With Legislation in Place, Hard Part Begins

Now comes the hard part. With Gov. Gray Davis' signing of Assembly Bill 471 on Aug. 13, California will soon usher in account wagering as well as see the unionization of racetrack backstretch workers. But how?

The approval of the legislation, which go into effect Jan. 1, 2002, is only the first step in a lengthy process.

"We have to create the regulatory framework to make it all work," said Mike Marten, spokesman for the California Horse Racing Board. "Do not count on Jan. 1 for the start up of account wagering. Just the standard textbook regulation takes five months, and that's if everybody agrees on it from the start."

The CHRB expects months of lively debate during public review of potential policies. It remains to be seen how many companies will offer account-wagering services; there could be a split between the Magna Entertainment-owned tracks, and those that have exclusive partnerships with the TV Games Network.

In any event, commissioner John Harris, pleased by the bill's approval, believes the board will act as soon as it can.

"This is something we'll move on quickly and try to have in place by the end of the year," Harris said. "It has proven to work in other states without major problems."

Harris sees the bill as "a move forward for California. In particular, account wagering is something we tremendously need. We don't have the outlets to expand racing to more fans. The (state) lottery has more than 20,000 outlets; racing has 30 to 40. This helps level the playing field. It's a proven way to allow people to exercise their God-given right to bet on horses."

Due to the rapid growth of Internet play, California has been cut out of the action. More than 650 Web sites already allow California residents to make long-distance bets through their wagering accounts, officials said.
Horsemen and state legislators estimate that California is losing $30 million a year that normally would be deducted from those bets -- pegged to be worth as much as $1 billion -- for taxes, purses, and other uses. By allowing the state to regulate account wagering, that money would stay in the state.

Account wagering is only part of the bill's three-pronged reforms. It also calls for improved housing and living conditions for the state's 3,500 grooms and other workers who live on track. In addition, backstretch workers would be allowed to unionize and to participate in collective bargaining.

Davis had vetoed a very similar bill last year, calling it an expansion of gambling. An opinion by state attorney general Bill Lockyer helped change his mind. Just a month ago, Davis reportedly was still leaning against the bill, sponsored by assembly members Robert Hertzberg, Herb Wesson, Mike Briggs, and Dion Aroner, plus state senators John Burton and Ed Vincent.

The often fractious California racing industry came together behind the bill and lobbied hard for its approval. That included hiring Darius Anderson, a former Davis fund-raiser and organizer of the governor's inauguration committee, to lobby on racing's behalf.

"This shows the necessity of the entire racing community working closely together," said Wes Fitzpatrick, president of the California Thoroughbred Breeders Association. "This is legislation that can have a profound impact on many areas of our business."

In addition, Davis recently approved legislation that exempts breeding stock from state sale and use taxes. "All these things help," said racing lobbyist Robert Fox. "The racing industry has had as good a year as we could possibly hope."

Proposed CHRB policies for account wagering, plus backstretch labor and housing reforms, should get their first public hearings in early fall. "Any new regulations would likely go to (CHRB) committee in September," Marten said. "The approval of the bill sets everything in motion so we can get cracking on it."