SECTIONS 19590-19604 - California Statutes

BUSINESS AND PROFESSIONS CODE

SECTION 19590-19604

19590. The board shall adopt rules governing, permitting, and
regulating parimutuel wagering on horse races under the system known
as the parimutuel method of wagering. Parimutuel wagering shall be
conducted only by a person or persons licensed under this chapter to
conduct a horse racing meeting or authorized by the board to conduct
advance deposit wagering.

19591. Any licensee conducting a horse racing meeting shall provide
a place or places within the meeting grounds or inclosure where the
licensee may conduct, operate, and supervise the parimutuel method of
wagering in accordance with this chapter.

19592. The parimutuel system of wagering shall be operated only by
a totalizator or other equipment approved by the board. The board
shall not require any particular make of equipment. The
communications system, technology, and method used to accept wagers
and transmit odds, results, and other data related to wagering shall
be approved by the board.

19592.5. In order to facilitate the intrastate transmission of
racing programs, the board shall adopt regulations that provide for
the compatibility of parimutuel totalizator systems within the state,
including uniform procedures for the placing and cashing of
parimutuel wagers.

19593. No method of betting, pool making, or wagering other than by
the parimutuel method shall be permitted or used by any person
licensed under this chapter to conduct a horse racing meeting.

19594. Any person within the inclosure where a horse racing meeting
is authorized may wager on the result of a horse race held at that
meeting by contributing his money to the parimutuel pool operated by
the licensee under this chapter. Such wagering is not unlawful, any
other law of the State of California to the contrary notwithstanding.

19595. Any form of wagering or betting on the result of a horse
race other than that permitted by this chapter is illegal.

19596. (a) Notwithstanding any other provision of law, the board
may do any of the following:
(1) Authorize 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 Breeders' Crown Stakes, the
Meadowlands Pace, the Hambletonian, the Cane Pace, the Kentucky
Futurity, or the North American Cup.
(2) Authorize a licensed quarter horse racing association that is
conducting a live racing meeting in this state to accept wagers on
races conducted by the racing association that conducts the American
Quarter Horse Racing Challenge, if the races are conducted on the
same day as the American Quarter Horse Racing Challenge.
(3) Authorize the inclusion of wagers authorized pursuant to this
section in the parimutuel pools of the out-of-state association that
conducts the races on which the wagers are placed.
(b) The board authorization may be granted under this section only
if both of the following conditions are met:
(1) The authorization complies with federal laws, including, but
not limited to, Chapter 57 (commencing with Section 3001) of Title 15
of the United States Code.
(2) Wagering is offered only within the racing enclosure and only
within seven days of the running of the out-of-state race.

19596.1. (a) Notwithstanding any other provision of law, the board
may authorize a harness or quarter horse association conducting a
race meeting to accept wagers on the results of out-of-state or
out-of-country harness or quarter horse races and, with the board's
approval and with the concurrence of the horsemen's organization
contracting with the association, other designated harness or quarter
horse races during the period it is conducting the racing meeting,
if all of the following conditions are met:
(1) The authorization complies with federal laws, including, but
not limited to, Chapter 57 (commencing with Section 3001) of Title 15
of the United States Code.
(2) Wagering is offered only within the racing inclosure and only
within 36 hours of the running of the out-of-state feature race.
(3) The association conducts at least seven live races, and
imports not more than eight races on those days during a racing
meeting when live races are being run, except as provided in
subdivision (b).
(4) If only one breed of horse specified in this section is being
raced on a given day, then the association conducting the live racing
may import those races which would otherwise be simulcast by the
association which is not racing. After the usual deductions,
including the portion for the racing association, the portion
remaining for purses from these races shall be distributed equally
for purses for harness horsemen and quarter horse horsemen.
(5) No quarter horse or harness racing association shall accept
wagers on out-of-state or out-of-country quarter horse or harness
races commencing before 5:30 p.m., Pacific standard time, without the
consent of any thoroughbred association or fair that is then
conducting a live racing meeting in this state.
(b) An association that is authorized to import races pursuant to
subdivision (a) may, at its sole discretion, import fewer than the
maximum number of harness or quarter horse races authorized in
paragraph (3) of subdivision (a). For up to two races per night, for
each race that is not imported under the maximum authorized by
paragraph (3) of subdivision (a) on a particular night of racing, the
association may add a race to the number of races allowable under
the maximum authorization on another night of racing. However, no
more than two races may be added under this subdivision to the number
allowable on a single night, and the total number of imported races
over a calendar year may not exceed the total number of imported
races authorized pursuant to paragraphs (3) and (4) of subdivision
(a).

19596.2. (a) Notwithstanding any other provision of 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 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 32 per day on days when live thoroughbred or fair racing
is being conducted in the state. The limitation of 32 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, 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.

19596.21. (a) In addition to the authorizations to accept wagers on
out-of-state and out-of-country races pursuant to Sections 19596.2
and 19596.3 and in any other provision of law, during calendar
periods when a thoroughbred association or another fair in the
northern zone and the Humboldt County Fair simultaneously conduct
live race meetings, the Humboldt County Fair and a thoroughbred
association in the southern zone when conducting a live race meeting
may accept wagers on days when live races are being run on the
results of not more than eight out-of-state thoroughbred horse races,
if all of the following conditions are met:
(1) The authorization complies with federal laws, including, but
not limited to, Chapter 57 (commencing with Section 3001) of Title 15
of the United States Code.
(2) The Humboldt County Fair conducts at least six live races.
(3) The Humboldt County Fair and thoroughbred association in the
southern zone shall accept these wagers only on out-of-state
thoroughbred races that commence before 4:30 p.m., Pacific standard
time.
(b) The Humboldt County Fair may contract with the thoroughbred
association or fair in the southern zone to distribute the signal
statewide on its behalf.
(c) Any thoroughbred association or fair accepting wagers pursuant
to this section shall conduct the wagering in accordance with the
applicable provisions of Sections 19601, 19616, 19616.1, and 19616.2,
except that subdivision (i) of Section 19601 shall not be applicable
for the purpose of fulfilling the authorization described in this
section.

