Amended in Senate September 4, 2015

California Legislature—2015–16 Regular Session

Assembly Bill No. 650

Introduced by Assembly Member Perea

February 24, 2015

An act to amend begin delete Section 19596.2 end delete begin insert Sections 19607.2 and 19607.3 end insert of the Business and Professions Code, relating to horse begin delete racing. end delete begin insert racing, and declaring the urgency thereof, to take effect immediately. end insert

LEGISLATIVE COUNSEL’S DIGEST

AB 650, as amended, Perea. begin delete Horse racing: out-of-state thoroughbred races: Blue Grass Stakes. end delete begin insert Horse racing: thoroughbred racing: northern zone: auxiliary offsite stabling, training, and vanning. end insert

begin insert

(1) The Horse Racing Law requires, when satellite wagering is conducted on thoroughbred races at associations or fairs in the northern zone, that an amount not to exceed 1.25% of the total amount handled by all of those satellite wagering facilities be deducted from the funds otherwise allocated for distribution as commissions, purses, and owners’ premiums and instead distributed to an organization formed and operated by thoroughbred racing associations, fairs conducting thoroughbred racing, and the organization representing thoroughbred horsemen, to administer a fund to provide reimbursement for offsite stabling at California Horse Racing Board-approved auxiliary training facilities for additional stalls beyond the number of usable stalls the association or fair is required to make available and maintain, and for the vanning of starters from these additional stalls on racing days for thoroughbred horses.

end insert begin insert

This bill would increase the amount that is required to be deducted to an amount not to exceed 2% and would provide that this amount, if adjusted by the board, may be a different percentage of the handle for different associations and fairs but only if all the associations and fairs agree to the differing percentages. The bill would establish an auxiliary offsite stabling and training facility and vanning program for thoroughbred races in the northern zone. The bill would revise and recast the provisions governing the organization formed and operated to administer the fund to include, among other things, a 50-50 percentage allocation of specified voting interests on the board of the organization, the use of funds to pay the organization’s expenses and compensate the provider of a board-approved auxiliary facility for offsite stabling and training of thoroughbred horses in the northern zone, and the requirement that the organization submit its proposed financial and operational plans for the upcoming calendar year to the board for review no later than November 1 of the preceding year.

end insert begin insert

The bill would also require that the funds be used to cover all or part of the cost of vanning thoroughbred horses in the northern zone from a board-approved auxiliary offsite stabling and training facility and would authorize the organization to enter into multiyear contracts for auxiliary facilities in the northern zone subject to specified conditions. The bill would authorize the organization to use the funds to pay back commissions, purses, and owners’ premiums to the extent that the deductions made exceed in any year the amount of the funds necessary to achieve the objectives of the organization. The bill would also authorize a thoroughbred racing association or fair in the northern zone to opt out of the auxiliary offsite stabling and training facility and vanning program, as specified. The bill would provide that the board shall reserve the right to adjudicate any disputes that arise regarding costs, or other matters, relating to the furnishing of offsite stabling, training, or vanning, as specified.

end insert begin insert

(2) By expanding the provisions of the Horse Racing Law, a violation of which is a crime, the bill would create new crimes and would thereby impose a state-mandated local program.

end insert begin insert

(3) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

end insert begin insert

This bill would provide that no reimbursement is required by this act for a specified reason.

end insert begin insert

(4) This bill would declare that it is to take effect immediately as an urgency statute.

end insert begin delete

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. Under that law, the total number of thoroughbred races imported by associations or fairs on a statewide basis under these provisions are required to not exceed 50 per day on days when live thoroughbred or fair racing is being conducted in the state, with the exception of prescribed races, including races imported that are part of the race card of 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 Cup, the Arkansas Derby, the Apple Blossom Handicap, or the Haskell Invitational.

end delete begin delete

This bill would exempt from the 50 imported race per day limitation, races imported that are part of the race card of the Blue Grass Stakes.

end delete

Vote:  begin delete majority end delete begin insert ²⁄₃ end insert . Appropriation: no. Fiscal committee:  begin delete no end delete begin insert yes end insert . State-mandated local program:  begin delete no end delete begin insert yes end insert .

