HOUSE BILL REPORT

                  HB 2167

             As Reported By House Committee On:

                      Commerce & Labor

Title:  An act relating to thoroughbred race track gross receipts and licensing provisions.

Brief Description:  Regulating race tracks.

Sponsors:  Representatives Heavey, G. Fisher, Lemmon, Forner, Veloria, Roland, Eide, Campbell, Jones, Dorn, Zellinsky, Rayburn, Springer, Leonard and Patterson.

Brief History:

  Reported by House Committee on:

Commerce & Labor, January 18, 1994, DP.

HOUSE COMMITTEE ON COMMERCE & LABOR

Majority Report:  Do pass.  Signed by 8 members:  Representatives Heavey, Chair; G. Cole, Vice Chair; Lisk, Ranking Minority Member; Conway; Horn; King; Springer and Veloria.

Staff:  Jim Kelley (786-7166).

Background: In 1991, the Legislature enacted ESHB 1120.  Among other provisions, this bill reduced the parimutuel tax on race tracks with an average daily handle of more than $250,000 by roughly 2.5 percent.  The bill also required licensees who are nonprofit corporations and have race meets of 30 days or more to pay to the Horse Racing Commission 2.5 percent of their daily gross receipts.  The commission was required to deposit these additional funds into the Washington Thoroughbred Racing Fund (the fund).  The only operator required to contribute to the fund under this provision was the nonprofit Emerald Racing Association (Emerald), when it operated Longacres Park in its final two years of existence.

After Longacres closed in 1992, Emerald was awarded the license to operate the 1993 summer race meet at Yakima Meadows.  In 1993, the Legislature enacted EHB 1845, which reduced Emerald's contribution to the fund to 1.25 percent of its daily gross receipts and required Emerald to use the additional money it retained to enhance purses for the owners of winning horses.

The money in the fund may be spent only after legislative appropriation.  Expenditures from the fund are to be used to benefit and support interim continuation of thoroughbred racing, capital construction of a new race track facility, and programs enhancing the general welfare, safety, and advancement of the Washington thoroughbred industry.  At the end of the 1993 racing season, the fund contained $8.37 million. 

In the 1993 Capital Budget, $8.2 million of the fund was appropriated to the Horse Racing Commission.  The appropriation was subject to the following conditions and limitations: 

(1)The appropriation is provided solely for the benefit and support of thoroughbred horse racing;

(2)No expenditures may be made to construct horse race or related facilities until the commission has made a determination that the applicant has the ability to complete the construction of a facility and fund its operation and the applicant has completed all permitting requirements; and

(3)The commission shall insure that any expenditure will protect the state's long-term interest in the continuation and development of thoroughbred horse racing.

The Horse Racing Commission has not yet distributed any of the money in the fund.

Summary of Bill:  Licensees who are nonprofit corporations and have race meets of 30 days or more are no longer required to contribute any portion of their daily gross receipts to the Washington Thoroughbred Racing Fund.

Fiscal Note:  Requested January 10, 1994.

Effective Date:  The bill contains an emergency clause and takes effect immediately.

Testimony For:  The Emerald Racing Association was formed to continue horse racing in Washington while we wait for a new track to be built and to help in the effort of building a new track.  This bill is necessary for three reasons:  (1) Emerald will have to pay much higher rent for a satellite facility in 1994 than it paid in 1993 because the Longacres site is no longer available for satellite wagering; (2) with the passage of Initiative 601, the dollars in the Thoroughbred Racing Fund may be put in competition with other appropriated money; and (3) Emerald will be more free to use its money for the purposes needed by the builder of the new race track, because its money would not be limited by the constitutional prohibition on the gift of state funds.  Control of the money that Emerald is amassing is subject to the restrictions in Emerald's bylaws as a nonprofit corporation, which include the interim continuation of horse racing in Washington and the construction of a new race track in Western Washington.  More money may also be needed for purses to continue to attract high quality horses.  This proposal is supported by all sectors of the industry.

Testimony Against:  None.

Witnesses:  (In favor)  Frank Warnke and Marie Clifford, Emerald Racing Association; and Carl Baze, Horsemen's Benevolent and Protective Association.