races may be conducted in accordance with the rules and regulations of the respective national associations. (2) Existing law generally requires that any license granted to an association other than a fair shall be for only a single type of racing, except that the board may authorize the participation of thoroughbred and Appaloosa horses in quarter horse races subject to specified conditions. Existing law also provides that any association licensed to conduct quarter horse racing may apply to the board for, and be granted, the authority to conduct thoroughbred racing as part of its racing program, provided that specified conditions are met, including a requirement that the quarter horse association conducting thoroughbred racing shall pay to a quarter horse horsemen's organization an amount not to exceed 3% of the amount deducted for purses, for the payment of administrative expenses and services rendered to horsemen. This bill would provide that notwithstanding any other provision of law, any quarter horse racing association or fair conducting steeplechase, barrel, and show jumping racing shall pay to the quarter horse horsemen's organization an amount not to exceed 3% of the amount deducted for purses, for the purpose of representing the horsemen and horsewomen conducting these races. {+ (3) Existing law provides that any racing association in this state may authorize betting systems located outside of this state to accept wagers on a race or races conducted or disseminated by that association, and may transmit live audiovisual signals of the race or races and their results to those betting systems, subject to the consent of the host association and applicable federal law. Existing law also provides that, with the exception of a thoroughbred association that hosts the series of races known as the "Breeder's Cup," the association shall pay a license fee to the state in an amount equal to 8% of the total amount received by the association from the out-of-state betting system. This bill would exempt quarter horse associations from this license fee, and would instead provide that 8% of the amount received from the out-of-state betting system shall be deposited with the official registering agency to be distributed pursuant to certain existing provisions of law. (4) Existing law requires any association that conducts a quarter horse meeting, except a mixed breed meeting, to pay from the portion deducted for purses an amount not to exceed 3% of that portion to the quarter horse horsemen's organization for administrative expenses and services rendered to horsemen. Existing law also requires that, until January 1, 2004, any association, including a fair, that conducts thoroughbred racing shall pay to the owners' organization a specified percentage of the amount deducted for purses for payment to a national marketing program, as specified. This bill would require any association, including a fair, that conducts quarter horse racing to pay up to 1% of the portion deducted for purses to the contracting quarter horse horsemen's organization for use only in the promotion of horse racing in conjunction with a local, regional, or national horse racing marketing program. The bill would provide that the quarter horse horsemen's organization shall have the discretion to annually determine the purse amount distributed for this purpose, and shall be required to account for the receipt and expenditure of these funds and file a report with the board and certain committees of the Legislature on an annual basis. The bill would provide that the board of directors of the organization shall have discretion to select the marketing organization to receive these funds, and if the board of directors decides at any time not to contribute the full amount, the bill would require that prompt notice be given to the respective association or associations, that the unused funds be proportionally returned to the purse pool at the association where they were raised, and that the deduction shall cease until the horsemen's organization decides otherwise. This bill would also make clarifying, nonsubstantive, conforming changes to a related provision applicable to thoroughbred associations. These provisions would be repealed as of January 1, 2004. +} Vote: majority. Appropriation: no. Fiscal committee: {- no -} {+ yes +} . State-mandated local program: no. SECTION 1. Section 19403.5 of the Business and Professions Code is amended to read: 19403.5. "Barrel race" means a horse race around a course with three barrels placed in a triangular pattern which may conform to the requirements of the Women's Professional Rodeo Association. Two barrel race courses may be run simultaneously in the form of a heat. SEC. 2. Section 19410.8 of the Business and Professions Code is amended to read: 19410.8. "Show jumping race" means a horse race, over obstacles made of artificial or natural material, which is shorter than a steeplechase course, and is run by horses for time with faults converted to time. Requirements and rules for a show jumping race may conform to the requirements and rules of the American Horse Shows Association. SEC. 3. Section 19415.8 of the Business and Professions Code is amended to read: 19415.8. "Steeplechase race" means a horse race over obstacles made of natural or artificial material and includes both hurdle and timber races. Rules for a steeplechase race may conform to rules of the National Steeplechase and Hunt Association. SEC. 4. Section 19533 of the Business and Professions Code is amended to read: 19533. (a) Any license granted to an association other than a fair shall be only for one type of racing, thoroughbred, harness, or quarter horse racing as the case may be, except that the board may authorize the entering of thoroughbred and Appaloosa horses in quarter horse races at a distance not exceeding five furlongs at quarter horse meetings, mixed breed meetings, and fair meetings. If the board authorizes the entering of thoroughbred or Appaloosa horses in quarter horse races, the following conditions shall be met: (1) Any race written for participation by quarter horses, Appaloosas, and thoroughbreds shall be written as quarter horse preferred. (2) The number of races written as quarter horse preferred at a distance exceeding 870 yards shall not exceed more than three races per program without the consent of the quarter horse horsemen's organization contracting