The California legislature has approved a bill that will raise the takeout on exotic bets on California races to fund an increase in overnight purses.\r\nThe legislation will be forwarded to Gov. Arnold Schwarzenegger, who is expected to support the measure. Last November, while attending races at Hollywood Park, Schwarzenegger indicated that he wanted to sign legislation in 2010 to aid the state&rsquo;s horse racing industry. Schwarzenegger leaves office at the end of this year.\r\nThe legislation also permits the launch of exchange betting in the state in 2012. The takeout increase would take effect on Dec. 26, if signed by Schwarzenegger.\r\nBy a vote of 21-13, the state Senate late Tuesday approved Senate Bill 1072 that will raise the takeout on two-horse exotic wagers 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 percent to 23.68 percent. Takeout rates for win, place, and show betting will remain unchanged, at 15.43 percent.\r\nThe legislation states that revenue from the higher takeout must go to fund overnight purses. The measure could raise $25 million to $30 million annually, according to racing officials. The bill also contains a provision to financially promote the Breeders&rsquo; Cup, when the event is run in California.\r\nTuesday evening, SB 1072 was described by Sen. Tom Harman of Huntington Beach as important for the viability for California horse racing. &ldquo;This industry employs 50,000 people,&rdquo; he said before the vote. &ldquo;We need to do what we can to encourage the industry to try new things and new avenues.&rdquo;\r\nThe bill was amended last weekend to delay the implementation of exchange betting until 2012, and give the California Horse Racing Board ample time to write rules and regulation with industry participants.\r\nConducted on the Internet, exchange betting allows bettors to post odds on a horse and take bets directly from other players. It is not currently permitted in the United States.\r\nTuesday, the legislature also approved a bill that would repeal the legalization of exchange betting in 2016 unless further legislation was passed allowing it to continue.