19596.3. Notwithstanding any other provision of law, a thoroughbred
racing association or fair may distribute the audiovisual signal and
accept wagers on the results of out-of-country thoroughbred races
during the calendar period the association or fair is conducting a
race meeting, without the consent of the organization that represents
horsemen participating in the race meeting. Out-of-country races
shall be imported under the following conditions:
(a) A thoroughbred association or fair shall conduct the wagering
in accordance with the applicable provisions of Sections 19601,
19616, 19616.1, and 19616.2.
(b) No thoroughbred association or fair may accept wagers pursuant
to this section on out-of-country races commencing after 5:30 p.m.,
Pacific standard time, without the consent of the harness or quarter
horse racing association that is then conducting a live racing
meeting.
(c) A thoroughbred racing association or fair distributing the
audiovisual signal and accepting wagers on the results of
out-of-country races pursuant to this section may execute an
agreement with an association that conducts thoroughbred races in the
southern zone to allow that association to distribute the signal and
accept wagers on the results of out-of-country thoroughbred races,
except that the license fees paid to the state shall be double the
amount paid by a quarter horse racing association specified in
subdivision (b) of Section 19605.7.

19596.4. (a) Notwithstanding subdivision (a) of, and subject to the
conditions specified in subdivisions (c) and (d) of, Section
19596.2, if the total number of thoroughbred and fair racing days
allocated by the board in the northern zone in any calendar year
commencing with the calendar year 2001 is less than the total number
of thoroughbred and fair racing days allocated by the board in
calendar year 2000, a thoroughbred racing association or fair that
has been allocated fewer racing days in the northern zone may
distribute the audiovisual signal and accept wagers on the results of
out-of-state and out-of-country thoroughbred races during the
calendar period the association or fair is licensed to conduct a live
race meeting, excluding Saturdays and Sundays.
(b) The total number of out-of-state and out-of-country
thoroughbred races upon which wagers may be accepted pursuant to this
section shall be sufficient to the extent reasonably possible to
prevent any loss of revenue to the General Fund and the California
racing participants, as determined by the executive director of the
board but shall not exceed a maximum of three out-of-state or
out-of-country thoroughbred races for every live race that has been
eliminated by the board. A thoroughbred racing association in the
northern zone shall not import these races on a day when a fair is
conducting live racing in the northern zone.

19597. Notwithstanding any other provision of this chapter, a
person licensed under this chapter to conduct a horse racing meeting
shall, as to any payment made to a person who has wagered by
contributing to a parimutuel pool operated by such licensee, also
deduct the applicable breakage, as defined by Section 19405.

19597.5. A person licensed under this chapter to conduct a horse
racing meeting shall hold in trust the distributions required to be
made pursuant to this chapter until the funds are paid to the various
distributees. These required deductions, except for those that enure
to the benefit of the racing association, are trust funds and shall
not be used by the racing association for any purpose other than for
payment to those distributees as directed by this chapter. These
funds are not the property of the racing association, but are merely
held in trust for the benefit of the statutory distributees until the
funds are distributed to them in accordance with this chapter. These
funds shall be held in a separate depository account until they are
actually distributed as provided for in this chapter.

19598. Any person claiming to be entitled to any part of a
redistribution from a parimutuel pool operated by a licensee under
this chapter, who fails to claim the money due the person prior to
the completion of the horse racing meeting at which the pool was
formed, may file a claim with the association issuing the person's
ticket prior to May 15 of the year immediately following the close of
the horse racing meeting.
The funds that were unclaimed within the period specified under
this section are designated as "unclaimed tickets" and shall be
distributed in accordance with this chapter.

19599. An association or fair may offer any form of parimutuel
wagering, as defined by regulations adopted by the board, or as
defined by Chapter 9, Pari-Mutuel Wagering, Uniform Rules of Racing,
as published by the Association of Racing Commissioners
International. The board may prohibit any form of parimutuel wagering
if it determines that the proposed wagering would compromise the
honesty and integrity of racing in the state. Each racing association
or fair shall include the types of conventional exotic and other
wagering it proposes to offer on its application to conduct a horse
racing meeting.