with the association. (3) More than one-half of the races on any program shall be for quarter horses at a distance not to exceed 550 yards, unless the consent of the quarter horse horsemen's organization is received. (4) Mixed races with Appaloosa and quarter horses may only be written with the consent of the quarter horse horsemen's organization contracting with the association. (b) The association that conducts the meeting shall pay to a thoroughbred trainers' organization an amount for a pension plan for backstretch personnel to be administered by that trainers' organization equivalent to 1 percent of the amount available to thoroughbred horses for purses. The remainder of the portion shall be distributed as purses. Any redistributable money paid to the board pursuant to Section 19641, which is paid to a welfare fund established by a horsemen's organization from races with both thoroughbred and quarter horses, shall be divided pro rata between the two welfare funds based on the number of thoroughbreds and quarter horses in the race. (c) (1) Notwithstanding any other provision of law, any association licensed to conduct quarter horse racing may apply to the board for, and the board shall grant, authority to conduct thoroughbred racing as part of its racing program if all of the following conditions are met: (A) The thoroughbred races are for a claiming price of not more than five thousand dollars ($5,000), and at a distance of four and one-half furlongs or less. The races may not be stakes, allowance races, or maiden allowance races. (B) More than one-half of the races on any program shall be for quarter horses at a distance not to exceed 550 yards, unless the consent of the quarter horse horsemen's organization is received. (C) The consent of the quarter horse horsemen's organization contracting with the association is obtained with respect to the inclusion of thoroughbred racing. (2) The quarter horse racing association conducting thoroughbred racing pursuant to this subdivision shall pay to a quarter horse horsemen's organization the amount specified in subdivision (e) of Section 19613, and an amount for a pension plan for backstretch personnel to be administered by a thoroughbred trainers' organization equivalent to 1 percent of the amount available to thoroughbred horses for purses. The remainder of the portion shall be distributed as purses. The quarter horse racing association shall also deduct the appropriate amount to comply with subdivision (a) of Section 19617.2 for distribution to the thoroughbred official registering agency. (d) Notwithstanding any other provision of law, any quarter horse racing association or fair conducting barrel racing, show jumping racing, or steeplechase racing shall pay to the quarter horse horsemen's organization the amount specified in Section 19613 for purposes of representing the horsemen and horsewomen conducting these races. {+ SEC. 5. Section 19602 of the Business and Professions Code is amended to read:+} 19602. (a) Notwithstanding any other provision of law, any racing association in this state may authorize betting systems located outside of this state to accept wagers on a race or races conducted or disseminated by that association and may transmit live audiovisual signals of the race or races and their results to those betting systems, except that any authorization is subject to the consent of the host association and applicable federal laws, including, but not limited to, Chapter 57 (commencing with Section 3001) of Title 15 of the United States Code. (b) (1) Except as provided in {- paragraph -} {+ paragraphs +} (2) {+ and (3) +} , any racing association described in subdivision (a), when it authorizes betting systems located outside of this state to accept wagers on a race, shall pay a license fee to the state in an amount equal to 8 percent of the total amount received by the association from the out-of-state betting system. In addition, with respect to thoroughbred racing only, 3 percent of the amount remaining after the payment of the license fee shall be deposited with the official registering agency pursuant to subdivision (a) of Section 19617.2, and shall thereafter be distributed in accordance with subdivisions (b), (c), and (d) of Section 19617.2. The remaining amount received by the association shall be distributed to the association that conducts the racing meeting and to horsemen participating in that racing meeting as follows: 50 percent to the association as commissions, and 50 percent to the horsemen as purses. All rents, costs, and fees shall be deducted pursuant to a contract between the association that conducts the racing meeting and the horsemen participating in the racing meeting. Notwithstanding any other provision of law, racing associations may form a partnership, joint venture, or any other affiliation in order to negotiate terms and conditions of agreements with out-of-state betting systems. (2) A thoroughbred association that hosts the series of races known as the "Breeder's Cup" shall not be required to pay to the state the license fees required pursuant to paragraph (1). Amounts received by the association from out-of-state betting systems as wagers on Breeder's Cup races shall be distributed as follows: 50 percent as commissions to the association that conducts the racing meeting, and 50 percent as purses to the horsemen participating in the meeting. {+ (3) A quarter horse association shall not be required to pay the state the license fee required pursuant to paragraph (1). For quarter horse racing, 8 percent of the total amount received by the association from the out-of-state betting system shall be deposited with the official registering agency pursuant to subdivision (b) of Section 19617.7 and shall thereafter be distributed in accordance with subdivisions (c), (d), and (e) of that section. +} (c) With the permission of the board, wagers accepted by betting systems located outside of this state may be, but are not required to be, included in the parimutuel pool of the association that conducts the racing meeting in this state. If the wagers accepted by betting systems located outside of this state are included in the parimutuel pool of the association that conducts the racing meeting in this state, the betting system located outside of this state shall, if permissible under applicable law, deduct from the total amount handled in each conventional