BUSINESS AND PROFESSIONS CODE
SECTION 19604.5-19604.7
19604.5. (a) As used in this section, the following definitions
apply:
(1) "Back" means to wager on a selected outcome occurring in a
given market.
(2) "Board" means the California Horse Racing Board.
(3) "Corrective wager" means an exchange wager placed by the
exchange wagering licensee in a given market, under circumstances
approved by the board, in order to address the impact on that market
of the cancellation or voiding of a given matched wager or a given
part of a matched wager.
(4) "Exchange" means a system operated by an exchange wagering
licensee in which the exchange wagering licensee maintains one or
more markets in which persons may back or lay a selected outcome.
(5) "Exchange revenues" means all charges, fees, income, payments,
revenues, and deductions of any kind assessed or collected by, or
paid or delivered to, an exchange wagering licensee in connection
with the submission of any exchange wagers to the exchange wagering
licensee by residents of California and residents of jurisdictions
outside of California on the results of horse races conducted in
California, and by residents of California on the results of horse
races conducted outside of California.
(6) "Exchange wagers" means wagers submitted to an exchange
wagering licensee to be posted in a market on an exchange.
(7) "Exchange wagering" means a form of parimutuel wagering in
which two or more persons place identically opposing wagers in a
given market.
(8) "Exchange wagering account" means the account established with
an exchange wagering licensee by a person participating in exchange
wagering. An exchange wagering account may only be established or
maintained with an exchange wagering licensee by a natural person.
(9) "Exchange wagering agreement" means a written agreement by and
among the applicable exchange wagering licensee, the applicable
racing association or racing fair conducting live racing in this
state, and the horsemen's organization responsible for negotiating
purse agreements for the breed on which exchange wagers are accepted,
provided that the terms and conditions for the permitted use of
signal by the exchange wagering licensee, and the compensation to the
applicable racing association or racing fair and the horsemen's
organization, include provisions for, but are not limited to all of
the following:
(A) Calculation of any and all amounts earned and payable to the
applicable racing association or racing fair and horsemen's
organization.
(B) Audit rights and conditions.
(C) Duration terms.
(D) Contractual remedies.
(10) "Exchange wagering licensee" means a person located within or
outside of California that is authorized to offer exchange wagering
to residents of California pursuant to this section.
(11) "Identically opposing wagers" means wagers in which one or
more persons offer to lay a selected outcome at the same price at
which one or more persons offer to back that same outcome, with the
amount subject to the lay being proportionately commensurate to the
amount subject to the back.
(12) "Lay" means to wager on a selected outcome not occurring in a
given market.
(13) "Market" means, in relation to a given horse race or a given
set of horse races, a particular outcome that is subject to exchange
wagering as determined by an exchange wagering licensee.
(14) "Matched wager" means the wager that is formed when two or
more persons are confirmed by the exchange operator as having placed
identically opposing wagers in a given market on the exchange.
(15) "Net winnings" means the aggregate amounts payable to a
person as a result of that person's winning matched wagers in a pool
less the aggregate amount paid by that person as a result of that
person's losing matched wagers in that pool.
(16) "Parimutuel" means any system whereby wagers with respect to
the outcome of a horse race are placed with, or in, a wagering pool
conducted by an authorized person, and in which the participants are
wagering with each other and not against the person conducting the
wagering pool.
(17) "Person" means any individual, partnership, corporation,
limited liability company, or other association or organization.
(18) "Pool" means the total of all matched wagers in a given
market.
(19) "Price" means the odds for a given exchange wager.
(20) "Unmatched wager" means a wager or portion of a wager placed
in a given market within an exchange that does not become part of a
matched wager because there are not one or more available exchange
wagers in that market with which to form one or more identically
opposing wagers.
(21) "Zone" has the same meaning as defined in Section 19530.5, as
modified by the provisions of subdivision (f) of Section 19601,
except that for the purposes of this act the combined central and
southern zones shall be considered one "central/southern" zone.
(b) Notwithstanding any other law, rule, or regulation, exchange
wagering by residents of California and residents of jurisdictions
outside of California on the results of horse races conducted in
California, and by residents of California on the results of horse
races conducted outside of California, shall be lawful provided that
all of the following apply:
(1) Exchange wagering shall only be conducted by an exchange
wagering licensee pursuant to a valid exchange wagering license
issued by the board.
(2) No exchange wagering licensee shall accept exchange wagers on
races conducted in California from a resident of California or a
resident of a jurisdiction outside California, or conducted outside
California from a resident of California, unless an exchange wagering
agreement exists allowing these wagers.
(3) Exchange wagering shall be conducted pursuant to and in
compliance with the provisions of the Interstate Horseracing Act of
1978 (15 U.S.C. Sec. 3001 et seq.), as amended, this section, all
applicable federal laws, and rules and regulations promulgated by the
board pursuant to this section.
(4) An exchange wagering licensee may only offer exchange wagering
on thoroughbred horse races, whether these thoroughbred races are
conducted within or outside of this state, to persons whose primary
residence address is in the northern zone of this state if it has an
exchange wagering agreement with (A) the racing association or racing
fair located in the northern zone authorized by the board to conduct
a live thoroughbred racing meeting in accordance with the provisions
of Article 4 (commencing with Section 19480) at that time, or during
the calendar period, when the exchange wagering licensee is offering
exchange wagering to persons whose primary residence is in the
northern zone of this state, and (B) the horsemen's organization
responsible for negotiating purse agreements for a live thoroughbred
racing meeting.
(5) An exchange wagering licensee may only offer exchange wagering
on thoroughbred horse races, whether these thoroughbred races are
conducted within or outside of this state, to persons whose primary
residence address is in the central/southern zone of this state if it
has an exchange wagering agreement with (A) the racing association
or racing fair located in the central/southern zone authorized by the
board to conduct a live thoroughbred racing meeting in accordance
with the provisions of Article 4 (commencing with Section 19480) at
that time, or during the calendar period, when the exchange wagering
licensee is offering exchange wagering to persons whose primary
residence is in the central/southern zone of this state, and (B) the
horsemen's organization responsible for negotiating purse agreements
for a live thoroughbred racing meeting.