19601. (a) Notwithstanding any other provision of law, a licensed
association or fair that is conducting a live meeting in any racing
zone may accept wagers on any race conducted in this state, if all of
the following requirements are met:
(1) The association or fair that conducts the racing meeting and
the organization that is responsible for negotiating purse agreements
on behalf of the horsemen participating in that racing meeting
consent to the acceptance of the wagers. However, if consent is
withheld, any party may appeal the withholding of consent to the
board, which may determine that consent is not required.
(2) The association or fair conducts not less than eight races on
days when the association or fair is licensed to conduct racing,
except that fewer than eight live races per day may be conducted by
the mutual agreement of the association or fair and the organization
that is responsible for negotiating purse agreements on behalf of the
horsemen participating in the racing meeting.
(3) Wagering is offered only within the association's or fair's
racing inclosure or within the satellite wagering facility and only
within seven days of the commencement of the racing program with the
transmitted race.
(4) All wagers are included in the appropriate parimutuel pool at
the racetrack of the association or fair where the race is conducted,
or, in the appropriate parimutuel pool of the racetrack of the
association or fair that accepts the transmitted race.
(5) The association or fair accepting wagers on an out-of-zone
transmitted race distributes the audiovisual signal of the race to,
and accepts wagers from, all eligible satellite wagering facilities.
(b) Any association or fair accepting wagers under subdivision (a)
shall deduct, from the total amount handled in each conventional and
exotic parimutuel pool on the transmitted race, the same percentages
deducted pursuant to Article 9.5 (commencing with Section 19610) for
races at its own meeting. However, if the wagers are from a quarter
horse race meeting, then the amounts deducted shall be the same as
for a quarter horse race meeting. Amounts deducted under this
section, including amounts deducted from wagers on out-of-zone races
within the inclosure of the association or fair, shall be distributed
as provided under Sections 19605.7, 19605.72, and 19605.73 with
respect to wagers made within the northern zone, or Sections
19605.71, 19605.72, and 19605.73 with respect to wagers made within
the central or southern zone, except that amounts distributed for
purposes other than state license fees and fees payable to the Center
for Equine Health, School of Veterinary Medicine, University of
California at Davis, and the California Animal Health and Food Safety
Laboratory shall be proportionally reduced by the amount of any fees
paid to the Triple Crown or Breeder's Cup day host association
pursuant to subdivision (c). The method used to calculate the
reduction in proportionate share shall be approved by the board. For
wagers on out-of-state and out-of-country races made within the
association's or fair's inclosure, 1 percent shall be distributed to
the association or fair as a satellite wagering facility commission.
(c) Nothing in this section precludes an association or fair from
charging a fee as a condition of transmitting the Triple Crown or
Breeder's Cup day races, except that any fee shall be allocated among
all associations, fairs, and satellite wagering facilities receiving
the transmitted race in proportion to the amount wagered at each
location, and the fee shall equal that charged by the entity
conducting the race or races. Further, the only fee that can be
charged as a condition of transmitting the signal of an out-of-zone
race shall be a fee of 2.5 percent on Breeder's Cup day races.
(d) All breakage and unclaimed tickets, including unclaimed
refunds, shall be distributed equally between the association or fair
that accepts wagers on the transmitted race, and the horsemen, in
the form of purses. The purse moneys generated by this subdivision
shall be made available for purses during the meeting in which they
are received by the association or fair, or, if the association or
fair is not then conducting a live racing meeting, during the next
succeeding meeting of the association or fair.
(e) All wagers made pursuant to this section shall be considered
to have been wagered at a satellite wagering facility and shall be
excluded from total handle for the purposes of Section 19611.
(f) Notwithstanding Section 19530.5, satellite wagering facilities
operated by a fair, in the Counties of Fresno, Kern, or Tulare shall
be considered northern zone facilities and shall receive their
audiovisual signal from the association or fair conducting a racing
meeting in the northern zone that is authorized to distribute the
signal and accept wagers on central and southern zone races.
Satellite wagering facilities operated by a fair, in the Counties of
Santa Barbara or Ventura shall be considered central-southern zone
facilities and shall receive the audiovisual signal from the
association or fair conducting a racing meeting in the central or
southern zone that is authorized to distribute the signal and accept
wagers on northern zone races.
(g) All purse moneys derived from wagering on out-of-zone races at
fair racing meetings shall be distributed to all breeds of horses
participating in the fair meeting in direct proportion to the purse
money generated by breed on live races conducted during the fair race
meeting.
(h) During calendar periods when both a fair and a thoroughbred
association conduct live racing, the amounts deducted under this
section shall be distributed on any day of overlap as provided in
Section 19607.5, except that the applicable state license fee shall
be at the rate specified for nonfair meetings in subdivision (b) of
Section 19605.7.
(i) During calendar periods when a thoroughbred association and a
fair, or a thoroughbred association and any other breed association
are conducting a racing meeting in the same zone, the thoroughbred
association shall be the association authorized to distribute
out-of-zone, out-of-state, or out-of-country thoroughbred or fair
races, except that the thoroughbred association may waive this right
and allow the other breed racing association conducting a race
meeting to distribute the signal and accept wagers on out-of-zone,
out-of-state, or out-of-country thoroughbred or fair races for any
racing day or days. For the purposes of this subdivision, the
combined central and southern zone shall be considered one zone.
(j) In order to ensure, to the extent possible, that out-of-state
and out-of-country simulcasting, furthers the purposes of this
section, a committee made up of one representative from each of the
then-operating thoroughbred associations or fairs that are conducting
a live racing meeting in the state and one representative of the
organization responsible for negotiating purse agreements on behalf
of the horsemen participating in the meeting shall do the following:
(1) Determine the out-of-state or out-of-country thoroughbred
races to be imported on a statewide basis pursuant to provisions of
this chapter.
(2) Ensure, to the extent possible, that the fees charged by
out-of-state or out-of-country entities for these signals are at the
lowest obtainable rate and at the same rate statewide, in order to
maximize the revenue available to in-state associations and fairs and
their horsemen.
(3) Ensure, to the extent possible, due to the reciprocal nature
of the interstate simulcasting business, that the maximum obtainable
revenue is generated by the sale to out-of-state entities of the
audiovisual signal of races conducted in this state by thoroughbred
associations and fairs.
(4) Ensure that program information requirements for in-state
signals comply with the standards of the board, but provide that
abbreviated program formats may be used for races imported from other
jurisdictions.
(k) Notwithstanding any other provision of law, any thoroughbred
association or fair, when operating a live racing meeting, shall
distribute the signal of all races conducted by, or disseminated by,
that association or fair to, and accept wagers on these races from,
any association that is licensed to conduct a live quarter horse or
harness racing meeting in Orange County and that conducted such a
meeting in 1998.
(l) Notwithstanding any other provision of law, all associations
or fairs when operating as eligible satellite wagering facilities
shall be in compliance with, and subject to the provisions of,
Article 9.2 (commencing with Section 19605) of this chapter, and
shall display the signal and accept wagers on all live races
conducted in this state without regard to breed. Notwithstanding the
foregoing provision, a thoroughbred racing association located in the
City of Arcadia is exempt from these requirements for live harness
and quarter horse races conducted at night unless the thoroughbred
racing association facility is open for business at that time and is
accepting wagers on other night signals pursuant to this chapter.
A quarter horse racing association located in the southern zone
shall display the signal and accept wagers on all races imported by,
or conducted by, a harness racing association conducting racing in
the northern zone. A harness racing association in the northern zone
shall display the signal and accept wagers on all races imported by,
or conducted by, a quarter horse racing association conducting racing
in the southern zone. On those nights when both the harness racing
association in the northern zone and the quarter horse racing
association in the southern zone are conducting live racing, the
audiovisual signal of both breeds shall be displayed and wagers shall
be accepted on both breeds at each of the locations where the live
racing is being conducted, and each association shall display the
audiovisual signal and accept wagers on the other association's live
or imported races throughout their respective facilities, as they do
when they are conducting satellite wagering during other periods of
the same day. Each association shall pay the other an additional 5
percent of the amount wagered at their respective facilities on the
races imported by, or conducted by, the other racing association. The
additional 5 percent received by the racing association pursuant to
this paragraph shall be distributed as 50 percent as commissions to
the racing association and 50 percent as purses to the horsemen
participating in the racing meeting. Further, satellite wagering
facilities located at fairs may, but are not required to, accept an
audiovisual signal on out-of-state or out-of-country races unless the
facility is open for business at the time and accepting wagers on
other signals pursuant to this chapter.

