BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 1539


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          Date of Hearing:  April 27, 2015


                   ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION


                                  Adam Gray, Chair


          AB 1539  
          (Committee on Governmental Organization) - As Introduced March  
          26, 2015


          SUBJECT:  Horse racing:  advance deposit wagering:  deductions  
          and distributions:  jockey retirement plan


          SUMMARY:  Provides that a person becomes a participant in a  
          designed California jockey retirement plan when he or she is  
          licensed as a jockey in California.


          EXISTING LAW:  


          1)  Provides that the California Horse Racing Board (CHRB) shall  
          regulate the various forms of horse racing authorized in this  
          state.





          2)  Provides that jockeys must be licensed by CHRB.












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          3)  Authorizes Advance Deposit Wagering (ADW) to be conducted,  
          with the approval of the CHRB. 


          4)  Requires that amounts distributed under advance deposit  
          wagering provisions be proportionally reduced by an amount equal  
          to 0.00295 multiplied by the amount handled on advance deposit  
          wagers originating in California for each racing meeting, except  
          for harness racing meetings, provided that the amount of this  
          reduction not exceed $2,000,000. The method used to calculate  
          the reduction in proportionate share shall be approved by CHRB.   
          The amount deducted shall be distributed as follows:


            a)  Fifty percent of the money to CHRB to establish and to  
          administer jointly with the                                    
          organization certified as the majority representative of  
          California-licensed jockeys pursuant                          to  
          Section 19612.9, a defined contribution retirement plan for  
          California-licensed jockeys                                    
          who retired from racing on or after January 1, 2009.


            b)  The remaining 50 percent of the money shall be distributed  
          to supplement the trainer-                                     
          administered pension plans for backstretch personnel and to the  
          welfare fund established for                                   
          the benefit of horsemen and backstretch personnel, as defined.


          5)  Requires CHRB to establish safety standards governing the  
          racetracks, equipment, medical services, and other facilities to  
          ensure the safety of horses, riders, and workers at the  
          racetrack.


          FISCAL EFFECT:  Unknown









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          COMMENTS:  





           Purpose of this bill  :  AB 765 (Evans), Chapter 613, Statutes of  
          2007, reauthorized horse racing's ADW law.  As part of that  
          legislation, a portion of the revenue generated by ADW was to be  
          deposited into a trust jointly managed by the Jockeys' Guild and  
          the CHRB.  All licensed California jockeys are eligible to  
          participate in the plan.  A contribution is made for every race  
          that a jockey rides.  Nearly two hundred California jockeys have  
          been enrolled in the plan. 





          The pension fund has no unfunded liability, as it is a defined  
          contribution plan. The plan is similar to a 401K plan, not a  
          traditional pension fund, which "owes" retirees a fixed benefit  
          upon retirement.  Each jockey has an individual account, which  
          becomes active after riding in their first horse race in  
          California.  When jockey retires, he or she receives an annuity  
          purchased with the balance in their particular account, which  
          pays them a monthly benefit.  The funds are invested by the  
          trustees and the contributions and earnings are annually  
          allocated to each jockey on a per race basis.  The current  
          balance in the jockey pension plan is approximately $4.7  
          million.  





          According to the author, the purpose of the bill is to ensure  
          that a jockey shall become a participant in the existing  








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          retirement plan when he or she is "licensed by the CHRB" to be a  
          jockey in California.  By streamlining the jockey retirement  
          plan within the licensing process, it will ensure that every  
          jockey receives his or her fair share of earned benefits.





           Background  :





           What is Advance Deposit Wagering  ?  The California horse racing  
          industry entered into a new era in 2002 with the advent of ADW  
          (AB 471, Chapter 198, Statutes of 2001), which allows customers  
          to deposit funds into an account in order to wager online and  
          over the telephone.  These wagers are commingled into pools at  
          the host track where the races are run, and within the  
          pari-mutuel wagering system regulated by CHRB.





          ADW 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. In general, industry  
          stakeholders agree that ADW has become an important element to  
          the financial stability of California's horse racing industry.  
          Currently, the CHRB has approved three companies (TVG,  
          Twinspires.com, and XpressBet) to provide ADW services to  
          California customers. 









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          ADW constitutes about $600 million in handle for the horse  
          racing business.  It has become an important segment of the  
          industry - in fact, it is the only segment that has been  
          growing.


           


          California jockeys are independent contractors  :  For purposes  
          other than workers' compensation insurance, jockeys are  
          independent contractors.  California jockeys supply their own  
          equipment, choose which horses to ride, ride only those races  
          they elect to ride at race meets they select, and are allowed to  
          negotiate their own rate of compensation.  (California Code of  
          Regulations, Title 4, Divisions 4, Rule 1632.)  The minimum wage  
          that jockeys receive in a horse race is established by the CHRB  
          (per regulation) as a minimum riding fee.  Jockeys may earn  
          additional compensation if the horse they are racing is a  
          winning mount, a second place mount, or a third place mount.


                 


           Prior legislation  : AB 1226 (Hall), Chapter 434, Statutes of  
          2013.  Required the CHRB not to permit any portion of any entry,  
          nomination, or other fee paid by any owner to be deducted from a  
          jockey riding fee unless the entry, nomination, or other fee is  
          paid exclusively by the owner and not reimbursed by any other  
          person or entity.












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          AB 765 (Evans), Chapter 613, Statutes of 2007.  Reauthorized ADW  
          law in the state, which was set to "sunset" on January 1, 2008,  
          as specified.   





          AB 471 (Hertzberg), Chapter 198, Statutes of 2001.  Allowed  
          customers to deposit funds into an account in order to wager  
          online and over the telephone (ADW).  ADW wagers are commingled  
          into pools at the host track where the races are run, and within  
          the pari-mutuel wagering system regulated by CHRB.  The bill  
          established a process for the distribution of the revenue  
          received from ADW to mirror existing distributions for track  
          commissions, owner purses, and breeder incentive awards.


          REGISTERED SUPPORT / OPPOSITION:




          Support


          Jockeys' Guild




          Opposition


          None on file











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