(6) An exchange wagering licensee may only offer exchange wagering
on quarter horse races, whether these quarter horse races are
conducted within or outside of this state, to persons whose primary
residence address is in this state if it has an exchange wagering
agreement with (A) the racing association or racing fair located in
the state authorized by the board to conduct a live quarter horse
racing meeting in accordance with the provisions of Article 4
(commencing with Section 19480) at that time, or during the calendar
period, when the exchange wagering licensee is offering exchange
wagering to persons whose primary residence is this state, and (B)
the horsemen's organization responsible for negotiating purse
agreements for the live quarter horse racing meeting.
(7) An exchange wagering licensee may only offer exchange wagering
on standardbred horse races, whether these standardbred horse races
are conducted within or outside of this state, to persons whose
primary residence address is in this state if it has an exchange
wagering agreement with (A) the racing association or racing fair
located in the state authorized by the board to conduct a live
standardbred racing meeting in accordance with the provisions of
Article 4 (commencing with Section 19480) at that time, or during the
calendar period, when the exchange wagering licensee is offering
exchange wagering to persons whose primary residence is this state,
and (B) the horsemen's organization responsible for negotiating purse
agreements for the live standardbred racing meeting.
(8) Exchange wagers are submitted to, and accepted by, an exchange
wagering licensee in person, by direct telephone call, or by
communication through other electronic media.
(c) A person shall not be permitted to open an exchange wagering
account, or place an exchange wager, except in accordance with
federal law, this section, and rules and regulations promulgated by
the board. Only natural persons with valid exchange wagering accounts
may place wagers through an exchange. To establish an exchange
wagering account, a person shall be at least 18 years of age and a
resident of California or of another jurisdiction within which the
placement of exchange wagers would not be unlawful under United
States federal law or the law of that jurisdiction.
(d) The board shall approve, as part of the exchange wagering
licensee's application for an exchange wagering license, security
policies and safeguards to ensure player protection and integrity,
including, but not limited to, provisions governing the acceptance of
electronic applications for persons establishing exchange wagering
accounts, location and age verification confirmation for persons
establishing exchange wagering accounts, the use of identifying
factors to ensure security of individual accounts, and the
requirements for management of funds in exchange wagering accounts.
An exchange wagering licensee may not accept a wager, or series of
wagers, if the results of the wager or wagers would create a
liability for the exchange wagering account holder that is in excess
of the funds on deposit in the exchange wagering account of that
holder.
(e) Notwithstanding any other law, rule, or regulation:
(1) The board shall have full power to prescribe rules,
regulations, and conditions under which exchange wagering may be
conducted in California consistent with this section, including the
manner in which exchange wagers may be accepted and the requirements
for any person to participate in exchange wagering.
(2) Prior to the board promulgating rules, regulations, and
conditions under which exchange wagering may be conducted in
California, the board shall consider studies or comments submitted by
interested parties on the impact of exchange wagering on parimutuel
betting and the economics of the California horse racing industry to
assist the board in developing rules, regulations, and conditions for
exchange wagering that are in the best interest of the public and
the California horse racing industry. The board may set a time frame
for comments and studies to be submitted by interested parties and
for the board to consider the studies and comments so as to allow
sufficient time, in the discretion of the board, to allow for the
promulgation of rules, regulations, and conditions for exchange
wagering and the issuance of licenses for exchange wagering prior to
May 1, 2012.
(3) Notwithstanding paragraph (1), the board shall adopt the
following rules:
(A) An owner, authorized agent, trainer, jockey, jockey's agent,
driver, or stable employee shall not place an exchange wager to lay
any entrant in a horse race that is owned in whole or part by that
owner or the owner represented by that authorized agent, trained by
that trainer or stable employee, ridden by that jockey or the jockey
represented by that jockey's agent, or driven by that driver.
(B) No exchange wagers shall be placed on a market after the
conclusion of a live race. Exchange wagering on previously run races
is prohibited.
(C) The exchange wagering licensee shall provide a person with
information on the race, including the track where the race will take
place and the names of the participating horses before the person
may place an exchange wager.
(D) The exchange wagering licensee shall require the person making
the exchange wager to select the specific race and horse for the
wager. The use of automatic, quick-pick, or similar features to aid
in the placing of a wager shall be prohibited.
(E) The results of a wager shall not be displayed through the use
of video or mechanical reels or other slot machine or casino game
themes, including, but not limited to, dice games, wheel games, card
games, and lotto.
(4) The board shall have full power to prescribe rules,
regulations, and conditions under which all exchange wagering
licenses are issued or renewed in California, including requiring an
annual audit of the exchange wagering licensee's books and records
pertaining to exchange wagering, and to revoke, suspend, or refuse to
renew a license pursuant to the authority granted to the board in
this chapter.
(5) The board may reasonably require licensure or registration of
officers or directors of any exchange wagering licensee.
(6) The board may recover any costs associated with the licensing
or regulation of exchange wagering from the exchange wagering
licensee by imposing an assessment on the exchange wagering licensee
in an amount that does not exceed the reasonable costs associated
with the licensing or regulation of exchange wagering. Funds received
pursuant to this subdivision shall be deposited in the Horse Racing
Fund, to be available upon appropriation by the Legislature for the
sole purpose of regulating exchange wagering.
(f) (1) The board shall not approve an application for an original
or renewal license as an exchange wagering licensee 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:
(A) The labor organization has historically represented employees
who accept or process any form of wagering at the nearest horse
racing meeting located in California.
(B) The agreement establishes the method by which the exchange
wagering licensee 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 exchange
wagering license is required.
(C) The agreement requires the exchange wagering licensee to
maintain its neutrality concerning the choice of those employees who
accept or process any form of wagering for which a California
exchange wagering license is required and whether or not to authorize
the labor organization to represent them with regard to wages,
hours, and other terms and conditions of employment.
(D) The agreement applies to those classifications of employees
who accept or process wagers for which a California exchange wagering
license is required whether the facility is located within or
outside of California.