19601.01. (a) Notwithstanding any other provision of law, a
thoroughbred association or fair, upon the filing of a written notice
with, and approval by, the board specifying the percentage to be
deducted, may deduct from the total amount handled in the parimutuel
pool for any type of wager an amount of not less than 10 percent nor
more than 25 percent. The written notice shall include the written
agreement of the thoroughbred association or fair and the horsemen's
organization for the meeting of the thoroughbred association or fair
accepting the wager. The established percentage to be deducted shall
remain in effect until the filing of a subsequent notice with, and
approval by, the board, unless otherwise specified in the notice. The
amount deducted shall be distributed as prescribed in this chapter.
However, any such distribution, except for amounts payable for the
support of the board and the equine drug testing program pursuant to
subdivision (a) of Section 19616.51, may be modified or redirected
upon the filing with, and approval by, the board of a written notice
that is authorized and signed by the organization representing each
entity affected by the modification or redirection, including, but
not limited to, horsemen's organizations, racing associations, and
fairs. If the proposed distribution modification or redirection
increases or would increase the financial burden of any other
organization or entity, the consent of that organization or entity
shall also be obtained. This organization or entity consent provision
for a distribution modification or redirection applies even if the
percentage deduction is not increased pursuant to this subdivision.
(b) A notice filed with the board to modify or redirect a
distribution pursuant to subdivision (a) shall be accompanied by a
report detailing all receipts and expenditures over the two prior
fiscal years of the funds and accounts proposed to be affected by the
notice.
(c) Initial approval of a distribution modification or redirection
pursuant to this section shall be limited to a one-year period. An
approval may be extended in subsequent years contingent upon annual
receipt of the report described in subdivision (e) and a
determination by the board that the extension is in the economic
interest of thoroughbred racing. However, in order for an initial
approval of a distribution modification or redirection to be extended
beyond the first year, the consent of each organization and entity
that gave its consent to that initial distribution modification or
redirection shall also be obtained for the extension. In the absence
of the consent of all of these organizations and entities, the board
shall not approve the extension.
(d) A thoroughbred association or fair whose written notice for a
percentage deduction pursuant to subdivision (a) has been approved by
the board shall provide subsequent quarterly reports of receipts and
expenditures of the affected funds if requested by the board.
(e) A thoroughbred association or fair whose written notice for a
percentage deduction pursuant to subdivision (a) has been approved by
the board shall file a report with the board and the respective
fiscal committees and Committees on Governmental Organization of the
Senate and the Assembly accounting for all receipts and expenditures
in any of the affected funds. This report shall be filed within one
year of initial board approval and annually thereafter if the
approval is extended by the board.

19601.02. (a) Notwithstanding Section 19610, every thoroughbred
association or fair that conducts a live race meeting shall deduct an
additional 2 percent of the total amount handled on exotic wagers
requiring the selection of two wagering interests, and 3 percent of
the total amount handled on exotic wagers requiring the selection of
three or more wagering interests.
(b) The funds collected pursuant to subdivision (a) from wagers
placed within the inclosure of a thoroughbred association or fair
conducting a race meeting, at satellite locations within this state,
and from account wagers originating within this state, shall be
distributed to the purse account of the meet conducting racing in the
zone in which the wager was placed, and distributed in accordance
with subdivision (d).
(c) Any thoroughbred racing association or fair, when it
authorizes betting systems located outside this state to accept
wagers on a race, shall retain from the total amount received by the
association or fair from the out-of-state betting system, the
incremental amount received as a result of the takeout specified in
subdivision (a) for distribution as overnight purses in accordance
with subdivision (d) without regard to the provisions of paragraph
(1) of subdivision (b) of Section 19602. The method utilized to
determine the incremental amount received as a result of the takeout
increase specified in subdivision (a) shall be established by
agreement between the various affected thoroughbred racing
associations and fairs and the applicable horsemen's organization.
Should the thoroughbred racing association or fair and the applicable
horsemen's organization be unable to reach an agreement as to the
method of making such determination, the board shall determine the
appropriate allocation method after a hearing on the matter.
(d) The amounts collected pursuant to subdivisions (b) and (c)
shall be utilized solely to augment and not supplant overnight
purses. Within 90 days after the conclusion of a given meet, the
thoroughbred association or fair receiving funds pursuant to
subdivisions (b) and (c) shall report to the board the manner in
which the funds were used to augment and not supplant overnight
purses at that meet.
(e) The board shall have the authority to postpone or revoke the
implementation of the takeout increase specified in subdivision (a)
if the board determines that the incremental amount that results from
the negotiations with the out-of-state betting systems is
incrementally insufficient.