The people of the State of California do enact as follows:

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert Section 19607.2 of the end insert begin insert Business and Professions
Code end insert begin insert is amended to read: end insert

19607.2.  

Notwithstanding Section 19605.8, when satellite
wagering is conducted on thoroughbred races at associations or
fairs in the northern zone, an amount not to exceed begin delete 1.25 end delete begin insert 2 end insert percent
of the total amount handled by all of those satellite wagering
facilities, shall be deducted from the funds otherwise allocated for
distribution as commissions, purses, and owners’ premiums and
instead distributed to an organization formed and operated by
thoroughbred racing associations, fairs conducting thoroughbred
racing, and the organization representing thoroughbred begin delete horsemen,
with each party having meaningful representation end delete begin insert horsemen and
horsewomen, for use pursuant to Section 19607.3. A vote of the
organization representing thoroughbred horsemen and
horsewomen shall constitute 50 percent of all voting interests end insert on
the board of the begin delete organization, to administer, pursuant end delete begin insert organization
formed and operated end insert to begin delete supervision of end delete begin insert administer end insert the begin delete board, a fund
to provide reimbursement for offsite stabling at board-approved
auxiliary training facilities of end delete begin insert fund. The other 50 percent of all
voting interests shall be allocated among thoroughbred end insert racing
associations begin delete or end delete begin insert and end insert fairs begin delete for additional stalls beyond the number
of usable stalls the association is required to make available and
maintain pursuant to Section 19535, end delete begin insert conducting thoroughbred
racing in a manner that provides meaningful representation on
the governing board of the organization end insert for begin delete starter fees end delete
begin insert thoroughbred racing associations end insert and begin delete for the vanning of starters
from these additional stalls on race days for thoroughbred horses. end delete
begin insert fairs conducting thoroughbred racing, except as provided in
subdivision (h) of Section 19607.3. end insert

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 19607.3 of the end insert begin insert Business and Professions Code end insert
begin insert is amended to read: end insert

19607.3.  

(a)  begin delete The end delete begin insert Notwithstanding Section 19535, the end insert funds
distributed to the organization formed pursuant to Section 19607.2
shall be used to begin delete reimburse racing associations that are operating
offsite stabling providing additional stalls end delete begin insert pay the organization’s
expenses and compensate the provider of a board-approved
auxiliary offsite facility for stabling, training, and vanning of
thoroughbred horses in the northern zone. The organization
administering the auxiliary offsite stabling and training facility
and vanning program shall submit its proposed financial and
operational plans end insert for the begin delete incremental increase in operating costs
directly resulting from providing the stabling. end delete begin insert upcoming calendar
year to the board for review no later than November 1 of the
preceding year. end insert Neither the organization administering the
begin insert auxiliary end insert offsite stabling and begin insert training facility and end insert vanning program
nor any of the entities forming and operating the organization,
except the entity operating the begin insert auxiliary end insert offsite stabling begin insert and
training end insert facility where the injury occurred, shall be liable for any
injury to any jockey, exercise person, owner, trainer, or any
employee or agent thereof, or any horse occurring at any begin insert auxiliary end insert
offsite stabling begin insert and training end insert facility.