(2) (A) The agreement required by paragraph (1) shall not be
conditioned by either party upon the other party agreeing to matters
outside the requirements of paragraph (1).
(B) The requirement in paragraph (1) shall not apply to an
exchange wagering licensee 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 exchange wagering
license is required, whether the facility is located within or
outside of California.
(3) 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.
(4) Parimutuel clerks employed by racing associations or fairs or
employees of exchange wagering licensees 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 exchange wagering licensee
licensed by the board. The preferential hiring rights established by
this paragraph shall be conditioned upon the employee meeting the
minimum qualification requirements of the new job.
(g) Notwithstanding any other law, rule, or regulation, an
exchange wagering licensee shall not be required to include any pools
of exchange wagers in the wagering pools at the racing association
or racing fair conducting the races, nor shall an exchange wagering
licensee be required to retain, withhold, or take out any amounts
from any exchange wagers, except as expressly set forth in the
applicable exchange wagering agreement.
(h) Subject to the approval of the board, an exchange wagering
licensee shall be permitted to collect exchange revenues in the
manner and amounts determined by the exchange wagering licensee,
including, but not limited to, assessing a surcharge on any person's
net winnings.
(i) Notwithstanding any other law, rule, or regulation, the board
shall require all of the following:
(1) Each exchange wagering licensee shall distribute all moneys in
each pool, net of any fees, charges, or deductions of any kind
assessed or collected by the exchange wagering licensee in connection
with matched wagers in that pool, at the conclusion of the race or
races associated with that pool.
(2) Each exchange wagering licensee shall distribute the portions
of the exchange wagering licensee's exchange revenues as may be
required pursuant to the exchange wagering agreement pursuant to
paragraphs (2) to (7), inclusive, of subdivision (b).
(3) Fifty percent of the amounts received by a racing association
or racing fair from exchange wagering shall be paid to horsemen
participating in the meetings conducted by that racing association or
racing fair in the form of purses. The allocation of amounts
received by a racing association or racing fair from exchange
wagering between that racing association or racing fair and the
horsemen participating in the meetings conducted by that racing
association or racing fair may be modified by a written agreement
between those entities.
(4) In addition to payments set forth in paragraphs (1) and (2),
each exchange wagering licensee shall distribute, on an annual basis,
an amount equal to the greater of (A) one hundred thousand dollars
($100,000), or (B) an amount equal to 0.001 multiplied by the total
amount of exchange revenues collected by the exchange wagering
licensee in that calendar year. The distribution shall be made at the
direction of the board pursuant to Section 19612.9. This paragraph
shall become inoperative on January 1, 2021, and, as of that date, is
repealed, unless a later enacted statute that is enacted before
January 1, 2021, deletes or extends that date.
(j) An exchange wagering licensee may cancel or allow to be
canceled any unmatched wagers, without cause, at any time.
(k) The board may prescribe rules governing when an exchange
wagering licensee may cancel or void a matched wager or part of a
matched wager, and the actions which an exchange wagering licensee
may take when all or part of a matched wager is canceled or voided.
The rules may include, but are not limited to, permitting the
exchange wagering licensee to place corrective wagers under
circumstances approved in the rules adopted by the board. Exchange
wagers placed on a market after the start of a race shall be lawful
if authorized by the board, racing association, or racing fair
conducting the races, and the horsemen's organization responsible for
negotiating purse agreements for the breed on which the exchange
wager is made.
(l) The provisions of this section shall be deemed to be
severable, and if any phrase, clause, sentence, or provision of this
section is declared to be unconstitutional or the applicability
thereof to any person is held invalid, the remainder of this section
shall not thereby be deemed to be unconstitutional or invalid.
(m) The board shall promulgate administrative rules and
regulations to effectuate the purposes of this section.
(n) No exchange wagering licensee may accept exchange wagers
pursuant to this section prior to May 1, 2012.
19604.7. This article shall become inoperative on May 1, 2016, and,
as of January 1, 2017, is repealed, unless a later enacted statute,
that becomes operative on or before January 1, 2017, deletes or
extends the dates on which it becomes inoperative and is repealed.
BUSINESS AND PROFESSIONS CODE
SECTION 19604.5-19604.7
19604.5. (a) As used in this section, the following definitions
apply:
(1) "Back" means to wager on a selected outcome occurring in a
given market.
(2) "Board" means the California Horse Racing Board.
(3) "Corrective wager" means an exchange wager placed by the
exchange wagering licensee in a given market, under circumstances
approved by the board, in order to address the impact on that market
of the cancellation or voiding of a given matched wager or a given
part of a matched wager.
(4) "Exchange" means a system operated by an exchange wagering
licensee in which the exchange wagering licensee maintains one or
more markets in which persons may back or lay a selected outcome.
(5) "Exchange revenues" means all charges, fees, income, payments,
revenues, and deductions of any kind assessed or collected by, or
paid or delivered to, an exchange wagering licensee in connection
with the submission of any exchange wagers to the exchange wagering
licensee by residents of California and residents of jurisdictions
outside of California on the results of horse races conducted in
California, and by residents of California on the results of horse
races conducted outside of California.
(6) "Exchange wagers" means wagers submitted to an exchange
wagering licensee to be posted in a market on an exchange.
(7) "Exchange wagering" means a form of parimutuel wagering in
which two or more persons place identically opposing wagers in a
given market.
(8) "Exchange wagering account" means the account established with
an exchange wagering licensee by a person participating in exchange
wagering. An exchange wagering account may only be established or
maintained with an exchange wagering licensee by a natural person.
(9) "Exchange wagering agreement" means a written agreement by and
among the applicable exchange wagering licensee, the applicable
racing association or racing fair conducting live racing in this
state, and the horsemen's organization responsible for negotiating
purse agreements for the breed on which exchange wagers are accepted,
provided that the terms and conditions for the permitted use of
signal by the exchange wagering licensee, and the compensation to the
applicable racing association or racing fair and the horsemen's
organization, include provisions for, but are not limited to all of
the following:
(A) Calculation of any and all amounts earned and payable to the
applicable racing association or racing fair and horsemen's
organization.