19601.2. During calendar periods when any other fair or
thoroughbred association and the Humboldt County Fair simultaneously
conduct race meetings in the northern zone, the other fair or
thoroughbred association shall be the association authorized to
distribute the signal and accept wagers on out-of-zone, out-of-state,
and out-of-country races if it complies with the conditions
specified in subdivision (a) of Section 19601. The amounts deducted
from these wagers shall be distributed as provided in Section 19601.
Additionally, from, and to the extent of, commissions and purses
generated from the total handle of the other fair or thoroughbred
association during the overlap, the other fair or thoroughbred
association shall distribute to the Humboldt County Fair, not less
than seven days after the close of the racing meeting, an amount
equal to 0.75 percent of the out-of-zone, out-of-state, and
out-of-country handle.

19601.3. (a) Notwithstanding any other provision of law, a quarter
horse racing association, subject to approval by the board, may
deduct from the total amount handled in the parimutuel pool for any
type of wager up to 2 percent more of the total amount handled than
was authorized on May 1, 2009. Funds deducted pursuant to this
additional authority shall be distributed as follows:
(1) All of the funds, up to 1 percent on the first fifty thousand
dollars ($50,000) per day handled, to eligible satellite wagering
facilities that are in compliance with Article 9.2 (commencing with
Section 19605), based on the wagers they accept, and provided further
that they accept all available signals from the quarter horse racing
association.
(2) The remainder of the funds shall be distributed with 50
percent going to the quarter horse horsemen's organization for purses
and the other 50 percent being retained by the racing association.
(b) Notwithstanding any other provision of law, a harness racing
association, subject to approval by the board, may deduct from the
total amount handled in the parimutuel pool for any type of wager up
to 2 percent more of the total amount handled than was authorized on
May 1, 2009. Funds deducted pursuant to this additional authority
shall be distributed as follows:
(1) All of the funds, up to 1 percent on the first fifty thousand
dollars ($50,000) per day handled, to eligible satellite wagering
facilities that are in compliance with Article 9.2 (commencing with
Section 19605), based on the wagers they accept, and provided further
that they accept all available signals from the harness racing
association.
(2) The remainder of the funds shall be distributed with 50
percent going to the harness horsemen's organization for purses and
the other 50 percent being retained by the racing association.

19601.4. (a) Notwithstanding any other provision of law, a fair,
combination of fairs, or an association conducting racing at a fair,
may, after approval from the board, deduct an additional 1 percent
from the total amount handled daily in its conventional and exotic
pools. The additional 1 percent shall be deposited into the Inclosure
Facilities Improvement Fund, which is hereby created as a special
fund in the State Treasury, the moneys of which are available upon
appropriation by the Legislature in the annual Budget Act. Any moneys
deducted from the handle pursuant to this section shall be used
solely for the purpose of facilities maintenance and improvements at
a fair's racetrack inclosure for those fairs that contribute to, or
for those fairs where an association conducting racing at that fair
contributes to, the Inclosure Facilities Improvement Fund.
(b) The secretary shall appoint a committee of not more than five
and no fewer than three individuals with expertise in financing,
constructing, and managing horse racing facilities, to advise in the
administration of the funds. The secretary shall have oversight over
the committee. The secretary shall adhere to the same oversight
responsibilities as outlined in Section 19620 when administering the
funds contributed and disbursed pursuant to this section.
(c) The secretary shall include in the annual expenditure plan
required pursuant to Section 19621 any allocations made pursuant to
this section.
(d) For purposes of this section, "secretary" means the Secretary
of Food and Agriculture.

19602. (a) Notwithstanding any other provision of law, any racing
association located 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 (2), 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.
(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 meeting, 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 a racing
meeting 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 a racing
meeting 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) Breakage allocated pursuant to this section to an association
conducting a racing meeting 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.
(g) If wagers accepted by a betting system located outside of this
state are included in the parimutuel pool of an association
conducting a racing meeting in this state, funds in the parimutuel
pool attributable to unclaimed tickets relating to wagers accepted by
the association conducting a racing meeting 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.

19603. Notwithstanding any other provision of law, any racing
association in this state may, with the approval of the board, accept
out-of-state wagers on a race or races conducted by or disseminated
by that association and may transmit live audiovisual signals of the
race or races to locations out of state, except that any wagers made
pursuant to this section are subject to applicable federal laws. The
amounts deducted and distributed pursuant to this section shall be as
provided in Section 19602 for all other out-of-state wagers.

