Advance Deposit Wagering Reauthorization
AB 765 (Evans) – as amended on September 6, 2007

Background

• Advance Deposit Wagering (ADW) allows a horse racing fan to deposit funds into an account in order to wager on races originating in California, over 40 states and several other countries via telephone, internet or other electronic media.

• ADW was originally authorized in California by AB 471 (Hertzberg, Chapter 198, Statutes of 2001) which is scheduled to sunset on January 1, 2008.

• There are currently three providers (Youbet.com, TVG and ExpressBet) licensed by the California Horse Racing Board (CHRB) to provide ADW services in California.

• In order to be licensed, a provider must post a $500,000 bond; demonstrate the financial resources necessary to operate an ADW system; execute contracts with race tracks and horsemen; establish security policies and safeguards that protect the confidentiality of account information; ensure that persons under 18 will not be able to open an account; and, agree to include in their promotional material information on a recognized problem gambling support organization.

• ADW is intended to provide easier access to horse racing, make wagering more convenient, provide more variety and offer faster-paced entertainment for California fans.

• ADW is critical to the financial stability of California’s horse racing industry; it accounts for about 15% of all contemporary wagering in the state.

AB 765

• AB 765 was recently amended to eliminate the ADW sunset provision, reauthorize the continuation of ADW in California and make a number of clarifications in current statute.

• The recent amendments reflect more than a year’s worth of comprehensive stakeholder discussion and industry-wide consensus building.

• These amendments were developed in conjunction with the policy committee Chairs from both Houses and Assembly Members Price and Portantino, who introduced ADW legislation earlier this year.

• For the most part, AB 765 reorders/recasts existing statute; significant changes reflected in the September 6 version would:
o Provide concise parameters for “contractual compensation” paid to ADW providers for handling in-state, out-of-state and out-of-country races.
o Clarify the role of horsemen organizations in the negotiation/approval of ADW provider agreements.
o Establish a dispute resolution process for challenges to ADW agreements for out-of-state races.
o Clarify collective bargaining rights/requirements related to CHRB approval of an application for ADW licensure.
o Allocate a portion of the net revenue generated from ADW to a new jockey pension plan, an existing backstretch worker pension plan and a welfare plan for horsemen and other personnel.

• AB 765 (as amended) is supported by virtually everyone involved in California horse racing, including organizations representing:
o All major tracks
o County fairs and expositions
o Horsemens organizations
o Organized labor
o Jockeys Guild
o ADW providers

September 6, 2007