(B) Audit rights and conditions.
(C) Duration terms.
(D) Contractual remedies.
(10) "Exchange wagering licensee" means a person located within or
outside of California that is authorized to offer exchange wagering
to residents of California pursuant to this section.
(11) "Identically opposing wagers" means wagers in which one or
more persons offer to lay a selected outcome at the same price at
which one or more persons offer to back that same outcome, with the
amount subject to the lay being proportionately commensurate to the
amount subject to the back.
(12) "Lay" means to wager on a selected outcome not occurring in a
given market.
(13) "Market" means, in relation to a given horse race or a given
set of horse races, a particular outcome that is subject to exchange
wagering as determined by an exchange wagering licensee.
(14) "Matched wager" means the wager that is formed when two or
more persons are confirmed by the exchange operator as having placed
identically opposing wagers in a given market on the exchange.
(15) "Net winnings" means the aggregate amounts payable to a
person as a result of that person's winning matched wagers in a pool
less the aggregate amount paid by that person as a result of that
person's losing matched wagers in that pool.
(16) "Parimutuel" means any system whereby wagers with respect to
the outcome of a horse race are placed with, or in, a wagering pool
conducted by an authorized person, and in which the participants are
wagering with each other and not against the person conducting the
wagering pool.
(17) "Person" means any individual, partnership, corporation,
limited liability company, or other association or organization.
(18) "Pool" means the total of all matched wagers in a given
market.
(19) "Price" means the odds for a given exchange wager.
(20) "Unmatched wager" means a wager or portion of a wager placed
in a given market within an exchange that does not become part of a
matched wager because there are not one or more available exchange
wagers in that market with which to form one or more identically
opposing wagers.
(21) "Zone" has the same meaning as defined in Section 19530.5, as
modified by the provisions of subdivision (f) of Section 19601,
except that for the purposes of this act the combined central and
southern zones shall be considered one "central/southern" zone.
(b) Notwithstanding any other law, rule, or regulation, exchange
wagering by residents of California and residents of jurisdictions
outside of California on the results of horse races conducted in
California, and by residents of California on the results of horse
races conducted outside of California, shall be lawful provided that
all of the following apply:
(1) Exchange wagering shall only be conducted by an exchange
wagering licensee pursuant to a valid exchange wagering license
issued by the board.
(2) No exchange wagering licensee shall accept exchange wagers on
races conducted in California from a resident of California or a
resident of a jurisdiction outside California, or conducted outside
California from a resident of California, unless an exchange wagering
agreement exists allowing these wagers.
(3) Exchange wagering shall be conducted pursuant to and in
compliance with the provisions of the Interstate Horseracing Act of
1978 (15 U.S.C. Sec. 3001 et seq.), as amended, this section, all
applicable federal laws, and rules and regulations promulgated by the
board pursuant to this section.
(4) An exchange wagering licensee may only offer exchange wagering
on thoroughbred horse races, whether these thoroughbred races are
conducted within or outside of this state, to persons whose primary
residence address is in the northern zone of this state if it has an
exchange wagering agreement with (A) the racing association or racing
fair located in the northern zone authorized by the board to conduct
a live thoroughbred racing meeting in accordance with the provisions
of Article 4 (commencing with Section 19480) at that time, or during
the calendar period, when the exchange wagering licensee is offering
exchange wagering to persons whose primary residence is in the
northern zone of this state, and (B) the horsemen's organization
responsible for negotiating purse agreements for a live thoroughbred
racing meeting.
(5) An exchange wagering licensee may only offer exchange wagering
on thoroughbred horse races, whether these thoroughbred races are
conducted within or outside of this state, to persons whose primary
residence address is in the central/southern zone of this state if it
has an exchange wagering agreement with (A) the racing association
or racing fair located in the central/southern zone authorized by the
board to conduct a live thoroughbred racing meeting in accordance
with the provisions of Article 4 (commencing with Section 19480) at
that time, or during the calendar period, when the exchange wagering
licensee is offering exchange wagering to persons whose primary
residence is in the central/southern zone of this state, and (B) the
horsemen's organization responsible for negotiating purse agreements
for a live thoroughbred racing meeting.
(6) An exchange wagering licensee may only offer exchange wagering
on quarter horse races, whether these quarter horse races are
conducted within or outside of this state, to persons whose primary
residence address is in this state if it has an exchange wagering
agreement with (A) the racing association or racing fair located in
the state authorized by the board to conduct a live quarter horse
racing meeting in accordance with the provisions of Article 4
(commencing with Section 19480) at that time, or during the calendar
period, when the exchange wagering licensee is offering exchange
wagering to persons whose primary residence is this state, and (B)
the horsemen's organization responsible for negotiating purse
agreements for the live quarter horse racing meeting.
(7) An exchange wagering licensee may only offer exchange wagering
on standardbred horse races, whether these standardbred horse races
are conducted within or outside of this state, to persons whose
primary residence address is in this state if it has an exchange
wagering agreement with (A) the racing association or racing fair
located in the state authorized by the board to conduct a live
standardbred racing meeting in accordance with the provisions of
Article 4 (commencing with Section 19480) at that time, or during the
calendar period, when the exchange wagering licensee is offering
exchange wagering to persons whose primary residence is this state,
and (B) the horsemen's organization responsible for negotiating purse
agreements for the live standardbred racing meeting.
(8) Exchange wagers are submitted to, and accepted by, an exchange
wagering licensee in person, by direct telephone call, or by
communication through other electronic media.
(c) A person shall not be permitted to open an exchange wagering
account, or place an exchange wager, except in accordance with
federal law, this section, and rules and regulations promulgated by
the board. Only natural persons with valid exchange wagering accounts
may place wagers through an exchange. To establish an exchange
wagering account, a person shall be at least 18 years of age and a
resident of California or of another jurisdiction within which the
placement of exchange wagers would not be unlawful under United
States federal law or the law of that jurisdiction.