(b) The funds shall also be used to begin delete reimburse horsemen for end delete begin insert cover
all or part of end insert the cost of vanning begin delete starting end delete begin insert thoroughbred end insert horses
from a board-approved auxiliary begin delete training facility operated by a
racing association or fair end delete begin insert offsite stabling and training facility end insert to
the track begin delete conducting the racing meeting. Horsemen may use carriers
of their own choice, except that end delete begin insert to start in a thoroughbred race at
a thoroughbred or fair racing meeting in end insert the begin delete amount end delete begin insert northern
zone. The organization shall determine the extent end insert of begin delete reimbursement
to horsemen is limited to the amount end delete begin insert and manner in which
compensation will be paid for thoroughbred horses end insert that begin delete the
organization determines is generally charged by carriers for
vanning end delete begin insert are vanned end insert from the auxiliary begin delete training end delete facility to the track
begin insert or the fair end insert conducting the begin insert thoroughbred or fair end insert racing meeting.
Neither the organization administering the begin insert auxiliary end insert offsite stabling
begin insert and training facility end insert and vanning program nor any of the entities
forming and operating the organization, except begin delete the end delete begin insert an end insert entity
actually engaged in vanning horses, is liable for any injury
occurring to any individual or horse during vanning from an offsite
stabling begin insert and training end insert facility.

(c) The begin delete training end delete begin insert auxiliary offsite stabling and training end insert facilities
and begin insert the end insert amenities provided for offsite stabling and training
purposes shall be begin insert substantially end insert equivalent in character to those
provided begin delete during end delete begin insert by the thoroughbred end insert racing begin delete meetings of end delete
begin insert association or fair conducting end insert the begin delete association. end delete begin insert racing meeting. end insert

begin insert

(d) In order to ensure the long-term availability of facilities for
offsite stabling and training, the organization may enter into
multiyear contracts for auxiliary facilities in the northern zone.
The organization shall submit to the board for its approval the
multiyear contracts that it enters into with providers of auxiliary
facilities for offsite stabling and training. Contracts not
disapproved by the board within 60 days of submittal to the board
shall be deemed to have been approved by the board.

end insert begin insert

(e) At the request of the board, the organization shall submit a
report detailing all of its receipts and expenditures over the prior
two fiscal years and, upon request of any party within the
organization, those receipts and expenditures shall be audited by
the board.

end insert begin delete

(d) Upon the request of any party within the organization, the
board shall adjudicate any dispute regarding costs, or other matters
relating

end delete

begin insert (f) end insert begin insert   end insert begin insert In addition end insert to the begin delete furnishing end delete begin insert uses end insert of begin delete offsite stabling or
vanning. The board may, if necessary, appoint an independent
auditor to assist end delete begin insert the funds described end insert in begin delete the resolution of disputes.
The auditor shall be reimbursed from the end delete begin insert subdivisions (a) and (b),
the organization may use the end insert funds begin insert for both end insert of the begin delete organization. end delete
begin insert following: end insert

begin delete

(e) The organization may maintain

end delete

begin insert (1) end insert begin insert   end insert begin insert Maintain end insert a reserve fund of up to 10 percent of the total
estimated annual vanning and begin insert auxiliary offsite end insert stabling begin insert and training
facility end insert costs. In addition to the reserve fund, if the funds generated
for begin insert the auxiliary end insert offsite stabling and begin insert training facilities and end insert vanning
are insufficient to fully begin delete reimburse racing associations or fairs for
expenses incurred during end delete begin insert cover end insert the begin delete offsite vanning and stabling
program, end delete begin insert expenses incurred, end insert the organization begin delete may end delete begin insert may, in the
future, end insert accumulate sufficient funds to fully begin delete reimburse end delete begin insert cover end insert those
begin delete associations or fairs for those end delete expenses.

begin insert

(2) Pay back commissions, purses, and owners’ premiums to
the extent the deductions made pursuant to Section 19607.2 exceed
in any year the amount of funds necessary to achieve the objectives
of the organization.