19604. The board may authorize any racing association, racing fair,
betting system, or multijurisdictional wagering hub to conduct
advance deposit wagering in accordance with this section. Racing
associations, racing fairs, and their respective horsemen's
organizations may form a partnership, joint venture, or any other
affiliation in order to further the purposes of this section.
(a) As used in this section, the following definitions apply:
(1) "Advance deposit wagering" (ADW) means a form of parimutuel
wagering in which a person residing within California or outside of
this state establishes an account with an ADW provider, and
subsequently issues wagering instructions concerning the funds in
this account, thereby authorizing the ADW provider holding the
account to place wagers on the account owner's behalf.
(2) "ADW provider" means a licensee, betting system, or
multijurisdictional wagering hub, located within California or
outside this state, that is authorized to conduct advance deposit
wagering pursuant to this section.
(3) "Betting system" means a business conducted exclusively in
this state that facilitates parimutuel wagering on races it
simulcasts and other races it offers in its wagering menu.
(4) "Breed of racing" means as follows:
(A) With respect to associations and fairs licensed by the board
to conduct thoroughbred, fair, or mixed breed race meetings, "breed
of racing" shall mean thoroughbred.
(B) With respect to associations licensed by the board to conduct
quarter horse race meetings, "breed of racing" shall mean quarter
horse.
(C) With respect to associations and fairs licensed by the board
to conduct standardbred race meetings, "breed of racing" shall mean
standardbred.
(5) "Contractual compensation" means the amount paid to an ADW
provider from advance deposit wagers originating in this state.
Contractual compensation includes, but is not limited to, hub fee
payments, and may include host fee payments, if any, for out-of-state
and out-of-country races. Contractual compensation is subject to the
following requirements:
(A) Excluding contractual compensation for host fee payments,
contractual compensation shall not exceed 6.5 percent of the amount
wagered.
(B) The host fee payments included within contractual compensation
shall not exceed 3.5 percent of the amount wagered. Notwithstanding
this provision, the host fee payment with respect to wagers on the
Kentucky Derby, Preakness Stakes, Belmont Stakes, and selected
Breeders' Cup Championship races may be negotiated by the ADW
provider, the racing associations accepting wagers on those races
pursuant to Section 19596.2, and the horsemen's organization.
(C) In order to ensure fair and consistent market access fee
distributions to associations, fairs, horsemen, and breeders, for
each breed of racing, the percentage of wagers paid as contractual
compensation to an ADW provider pursuant to the terms of a hub
agreement with a racing association or fair when that racing
association or fair is conducting live racing shall be the same as
the percentage of wagers paid as contractual compensation to that ADW
provider when that racing association or fair is not conducting live
racing.
(6) "Horsemen's organization" means, with respect to a particular
racing meeting, the organization recognized by the board as
responsible for negotiating purse agreements on behalf of horsemen
participating in that racing meeting.
(7) "Hub agreement" means a written agreement providing for
contractual compensation paid with respect to advance deposit wagers
placed by California residents on a particular breed of racing
conducted outside of California. In the event a hub agreement exceeds
a term of two years, then an ADW provider, one or more racing
associations or fairs that together conduct no fewer than five weeks
of live racing for the breed covered by the hub agreement, and the
horsemen's organization responsible for negotiating purse agreements
for the breed covered by the hub agreement shall be signatories to
the hub agreement. A hub agreement is required for an ADW provider to
receive contractual compensation for races conducted outside of
California.
(8) "Hub agreement arbitration" means an arbitration proceeding
pursuant to which the disputed provisions of the hub agreement
pertaining to the hub or host fees from wagers on races conducted
outside of California provided pursuant to paragraph (2) of
subdivision (b) are determined in accordance with the provisions of
this paragraph. If a hub agreement arbitration is requested, all of
the following shall apply:
(A) The ADW provider shall be permitted to accept advance deposit
wagers from California residents.
(B) The contractual compensation received by the ADW provider
shall be the contractual compensation specified in the hub agreement
that is the subject of the hub agreement arbitration.
(C) The difference between the contractual compensation specified
in subparagraph (B) and the contractual compensation determined to be
payable at the conclusion of the hub agreement arbitration shall be
calculated and paid within 15 days following the arbitrator's
decision and order. The hub agreement arbitration shall be held as
promptly as possible, but in no event more than 60 days following the
demand for that arbitration. The arbitrator shall issue a decision
no later than 15 days following the conclusion of the arbitration. A
single arbitrator jointly selected by the ADW provider and the party
requesting a hub agreement arbitration shall conduct the hub
agreement arbitration. However, if the parties cannot agree on the
arbitrator within seven days of issuance of the written demand for
arbitration, then the arbitrator shall be selected pursuant to the
Streamlined Arbitration Rules and Procedures of the Judicial
Arbitration and Mediation Services, or pursuant to the applicable
rules of its successor organization. In making the hub agreement
arbitration determination, the arbitrator shall be required to choose
between the contractual compensation of the hub agreement agreed to
by the ADW provider or whatever different terms for the hub agreement
were proposed by the party requesting the hub agreement arbitration.
The arbitrator shall not be permitted to impose new, different, or
compromised terms to the hub agreement. The arbitrator's decision
shall be final and binding on the parties. If an arbitration is
requested, either party may bring an action in state court to compel
a party to go into arbitration or to enforce the decision of the
arbitrator. The cost of the hub agreement arbitration, including the
cost of the arbitrator, shall be borne in equal shares by the parties
to the hub agreement and the party or parties requesting a hub
agreement arbitration. The hub agreement arbitration shall be
administered by the Judicial Arbitration and Mediation Services
pursuant to its Streamlined Arbitration Rules and Procedures or its
successor organization.
(9) "Incentive awards" means those payments provided for in
Sections 19617.2, 19617.7, 19617.8, 19617.9, and 19619. The amount
determined to be payable for incentive awards under this section
shall be payable to the applicable official registering agency and
thereafter distributed as provided in this chapter.
(10) "Licensee" means any racing association or fair licensed to
conduct a live racing meet in this state, or affiliation thereof,
authorized under this section.
(11) "Market access fee" means the amount of advance deposit
wagering handle remaining after the payment of winning wagers, and