and exotic parimutuel pool the same total percentages deducted pursuant to Article 9.5 (commencing with Section 19610) by the association that conducts the racing meeting in this state. If the laws of the jurisdiction in which the betting system is located do not permit the betting system to deduct the same percentages as are deducted by the association that conducts the racing, the board may, nonetheless, permit the inclusion of those out-of-state wagers in the association's parimutuel pool if the board determines it to be in the public interest of this state to do so. (d) If wagers accepted by an association conducting racing within the state and wagers accepted by a betting system located outside of the state are combined in one parimutuel pool and the association and the betting system both deduct the same total percentages as set forth in subdivision (c), the breakage shall be allocated between the association and the betting system on the basis of a calculation for distribution approved by the board. (e) If wagers accepted by an association conducting racing within the state are combined in one parimutuel pool with wagers accepted by a betting system located outside the state and the association and the betting system deduct different percentages from the amount handled in the parimutuel pool, the precise calculation and distribution of payments on winning tickets and breakage between the association and the betting system shall be on the basis of a calculation for distribution approved by the board. (f) The board shall report to the Department of Finance whenever it approves a calculation for distribution pursuant to subdivision (d) or (e) and the projected impact of that calculation, if any, on state revenues. (g) Breakage allocated pursuant to this section to an association conducting racing within this state shall be distributed in the same manner as would be breakage arising from wagers at the association in the absence of a combined parimutuel pool. This section does not apply to the disposition of breakage allocated to the betting system located outside of the state. (h) If wagers accepted by a betting system located outside of this state are included in the parimutuel pool of an association conducting racing in this state, funds in the parimutuel pool attributable to unclaimed tickets relating to wagers accepted by the association conducting racing within the state shall be distributed in the same manner as unclaimed tickets relating to wagers accepted by that association in the absence of a combined parimutuel pool. Funds in the parimutuel pool attributable to unclaimed tickets related to wagers accepted by the betting system located outside of this state shall be allocated to that betting system, and this section does not otherwise apply to the disposition of those funds at that location outside of the state. {+ SEC. 6. Section 19613.05 of the Business and Professions Code is amended to read: +} 19613.05. (a) Any association, including a fair, that conducts thoroughbred racing shall pay to the owners' organization {- , -} contracting with the association with respect to the conduct of thoroughbred racing {+ meetings +} , an additional {- 13/4 -} {+ 1.75 +} percent of the portion {- required by Section 19613 -} {+ deducted for purses pursuant to this chapter +} for a national marketing program. {+ This payment is in addition to the distributions required pursuant to Section 19613.+} These funds shall be used exclusively for the promotion of thoroughbred racing in conjunction with a national thoroughbred racing marketing program. Funds that may not be needed for this effort shall be returned to the purse pool at the racing associations where these funds were raised in direct proportion to the amount in which they were initially raised. The owners' organization shall file a report with the board and the respective Committees on Governmental Organization of the Senate and Assembly, accounting for the receipt and expenditure of these funds on an annual basis. The board of directors of the owners' organization shall have the discretion to select the national marketing organization that shall be the recipient of these funds. If the board of directors of the owners' organization decides at any time not to contribute to the national marketing organization, notice shall be given promptly to the respective racing association or associations and the {- 13/4 -} {+ 1.75 +} percent deduction shall cease until the owners' organization decides otherwise. (b) {+ Any association, including a fair, that conducts quarter horse racing shall pay to the horsemen's organization contracting with the association with respect to the conduct of quarter horse racing meetings, up to 1 percent of the portion deducted for purses pursuant to this chapter for a local, regional, or national marketing program. This payment is in addition to the distributions required pursuant to Section 19613. The board of the contracting horsemen's organization shall have the discretion to annually determine the purse amount distributed for this purpose. These funds shall be used exclusively for the promotion of horse racing in conjunction with a local, regional, or national horse racing marketing program. Funds that may not be needed for this effort shall be returned to the purse pool at the racing associations where these funds were raised in direct proportion to the amount in which they were initially raised. The horsemen's organization shall file a report with the board and the respective Committees on Governmental Organization of the Senate and Assembly, accounting for the receipt and expenditure of these funds on an annual basis. The board of directors of the horsemen's organization shall have the discretion to select the local, regional, or national marketing organization that shall be the recipient of these funds. If the board of directors of the quarter horse horsemen's organization decides at any time not to contribute to the local, regional, or national marketing organization, notice shall be given promptly to the respective racing association or associations and the 1 percent deduction shall cease until the horsemen's organization decides otherwise. (c) +} This section shall remain in effect only until January 1, 2004, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2004, deletes or extends that date. 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