California takeout bill faces hurdles

DEL MAR, Calif. – Legislation that would increase takeout for exotic bets on California races and permit the development of exchange betting was stuck at the committee level on Friday.

The state legislative session is scheduled to end on Tuesday, but the legislature has yet to produce a state budget and is not expected to adjourn on that date. That could give the bill more time to pass through the State Senate and Assembly. It could even be divided into a takeout bill and an exchange betting bill, said one legislative analyst.

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The legislation would raise the takeout on two-horse exotic bets by 2 percent, from the current 20.68 percent to 22.68 percent, and increase the takeout on bets requiring three or more horses by 3 percent, from 20.68 to 23.68 percent. Proponents say the takeout increase would add $25 million to $30 million in purses annually.

The bill is supported by the California Horse Racing Board, Hollywood Park, Del Mar, the Oak Tree Racing Association, the Jockey’s Guild, the Thoroughbred Owners of California, and the California Authority of Racing Fairs.

But Santa Anita and Churchill Downs Inc. issued a statement earlier in the week opposing the bill, specifically the exchange betting provision, calling the legislation the “California bookie bill.”

Santa Anita president George Haines said, “We’re opposing the exchange aspect of it. We’d prefer it be split into two.”

Haines said that executives with Golden Gate Fields, which like Santa Anita is owned by MI Developments, were in Sacramento earlier this week lobbying against passage of the bill. Churchill Downs does not own a track in California, but, Haines said, “they’re concerned what goes on in California because that dictates what goes on around the country.”

Exchange betting is not currently permitted in the United States. Conducted on the Internet, exchange betting allows bettors to post odds on a horse and take bets directly from other players. The style of betting has become extremely popular in Great Britain. The current legislation leaves the rules and regulations of that type of bet to the California Horse Racing Board to determine, including how to divide revenue among the tracks, horsemen and system operators.

The exchange betting provision is supported by the exchange betting company Betfair, which owns TVG.

The bill, AB 2414, sponsored by Assembly speaker John Perez, a Democrat from Los Angeles, was amended on Aug. 20 from a bill designed solely to promote marketing the Breeders’ Cup in California.