(d) The board shall approve, as part of the exchange wagering
licensee's application for an exchange wagering license, security
policies and safeguards to ensure player protection and integrity,
including, but not limited to, provisions governing the acceptance of
electronic applications for persons establishing exchange wagering
accounts, location and age verification confirmation for persons
establishing exchange wagering accounts, the use of identifying
factors to ensure security of individual accounts, and the
requirements for management of funds in exchange wagering accounts.
An exchange wagering licensee may not accept a wager, or series of
wagers, if the results of the wager or wagers would create a
liability for the exchange wagering account holder that is in excess
of the funds on deposit in the exchange wagering account of that
holder.
(e) Notwithstanding any other law, rule, or regulation:
(1) The board shall have full power to prescribe rules,
regulations, and conditions under which exchange wagering may be
conducted in California consistent with this section, including the
manner in which exchange wagers may be accepted and the requirements
for any person to participate in exchange wagering.
(2) Prior to the board promulgating rules, regulations, and
conditions under which exchange wagering may be conducted in
California, the board shall consider studies or comments submitted by
interested parties on the impact of exchange wagering on parimutuel
betting and the economics of the California horse racing industry to
assist the board in developing rules, regulations, and conditions for
exchange wagering that are in the best interest of the public and
the California horse racing industry. The board may set a time frame
for comments and studies to be submitted by interested parties and
for the board to consider the studies and comments so as to allow
sufficient time, in the discretion of the board, to allow for the
promulgation of rules, regulations, and conditions for exchange
wagering and the issuance of licenses for exchange wagering prior to
May 1, 2012.
(3) Notwithstanding paragraph (1), the board shall adopt the
following rules:
(A) An owner, authorized agent, trainer, jockey, jockey's agent,
driver, or stable employee shall not place an exchange wager to lay
any entrant in a horse race that is owned in whole or part by that
owner or the owner represented by that authorized agent, trained by
that trainer or stable employee, ridden by that jockey or the jockey
represented by that jockey's agent, or driven by that driver.
(B) No exchange wagers shall be placed on a market after the
conclusion of a live race. Exchange wagering on previously run races
is prohibited.
(C) The exchange wagering licensee shall provide a person with
information on the race, including the track where the race will take
place and the names of the participating horses before the person
may place an exchange wager.
(D) The exchange wagering licensee shall require the person making
the exchange wager to select the specific race and horse for the
wager. The use of automatic, quick-pick, or similar features to aid
in the placing of a wager shall be prohibited.
(E) The results of a wager shall not be displayed through the use
of video or mechanical reels or other slot machine or casino game
themes, including, but not limited to, dice games, wheel games, card
games, and lotto.
(4) The board shall have full power to prescribe rules,
regulations, and conditions under which all exchange wagering
licenses are issued or renewed in California, including requiring an
annual audit of the exchange wagering licensee's books and records
pertaining to exchange wagering, and to revoke, suspend, or refuse to
renew a license pursuant to the authority granted to the board in
this chapter.
(5) The board may reasonably require licensure or registration of
officers or directors of any exchange wagering licensee.
(6) The board may recover any costs associated with the licensing
or regulation of exchange wagering from the exchange wagering
licensee by imposing an assessment on the exchange wagering licensee
in an amount that does not exceed the reasonable costs associated
with the licensing or regulation of exchange wagering. Funds received
pursuant to this subdivision shall be deposited in the Horse Racing
Fund, to be available upon appropriation by the Legislature for the
sole purpose of regulating exchange wagering.
(f) (1) The board shall not approve an application for an original
or renewal license as an exchange wagering licensee 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:
(A) The labor organization has historically represented employees
who accept or process any form of wagering at the nearest horse
racing meeting located in California.
(B) The agreement establishes the method by which the exchange
wagering licensee 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 exchange
wagering license is required.
(C) The agreement requires the exchange wagering licensee to
maintain its neutrality concerning the choice of those employees who
accept or process any form of wagering for which a California
exchange wagering license is required and whether or not to authorize
the labor organization to represent them with regard to wages,
hours, and other terms and conditions of employment.
(D) The agreement applies to those classifications of employees
who accept or process wagers for which a California exchange wagering
license is required whether the facility is located within or
outside of California.
(2) (A) The agreement required by paragraph (1) shall not be
conditioned by either party upon the other party agreeing to matters
outside the requirements of paragraph (1).
(B) The requirement in paragraph (1) shall not apply to an
exchange wagering licensee 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 exchange wagering
license is required, whether the facility is located within or
outside of California.
(3) 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.
(4) Parimutuel clerks employed by racing associations or fairs or
employees of exchange wagering licensees 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 exchange wagering licensee
licensed by the board. The preferential hiring rights established by
this paragraph shall be conditioned upon the employee meeting the
minimum qualification requirements of the new job.
(g) Notwithstanding any other law, rule, or regulation, an
exchange wagering licensee shall not be required to include any pools
of exchange wagers in the wagering pools at the racing association
or racing fair conducting the races, nor shall an exchange wagering
licensee be required to retain, withhold, or take out any amounts
from any exchange wagers, except as expressly set forth in the
applicable exchange wagering agreement.
(h) Subject to the approval of the board, an exchange wagering
licensee shall be permitted to collect exchange revenues in the
manner and amounts determined by the exchange wagering licensee,
including, but not limited to, assessing a surcharge on any person's
net winnings.
(i) Notwithstanding any other law, rule, or regulation, the board
shall require all of the following:
(1) Each exchange wagering licensee shall distribute all moneys in
each pool, net of any fees, charges, or deductions of any kind
assessed or collected by the exchange wagering licensee in connection
with matched wagers in that pool, at the conclusion of the race or
races associated with that pool.
(2) Each exchange wagering licensee shall distribute the portions
of the exchange wagering licensee's exchange revenues as may be
required pursuant to the exchange wagering agreement pursuant to
paragraphs (2) to (7), inclusive, of subdivision (b).
(3) Fifty percent of the amounts received by a racing association
or racing fair from exchange wagering shall be paid to horsemen
participating in the meetings conducted by that racing association or
racing fair in the form of purses. The allocation of amounts
received by a racing association or racing fair from exchange
wagering between that racing association or racing fair and the
horsemen participating in the meetings conducted by that racing
association or racing fair may be modified by a written agreement
between those entities.