after the payment of contractual compensation, if any, to an ADW
provider. Market access fees shall be distributed in accordance with
subdivision (f).
(12) "Multijurisdictional wagering hub" means a business conducted
in more than one jurisdiction that facilitates parimutuel wagering
on races it simulcasts and other races it offers in its wagering
menu.
(13) "Racing fair" means a fair authorized by the board to conduct
live racing.
(14) "Zone" means the zone of the state, as defined in Section
19530.5, except as modified by the provisions of subdivision (f) of
Section 19601. For these purposes, the central and southern zones
shall together be considered one zone.
(b) Wagers shall be accepted according to the procedures set forth
in this subdivision.
(1) No ADW provider shall accept wagers or wagering instructions
on races conducted in California from a resident of California unless
all of the following conditions are met:
(A) The ADW provider is licensed by the board.
(B) A written agreement allowing those wagers exists with the
racing association or fair conducting the races on which the wagers
are made.
(C) The agreement referenced in subparagraph (B) shall have been
approved in writing by the horsemen's organization responsible for
negotiating purse agreements for the breed on which the wagers are
made in accordance with the Interstate Horseracing Act (15 U.S.C.
Sec. 3001 et seq.), regardless of the location of the ADW provider,
whether in California or otherwise, including, without limitation,
any and all requirements contained therein with respect to written
consents and required written agreements of horsemen's groups to the
terms and conditions of the acceptance of those wagers and any
arrangements as to the exclusivity between the host racing
association or fair and the ADW provider. For purposes of this
subdivision, the substantive provisions of the Interstate Horseracing
Act shall be taken into account without regard to whether, by its
own terms, that act is applicable to advance deposit wagering on
races conducted in California accepted from residents of California.
(2) No ADW provider shall accept wagers or wagering instructions
on races conducted outside of California from a resident of
California unless all of the following conditions are met:
(A) The ADW provider is licensed by the board.
(B) There is a hub agreement between the ADW provider and one or
both of (i) one or more racing associations or fairs that together
conduct no fewer than five weeks of live racing on the breed on which
wagering is conducted during the calendar year during which the
wager is placed, and (ii) the horsemen's organization responsible for
negotiating purse agreements for the breed on which wagering is
conducted.
(C) If the parties referenced in clauses (i) and (ii) of
subparagraph (B) are both signatories to the hub agreement, then no
party shall have the right to request a hub agreement arbitration.
(D) If only the party or parties referenced in clause (i) of
subparagraph (B) is a signatory to the hub agreement, then the
signatories to the hub agreement shall, within five days of execution
of the hub agreement, provide a copy of the hub agreement to the
horsemen's organization responsible for negotiating purse agreements
for the breed on which wagering is conducted for each race conducted
outside of California on which California residents may place advance
deposit wagers. Prior to receipt of the hub agreement, the horsemen'
s organization shall sign a nondisclosure agreement with the ADW
provider agreeing to hold confidential all terms of the hub
agreement. If the horsemen's organization wants to request a hub
agreement arbitration, it shall send written notice of its election
to the signatories to the hub agreement within 10 days after receipt
of the copy of the hub agreement, and shall provide its alternate
proposal to the hub and host fees specified in the hub agreement with
that written notice. If the horsemen's organization does not provide
that written notice within the 10-day period, then no party shall
have the right to request a hub agreement arbitration. If the
horsemen's organization does provide that written notice within the
10-day period, then the ADW provider shall have 10 days to elect in
writing to do one of the following:
(i) Abandon the hub agreement.
(ii) Accept the alternate proposal submitted by the horsemen's
organization.
(iii) Proceed with a hub agreement arbitration.
(E) If only the party referenced in clause (ii) of subparagraph
(B) is a signatory to the hub agreement, then the signatories to the
hub agreement shall, within five days of execution of the hub
agreement, provide written notice of the host and hub fees applicable
pursuant to the hub agreement for each race conducted outside of
California on which California residents may place advance deposit
wagers, which notice shall be provided to all racing associations and
fairs conducting live racing of the same breed covered by the hub
agreement. If any racing association or fair wants to request a hub
agreement arbitration, it shall send written notice of its election
to the signatories to the hub agreement within 10 days after receipt
of the notice of host and hub fees. It shall also provide its
alternate proposal to the hub and host fees specified in the hub
agreement with the notice of its election. If more than one racing
association or fair provides notice of their request for hub
agreement arbitration, those racing associations or fairs, or both,
shall have a period of five days to jointly agree upon which of their
alternate proposals shall be the official proposal for purposes of
the hub agreement arbitration. If one or more racing associations or
fairs that together conduct no fewer than five weeks of live racing
on the breed on which wagering is conducted during the calendar year
during which the wager is placed does not provide written notice of
their election to arbitrate within the 10-day period, then no party
shall have the right to request a hub agreement arbitration. If a
valid hub agreement arbitration request is made, then the ADW
provider shall have 10 days to elect in writing to do one of the
following:
(i) Abandon the hub agreement.
(ii) Accept the alternate proposal submitted by the racing
associations or fairs.
(iii) Proceed with a hub agreement arbitration.
The results of any hub agreement arbitration elected pursuant to
this subdivision shall be binding on all other associations and fairs
conducting live racing on that breed.
(F) The acceptance thereof is in compliance with the provisions of
the Interstate Horseracing Act (15 U.S.C. Sec. 3001 et seq.),
regardless of the location of the ADW provider, whether in California
or otherwise, including, without limitation, any and all
requirements contained therein with respect to written consents and
required written agreements of horsemen's groups to the terms and
conditions of the acceptance of such wagers and any arrangements as
to the exclusivity between the host racing association or fair and
the ADW provider.
(c) An advance deposit wager may be made only by the ADW provider
holding the account pursuant to wagering instructions issued by the
owner of the funds communicated by telephone call or through other
electronic media. The ADW provider shall ensure the identification of
the account's owner by using methods and technologies approved by
the board. Any ADW provider that accepts wagering instructions
concerning races conducted in California, or accepts wagering
