BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 493| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 445-6614 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ {u u} THIRD READING Bill No: AB 493 Author: Floyd (D) Amended: 6/24/99 in Senate Vote: 21 {u SENATE GOVERNMENTAL ORG. COMMITTEE u} : 9-0, 7/13/99 AYES: Baca, Chesbro, Dunn, Hughes, Johannessen, Karnette, Knight, O'Connell, Perata NOT VOTING: Burton, Lewis, Johnson {u SENATE APPROPRIATIONS COMMITTEE u} : 11-0, 8/16/99 AYES: Johnston, Alpert, Burton, Escutia, Johnson, Karnette, Kelley, Leslie, McPherson, Mountjoy, Vasconcellos NOT VOTING: Bowen, Perata {u ASSEMBLY FLOOR u} : 66-4, 6/1/99 - See last page for vote {u SUBJECT u} : Horse racing {u SOURCE u} : Pacific Coast Quarter Horse Racing Association {u DIGEST u} : This bill exempts quarter horse associations from the eight percent state license fee imposed on associations for wagering on specified interstate simulcasting, provides for funding of a marketing program through a one percent purse deduction and requires quarter horse or fair racing associations conducting barrel racing, show jumping racing, or steeplechase racing to pay three percent of the purse amounts to the quarter horsemen's organization. CONTINUED {u AB 493 u} Page 2 {u ANALYSIS u} : Existing law: 1. Allows the California State Fair and Exposition, a county fair, or a district agricultural association fair to provide a program of mixed breed racing that includes thoroughbred racing, harness racing, quarter horse racing, Arabian racing, Paint racing, Appaloosa racing, steeplechase races, barrel races, and show jumping races whenever it conducts a program of parimutuel wagering. 2. Allows all recognized breeds of horses to compete in barrel races, show jumping races and steeplechase races. Parimutuel wagering may be conducted on these races at any public or private racing facility approved and licensed by the California Horse Racing Board (CHRB). 3. Requires racing associations or fairs to pay specified amounts to owner's organizations for administrative expenses and services rendered in representing the owners of the respective breeds participating in the race meeting. 4. Provides for certain license fees to be paid to the state related to racing associations in this state authorizing betting systems located outside this state to accept wagers on a race or races conducted or disseminated outside of California. 5. Requires that any association conducting thoroughbred racing will pay to an owners' organization, a certain percentage of the amount deducted for purses, for payment to a national marketing program, as specified. This bill: 1.Requires any quarter horse or fair racing association conducting barrel racing, show jumping racing, or steeplechase racing, to pay to the quarter horsemen/women's organization 3% of the purse amounts for purposes of representing the horsemen/women conducting these races. 2. Deletes the requirement that a quarter horse {u AB 493 u} Page 3 association pay a specified 8% license fee to the state, and instead provides that these funds be deposited with an official registering agency to be distributed for the purpose of described breeder awards. 3. Provides that any association, including a fair, conducting quarter horse racing will deduct 1% from purses to pay to the horsemen's organization contracting with the association with respect to the conduct of quarter horse racing meetings, for a specified local, regional, or national marketing program. 4. Provides that funds not needed for this purpose will be returned to purses, and the horsemen's organization will file a specified report with the California Horse Racing Board, and both the Senate and Assembly Governmental Organization Committees. 5. The horsemen's organization will have the discretion to select which marketing organization will receive these monies, and also allows the horsemen's organization to choose not to make this contribution if they give prompt notice to the respective racing association. {u FISCAL EFFECT u} : Appropriation: No Fiscal Com.: Yes Local: No According to Senate Appropriations Committee: Fiscal Impact (in thousands) {u Major Provisions u} {u 1999-2000 u} {u 2000-01 u} {u 2001-02 u} {u Fund u} License fee revenue loss ----unknown, up to $100 annually ----Various The license fees paid to the State are distributed to the General Fund, Fair and Exposition Fund, Satellite Wagering Account, Wildlife Restoration Fund and the Department of Education for vocational programs related to agriculture. {u SUPPORT u} : (Verified 8/18/99) {u AB 493 u} Page 4 Pacific Coast Quarter Horse Racing Association {u OPPOSITION u} : (Verified 8/18/99) State Department of Finance {u ARGUMENTS IN SUPPORT u} : According to the Pacific Coast Quarter Horse Racing Association (PCQHRA), the purpose of this bill is to promote and stimulate the production of non-breed specific horse racing in California in order to broaden and extend the use of California race horses and develop a new market for the racing industry. PCQHRA notes that barrel, show jumping, and steeplechase racing have been eligible for parimutuel wagering at all racing venues since 1990. However, to date, no racing association has offered these races to the betting public. Instead, PCQHRA contends the racing associations and fairs have continued to promote traditional or flat racing of all breeds of horses, even adding mule races to mixed meets held at fairs. PCQHRA claims that the one-percent amount in this measure obligated to the National Thoroughbred Racing Association for a national marketing program, is equivalent to the 1.75% deduction currently taken from purses for thoroughbreds participating in the same program. The author maintains that the current national organizations involved in representing these types of breeds are not organized to promote wagering in California on these races. This bill seeks to remedy the situation by authorizing the quarter horse racing owner's organization to represent these owners. The author believes that every effort must be made to attempt to stimulate interest in all types of horse racing to attract new fans to a sport that continues to experience stagnant market growth. {u ARGUMENTS IN OPPOSITION u} : The State Department of Finance states that this bill would result in General Fund revenue losses of approximately $79,000 annually, which are not reflected in the 1999 Budget Act, and would set a precedent to exempt other horse racing associations from this license fee. {u AB 493 u} Page 5 Finance notes that the horse racing industry has received substantial tax relief in recent years. Chapter 335, Statutes of 1998 (SB 27, Maddy) provided approximately $40 million annually in relief to the horse racing industry, while Chapter 1121, Statutes of 1996 (SB 2000, Maddy) reduced horse racing license fees by approximately $12 million. General Fund revenues from horse racing have decreased by 65 percent from 1995-96 to 1998-99, from $67 million to $23 million. {u u} {u ASSEMBLY FLOOR u} : 66-4, 6/1/99 AYES: Ackerman, Alquist, Aroner, Ashburn, Bates, Battin, Baugh, Briggs, Calderon, Campbell, Cardenas, Cardoza, Cedillo, Corbett, Correa, Cox, Cunneen, Davis, Dickerson, Ducheny, Dutra, Firebaugh, Florez, Floyd, Gallegos, Granlund, Hertzberg, Honda, Kaloogian, Keeley, Knox, Leach, Lempert, Leonard, Longville, Machado, Maddox, Maldonado, Margett, Mazzoni, Migden, Nakano, Olberg, Oller, Robert Pacheco, Rod Pacheco, Papan, Pescetti, Reyes, Romero, Runner, Scott, Shelley, Steinberg, Strickland, Strom-Martin, Thomson, Torlakson, Vincent, Wayne, Wesson, Wiggins, Wildman, Wright, Zettel, Villaraigosa NOES: Frusetta, Havice, House, Thompson NOT VOTING: Aanestad, Baldwin, Bock, Brewer, Jackson, Kuehl, Lowenthal, McClintock, Soto, Washington TSM:jk 8/18/99 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END ****