(4) In addition to payments set forth in paragraphs (1) and (2),
each exchange wagering licensee shall distribute, on an annual basis,
an amount equal to the greater of (A) one hundred thousand dollars
($100,000), or (B) an amount equal to 0.001 multiplied by the total
amount of exchange revenues collected by the exchange wagering
licensee in that calendar year. The distribution shall be made at the
direction of the board pursuant to Section 19612.9. This paragraph
shall become inoperative on January 1, 2021, and, as of that date, is
repealed, unless a later enacted statute that is enacted before
January 1, 2021, deletes or extends that date.
(j) An exchange wagering licensee may cancel or allow to be
canceled any unmatched wagers, without cause, at any time.
(k) The board may prescribe rules governing when an exchange
wagering licensee may cancel or void a matched wager or part of a
matched wager, and the actions which an exchange wagering licensee
may take when all or part of a matched wager is canceled or voided.
The rules may include, but are not limited to, permitting the
exchange wagering licensee to place corrective wagers under
circumstances approved in the rules adopted by the board. Exchange
wagers placed on a market after the start of a race shall be lawful
if authorized by the board, racing association, or racing fair
conducting the races, and the horsemen's organization responsible for
negotiating purse agreements for the breed on which the exchange
wager is made.
(l) The provisions of this section shall be deemed to be
severable, and if any phrase, clause, sentence, or provision of this
section is declared to be unconstitutional or the applicability
thereof to any person is held invalid, the remainder of this section
shall not thereby be deemed to be unconstitutional or invalid.
(m) The board shall promulgate administrative rules and
regulations to effectuate the purposes of this section.
(n) No exchange wagering licensee may accept exchange wagers
pursuant to this section prior to May 1, 2012.
19604.7. This article shall become inoperative on May 1, 2016, and,
as of January 1, 2017, is repealed, unless a later enacted statute,
that becomes operative on or before January 1, 2017, deletes or
extends the dates on which it becomes inoperative and is repealed.
BUSINESS AND PROFESSIONS CODE
SECTION 19604.5-19604.7
19604.5. (a) As used in this section, the following definitions
apply:
(1) "Back" means to wager on a selected outcome occurring in a
given market.
(2) "Board" means the California Horse Racing Board.
(3) "Corrective wager" means an exchange wager placed by the
exchange wagering licensee in a given market, under circumstances
approved by the board, in order to address the impact on that market
of the cancellation or voiding of a given matched wager or a given
part of a matched wager.
(4) "Exchange" means a system operated by an exchange wagering
licensee in which the exchange wagering licensee maintains one or
more markets in which persons may back or lay a selected outcome.
(5) "Exchange revenues" means all charges, fees, income, payments,
revenues, and deductions of any kind assessed or collected by, or
paid or delivered to, an exchange wagering licensee in connection
with the submission of any exchange wagers to the exchange wagering
licensee by residents of California and residents of jurisdictions
outside of California on the results of horse races conducted in
California, and by residents of California on the results of horse
races conducted outside of California.
(6) "Exchange wagers" means wagers submitted to an exchange
wagering licensee to be posted in a market on an exchange.
(7) "Exchange wagering" means a form of parimutuel wagering in
which two or more persons place identically opposing wagers in a
given market.
(8) "Exchange wagering account" means the account established with
an exchange wagering licensee by a person participating in exchange
wagering. An exchange wagering account may only be established or
maintained with an exchange wagering licensee by a natural person.
(9) "Exchange wagering agreement" means a written agreement by and
among the applicable exchange wagering licensee, the applicable
racing association or racing fair conducting live racing in this
state, and the horsemen's organization responsible for negotiating
purse agreements for the breed on which exchange wagers are accepted,
provided that the terms and conditions for the permitted use of
signal by the exchange wagering licensee, and the compensation to the
applicable racing association or racing fair and the horsemen's
organization, include provisions for, but are not limited to all of
the following:
(A) Calculation of any and all amounts earned and payable to the
applicable racing association or racing fair and horsemen's
organization.
(B) Audit rights and conditions.
(C) Duration terms.
(D) Contractual remedies.
(10) "Exchange wagering licensee" means a person located within or
outside of California that is authorized to offer exchange wagering
to residents of California pursuant to this section.
(11) "Identically opposing wagers" means wagers in which one or
more persons offer to lay a selected outcome at the same price at
which one or more persons offer to back that same outcome, with the
amount subject to the lay being proportionately commensurate to the
amount subject to the back.
(12) "Lay" means to wager on a selected outcome not occurring in a
given market.
(13) "Market" means, in relation to a given horse race or a given
set of horse races, a particular outcome that is subject to exchange
wagering as determined by an exchange wagering licensee.
(14) "Matched wager" means the wager that is formed when two or
more persons are confirmed by the exchange operator as having placed
identically opposing wagers in a given market on the exchange.
(15) "Net winnings" means the aggregate amounts payable to a
person as a result of that person's winning matched wagers in a pool
less the aggregate amount paid by that person as a result of that
person's losing matched wagers in that pool.
(16) "Parimutuel" means any system whereby wagers with respect to
the outcome of a horse race are placed with, or in, a wagering pool
conducted by an authorized person, and in which the participants are
wagering with each other and not against the person conducting the
wagering pool.
(17) "Person" means any individual, partnership, corporation,
limited liability company, or other association or organization.
(18) "Pool" means the total of all matched wagers in a given
market.
(19) "Price" means the odds for a given exchange wager.
(20) "Unmatched wager" means a wager or portion of a wager placed
in a given market within an exchange that does not become part of a
matched wager because there are not one or more available exchange
wagers in that market with which to form one or more identically
opposing wagers.
(21) "Zone" has the same meaning as defined in Section 19530.5, as
modified by the provisions of subdivision (f) of Section 19601,
except that for the purposes of this act the combined central and
southern zones shall be considered one "central/southern" zone.