end insert begin delete

(f)

end delete

begin insert (g) end insert  The amount initially deducted and distributed to the
organization begin delete shall be 0.5 percent of the total amount handled by
satellite wagering facilities authorized under this article in the
northern zone on thoroughbred racing, but that allocation may end delete
begin insert pursuant to Section 19607.2 may, at the request of the organization, end insert
be adjusted by the board, in its discretion. However, the adjusted
amount may not exceed begin delete 1.25 end delete begin insert 2 end insert percent of the total amount handled
by satellite wagering begin delete facilities, end delete begin insert facilities. The amount deducted
and distributed end insert to begin delete pay expenses end delete begin insert the organization as adjusted by
the board may be a different percentage of the handle for different
associations end insert and begin delete maintain end delete begin insert fairs conducting thoroughbred racing
meetings in end insert the begin delete reserve fund for end delete begin insert northern zone, but only if all end insert the
begin delete continuing support of end delete begin insert associations and fairs agree to end insert the begin delete program. end delete
begin insert differing percentages. end insert

begin insert

(h) A thoroughbred racing association or fair in the northern
zone that is able to provide the minimum number of stalls required
by its racing meeting license without the use of any auxiliary offsite
stabling and training facility and vanning program may opt out
of that program, in which case the deduction described in Section
19607.2 shall not apply during the live racing meeting conducted
by the association or fair until such time as the association or fair
opts back into the auxiliary offsite stabling and training facility
and vanning program. Any thoroughbred racing association or
fair in the northern zone that opts out of the auxiliary offsite
stabling and training facility and vanning program shall not have
any voting interest therein until such time as the association or
fair opts back into the program. The organization shall establish
reasonable procedures and timelines for the giving of notice to
the organization by a thoroughbred racing association or fair that
elects to opt out of the auxiliary offsite stabling and training facility
and vanning program.

end insert begin insert

(i) The board shall reserve the right to adjudicate any disputes
that arise regarding costs, or other matters, relating to the
furnishing of offsite stabling, training, or vanning. Notwithstanding
any other law, the board shall maintain all powers necessary and
proper to ensure that offsite stabling, training, and vanning, as
provided for in this article, is conducted in a manner that protects
the public and serves the best interests of horse racing.

end insert

begin insert

begin insert SEC. 3. end insert   

end insert begin insert

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.

end insert

begin insert

begin insert SEC. end insert begin insert 4 end insert begin insert . end insert   

end insert begin insert

This act is an urgency statute necessary for the
immediate preservation of the public peace, health, or safety within
the meaning of Article IV of the Constitution and shall go into
immediate effect. The facts constituting the necessity are:

end insert begin insert

At current levels, there are insufficient funds to maintain an
auxiliary offsite stabling and training facility and vanning program
at racing meetings of thoroughbred horses conducted by
thoroughbred racing associations or fairs. Therefore, in order to
raise sufficient funds before the winter thoroughbred horse racing
season begins, it is necessary that this act take effect immediately.

end insert

begin delete

SECTION 1.  

Section 19596.2 of the Business and Professions
Code is amended to read:

19596.2.  

(a) Notwithstanding any other law and except as
provided in Section 19596.4, 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 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. Further, the total number of thoroughbred
races imported by associations or fairs on a statewide basis under
this section shall not exceed 50 per day on days when live
thoroughbred or fair racing is being conducted in the state. The
limitation of 50 imported races per day does not apply to any of
the following:

(1) Races imported for wagering purposes pursuant to
subdivision (c).

(2) Races imported that are part of the race card of 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 Cup, the Arkansas
Derby, the Apple Blossom Handicap, the Blue Grass Stakes, or
the Haskell Invitational.

(3) Races imported into the northern zone when there is no live
thoroughbred or fair racing being conducted in the northern zone.

(4) Races imported into the combined central and southern zones
when there is no live thoroughbred or fair racing being conducted
in the combined central and southern zones.

(b) Any thoroughbred association or fair accepting wagers
pursuant to subdivision (a) shall conduct the wagering in
accordance with the applicable provisions of Sections 19601,
19616, 19616.1, and 19616.2.

(c) No thoroughbred association or fair may accept wagers
pursuant to this section on 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 Orange or Sacramento Counties.

end delete