instructions originating in California, shall provide a full
accounting and verification of the source of the wagers thereby made,
including the postal ZIP Code and breed of the source of the wagers,
in the form of a daily download of parimutuel data to a database
designated by the board. The daily download shall be delivered in a
timely basis using file formats specified by the database designated
by the board, and shall include any and all data necessary to
calculate and distribute moneys according to the rules and
regulations governing California parimutuel wagering. Any and all
reasonable costs associated with the creation, provision, and
transfer of this data shall be borne by the ADW provider.
(d) (1) (A) The board shall develop and adopt rules to license and
regulate all phases of operation of advance deposit wagering for ADW
providers operating in California, including advance deposit
wagering activity that takes place within a minisatellite wagering
facility. The board may recover any costs associated with the
licensing or regulation of advance deposit wagering activities in a
minisatellite wagering facility either directly from the ADW provider
or through an appropriate increase in the funding formula devised by
the board pursuant to paragraph (1) of subdivision (a) of Section
19616.51.
(B) The board shall not approve an application for an original or
renewal license as an ADW provider unless the entity, if requested in
writing by a bona fide labor organization no later than 90 days
prior to licensing, has entered into a contractual agreement with
that labor organization that provides all of the following:
(i) The labor organization has historically represented employees
who accept or process any form of wagering at the nearest horse
racing meeting located in California.
(ii) The agreement establishes the method by which the ADW
provider will agree to recognize and bargain in good faith with a
labor organization which has demonstrated majority status by
submitting authorization cards signed by those employees who accept
or process any form of wagering for which a California ADW license is
required.
(iii) The agreement requires the ADW provider to maintain its
neutrality concerning the choice of those employees who accept or
process any form of wagering for which a California ADW license is
required whether or not to authorize the labor organization to
represent them with regard to wages, hours, and other terms and
conditions of employment.
(iv) The agreement applies to those classifications of employees
who accept or process wagers for which a California ADW license is
required whether the facility is located within or outside of
California.
(C) (i) The agreement required by subparagraph (B) shall not be
conditioned by either party upon the other party agreeing to matters
outside the requirements of subparagraph (B).
(ii) The requirement in subparagraph (B) shall not apply to an ADW
provider which has entered into a collective bargaining agreement
with a bona fide labor organization that is the exclusive bargaining
representative of employees who accept or process parimutuel wagers
on races for which an ADW license is required whether the facility is
located within or outside of California.
(D) Permanent state or county employees and nonprofit
organizations that have historically performed certain services at
county, state, or district fairs may continue to provide those
services.
(E) Parimutuel clerks employed by racing associations or fairs or
employees of ADW providers who accept or process any form of wagers
who are laid off due to lack of work shall have preferential hiring
rights for new positions with their employer in occupations whose
duties include accepting or processing any form of wagers, or the
operation, repair, service, or maintenance of equipment that accepts
or processes any form of wagering at a racetrack, satellite wagering
facility, or ADW provider licensed by the board. The preferential
hiring rights established by this subdivision shall be conditioned
upon the employee meeting the minimum qualification requirements of
the new job.
(2) The board shall develop and adopt rules and regulations
requiring ADW providers to establish security access policies and
safeguards, including, but not limited to, the following:
(A) The ADW provider shall use board-approved methods to perform
location and age verification confirmation with respect to persons
establishing an advance deposit wagering account.
(B) The ADW provider shall use personal identification numbers
(PINs) or other technologies to assure that only the accountholder
has access to the advance deposit wagering account.
(C) The ADW provider shall provide for withdrawals from the
wagering account only by means of a check made payable to the
accountholder and sent to the address of the accountholder or by
means of an electronic transfer to an account held by the verified
accountholder or the accountholder may withdraw funds from the
wagering account at a facility approved by the board by presenting
verifiable account identification information.
(D) The ADW provider shall allow the board access to its premises
to visit, investigate, audit, and place expert accountants and other
persons it deems necessary for the purpose of ensuring that its rules
and regulations concerning credit authorization, account access, and
other security provisions are strictly complied with. To ensure that
the amounts retained from the parimutuel handle are distributed
under law, rules, or agreements, any ADW provider that accepts
wagering instructions concerning races conducted in California or
accepts wagering instructions originating in California shall provide
an independent "agreed-upon procedures" audit for each California
racing meeting, within 60 days of the conclusion of the race meeting.
The auditing firm to be used and the content and scope of the audit,
including host fee obligations, shall be set forth in the applicable
agreement. The ADW provider shall provide the board, horsemen's
organizations, and the host racing association with an annual
parimutuel audit of the financial transactions of the ADW provider
with respect to wagers authorized pursuant to this section, prepared
in accordance with generally accepted auditing standards and the
requirements of the board. Any and all reasonable costs associated
with those audits shall be borne by the ADW provider.
(3) The board shall prohibit advance deposit wagering advertising
that it determines to be deceptive to the public. The board shall
also require, by regulation, that every form of advertising contain a
statement that minors are not allowed to open or have access to
advance deposit wagering accounts.
(e) In order for a licensee, betting system, or
multijurisdictional wagering hub to be approved by the board as an
ADW provider, it shall meet both of the following requirements:
(1) All wagers thereby made shall be included in the appropriate
parimutuel pool under a contractual agreement with the applicable
host track.
(2) The amounts deducted from advance deposit wagers shall be in
accordance with the provisions of this chapter.
(f) After the payment of contractual compensation, the amounts
received as market access fees from advance deposit wagers, which
shall not be considered for purposes of Section 19616.51, shall be
distributed as follows:
(1) An amount equal to 0.0011 multiplied by the amount handled on
advance deposit wagers originating in California for each r