(b) Notwithstanding any other law, rule, or regulation, exchange
wagering by residents of California and residents of jurisdictions
outside of California on the results of horse races conducted in
California, and by residents of California on the results of horse
races conducted outside of California, shall be lawful provided that
all of the following apply:
(1) Exchange wagering shall only be conducted by an exchange
wagering licensee pursuant to a valid exchange wagering license
issued by the board.
(2) No exchange wagering licensee shall accept exchange wagers on
races conducted in California from a resident of California or a
resident of a jurisdiction outside California, or conducted outside
California from a resident of California, unless an exchange wagering
agreement exists allowing these wagers.
(3) Exchange wagering shall be conducted pursuant to and in
compliance with the provisions of the Interstate Horseracing Act of
1978 (15 U.S.C. Sec. 3001 et seq.), as amended, this section, all
applicable federal laws, and rules and regulations promulgated by the
board pursuant to this section.
(4) An exchange wagering licensee may only offer exchange wagering
on thoroughbred horse races, whether these thoroughbred races are
conducted within or outside of this state, to persons whose primary
residence address is in the northern zone of this state if it has an
exchange wagering agreement with (A) the racing association or racing
fair located in the northern zone authorized by the board to conduct
a live thoroughbred racing meeting in accordance with the provisions
of Article 4 (commencing with Section 19480) at that time, or during
the calendar period, when the exchange wagering licensee is offering
exchange wagering to persons whose primary residence is in the
northern zone of this state, and (B) the horsemen's organization
responsible for negotiating purse agreements for a live thoroughbred
racing meeting.
(5) An exchange wagering licensee may only offer exchange wagering
on thoroughbred horse races, whether these thoroughbred races are
conducted within or outside of this state, to persons whose primary
residence address is in the central/southern zone of this state if it
has an exchange wagering agreement with (A) the racing association
or racing fair located in the central/southern zone authorized by the
board to conduct a live thoroughbred racing meeting in accordance
with the provisions of Article 4 (commencing with Section 19480) at
that time, or during the calendar period, when the exchange wagering
licensee is offering exchange wagering to persons whose primary
residence is in the central/southern zone of this state, and (B) the
horsemen's organization responsible for negotiating purse agreements
for a live thoroughbred racing meeting.
(6) An exchange wagering licensee may only offer exchange wagering
on quarter horse races, whether these quarter horse races are
conducted within or outside of this state, to persons whose primary
residence address is in this state if it has an exchange wagering
agreement with (A) the racing association or racing fair located in
the state authorized by the board to conduct a live quarter horse
racing meeting in accordance with the provisions of Article 4
(commencing with Section 19480) at that time, or during the calendar
period, when the exchange wagering licensee is offering exchange
wagering to persons whose primary residence is this state, and (B)
the horsemen's organization responsible for negotiating purse
agreements for the live quarter horse racing meeting.
(7) An exchange wagering licensee may only offer exchange wagering
on standardbred horse races, whether these standardbred horse races
are conducted within or outside of this state, to persons whose
primary residence address is in this state if it has an exchange
wagering agreement with (A) the racing association or racing fair
located in the state authorized by the board to conduct a live
standardbred racing meeting in accordance with the provisions of
Article 4 (commencing with Section 19480) at that time, or during the
calendar period, when the exchange wagering licensee is offering
exchange wagering to persons whose primary residence is this state,
and (B) the horsemen's organization responsible for negotiating purse
agreements for the live standardbred racing meeting.
(8) Exchange wagers are submitted to, and accepted by, an exchange
wagering licensee in person, by direct telephone call, or by
communication through other electronic media.
(c) A person shall not be permitted to open an exchange wagering
account, or place an exchange wager, except in accordance with
federal law, this section, and rules and regulations promulgated by
the board. Only natural persons with valid exchange wagering accounts
may place wagers through an exchange. To establish an exchange
wagering account, a person shall be at least 18 years of age and a
resident of California or of another jurisdiction within which the
placement of exchange wagers would not be unlawful under United
States federal law or the law of that jurisdiction.
(d) The board shall approve, as part of the exchange wagering
licensee's application for an exchange wagering license, security
policies and safeguards to ensure player protection and integrity,
including, but not limited to, provisions governing the acceptance of
electronic applications for persons establishing exchange wagering
accounts, location and age verification confirmation for persons
establishing exchange wagering accounts, the use of identifying
factors to ensure security of individual accounts, and the
requirements for management of funds in exchange wagering accounts.
An exchange wagering licensee may not accept a wager, or series of
wagers, if the results of the wager or wagers would create a
liability for the exchange wagering account holder that is in excess
of the funds on deposit in the exchange wagering account of that
holder.
(e) Notwithstanding any other law, rule, or regulation:
(1) The board shall have full power to prescribe rules,
regulations, and conditions under which exchange wagering may be
conducted in California consistent with this section, including the
manner in which exchange wagers may be accepted and the requirements
for any person to participate in exchange wagering.
(2) Prior to the board promulgating rules, regulations, and
conditions under which exchange wagering may be conducted in
California, the board shall consider studies or comments submitted by
interested parties on the impact of exchange wagering on parimutuel
betting and the economics of the California horse racing industry to
assist the board in developing rules, regulations, and conditions for
exchange wagering that are in the best interest of the public and
the California horse racing industry. The board may set a time frame
for comments and studies to be submitted by interested parties and
for the board to consider the studies and comments so as to allow
sufficient time, in the discretion of the board, to allow for the
promulgation of rules, regulations, and conditions for exchange
wagering and the issuance of licenses for exchange wagering prior to
May 1, 2012.
(3) Notwithstanding paragraph (1), the board shall adopt the
following rules:
(A) An owner, authorized agent, trainer, jockey, jockey's agent,
driver, or stable employee shall not place an exchange wager to lay
any entrant in a horse race that is owned in whole or part by that
owner or the owner represented by that authorized agent, trained by
that trainer or stable employee, ridden by that jockey or the jockey
represented by that jockey's agent, or driven by that driver.
(B) No exchange wagers shall be placed on a market after the
conclusion of a live race. Exchange wagering on previously run races
is prohibited.
(C) The exchange wagering licensee shall provide a person with
information on the race, including the track where the race will take
place and the names of the participating horses before the person
may place an exchange wager.
(D) The exchange wagering licensee shall require the person making
the exchange wager to select the specific race and horse for the
wager. The use of automatic, quick-pick, or similar features to aid
in the placing of a wager shall be prohibited.
(E) The results of a wager shall not be displayed through the use
of video or mechanical reels or other slot machine or casino game
themes, including, but not limited to, dice games, wheel games, card
games, and lotto.
(4) The board shall have full power to prescribe rules,
regulations, and conditions under which all exchange wagering
licenses are issued or renewed in California, including requiring an
annual audit of the exchange wagering licensee's books and records
pertaining to exchange wagering, and to revoke, suspend, or refuse to
renew a license pursuant to the authority granted to the board in
this chapter.
(5) The board may reasonably require licensure or registration of
officers or directors of any exchange wagering licensee.
(6) The board may recover any costs associated with the licensing
or regulation of exchange wagering from the exchange wagering
licensee by imposing an assessment on the exchange wagering licensee
in an amount that does not exceed the reasonable costs associated
with the licensing or regulation of exchange wagering. Funds received
pursuant to this subdivision shall be deposited in the Horse Racing
Fund, to be available upon appropriation by the Legislature for the
sole purpose of regulating exchange wagering.
(f) (1) The board shall not approve an application for an original
or renewal license as an exchange wagering licensee 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:
(A) The labor organization has historically represented employees
who accept or process any form of wagering at the nearest horse
racing meeting located in California.
(B) The agreement establishes the method by which the exchange
wagering licensee 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 exchange
wagering license is required.
(C) The agreement requires the exchange wagering licensee to
maintain its neutrality concerning the choice of those employees who
accept or process any form of wagering for which a California
exchange wagering license is required and whether or not to authorize
the labor organization to represent them with regard to wages,
hours, and other terms and conditions of employment.
(D) The agreement applies to those classifications of employees
who accept or process wagers for which a California exchange wagering
license is required whether the facility is located within or
outside of California.
(2) (A) The agreement required by paragraph (1) shall not be
conditioned by either party upon the other party agreeing to matters
outside the requirements of paragraph (1).
(B) The requirement in paragraph (1) shall not apply to an
exchange wagering licensee 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 exchange wagering
license is required, whether the facility is located within or
outside of California.
(3) 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.
(4) Parimutuel clerks employed by racing associations or fairs or
employees of exchange wagering licensees 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 exchange wagering licensee
licensed by the board. The preferential hiring rights established by
this paragraph shall be conditioned upon the employee meeting the
minimum qualification requirements of the new job.
(g) Notwithstanding any other law, rule, or regulation, an
exchange wagering licensee shall not be required to include any pools
of exchange wagers in the wagering pools at the racing association
or racing fair conducting the races, nor shall an exchange wagering
licensee be required to retain, withhold, or take out any amounts
from any exchange wagers, except as expressly set forth in the
applicable exchange wagering agreement.
(h) Subject to the approval of the board, an exchange wagering
licensee shall be permitted to collect exchange revenues in the
manner and amounts determined by the exchange wagering licensee,
including, but not limited to, assessing a surcharge on any person's
net winnings.
(i) Notwithstanding any other law, rule, or regulation, the board
shall require all of the following:
(1) Each exchange wagering licensee shall distribute all moneys in
each pool, net of any fees, charges, or deductions of any kind
assessed or collected by the exchange wagering licensee in connection
with matched wagers in that pool, at the conclusion of the race or
races associated with that pool.
(2) Each exchange wagering licensee shall distribute the portions
of the exchange wagering licensee's exchange revenues as may be
required pursuant to the exchange wagering agreement pursuant to
paragraphs (2) to (7), inclusive, of subdivision (b).
(3) Fifty percent of the amounts received by a racing association
or racing fair from exchange wagering shall be paid to horsemen
participating in the meetings conducted by that racing association or
racing fair in the form of purses. The allocation of amounts
received by a racing association or racing fair from exchange
wagering between that racing association or racing fair and the
horsemen participating in the meetings conducted by that racing
association or racing fair may be modified by a written agreement
between those entities.
(4) In addition to payments set forth in paragraphs (1) and (2),
each exchange wagering licensee shall distribute, on an annual basis,
an amount equal to the greater of (A) one hundred thousand dollars
($100,000), or (B) an amount equal to 0.001 multiplied by the total
amount of exchange revenues collected by the exchange wagering
licensee in that calendar year. The distribution shall be made at the
direction of the board pursuant to Section 19612.9. This paragraph
shall become inoperative on January 1, 2021, and, as of that date, is
repealed, unless a later enacted statute that is enacted before
January 1, 2021, deletes or extends that date.
(j) An exchange wagering licensee may cancel or allow to be
canceled any unmatched wagers, without cause, at any time.
(k) The board may prescribe rules governing when an exchange
wagering licensee may cancel or void a matched wager or part of a
matched wager, and the actions which an exchange wagering licensee
may take when all or part of a matched wager is canceled or voided.
The rules may include, but are not limited to, permitting the
exchange wagering licensee to place corrective wagers under
circumstances approved in the rules adopted by the board. Exchange
wagers placed on a market after the start of a race shall be lawful
if authorized by the board, racing association, or racing fair
conducting the races, and the horsemen's organization responsible for
negotiating purse agreements for the breed on which the exchange
wager is made.
(l) The provisions of this section shall be deemed to be
severable, and if any phrase, clause, sentence, or provision of this
section is declared to be unconstitutional or the applicability
thereof to any person is held invalid, the remainder of this section
shall not thereby be deemed to be unconstitutional or invalid.
(m) The board shall promulgate administrative rules and
regulations to effectuate the purposes of this section.
(n) No exchange wagering licensee may accept exchange wagers
pursuant to this section prior to May 1, 2012.
19604.7. This article shall become inoperative on May 1, 2016, and,
as of January 1, 2017, is repealed, unless a later enacted statute,
that becomes operative on or before January 1, 2017, deletes or
extends the dates on which it becomes inoperative and is repealed.
