State Is Considering a Bill That Could Cost Racing $36 Million : Budget: The proposed revenue-producing legislation could have big impact on intertrack wagering.

In their 11th-hour panic to find revenue that will cover the state’s $10.7 billion budget shortfall, California legislators are eyeing a bill that would slice an estimated $36 million out of the thoroughbred racing industry and threaten a shutdown of intertrack wagering sites.

As the state’s fiscal year drew to a close on Tuesday, Senate Bill 627 was on the Assembly floor, awaiting consideration along with 19 other revenue increasing measures.

“It’s part of a bill that would increase the tax on rat poison,” said Brian Sweeney, who is spearheading owner and trainer opposition to SB 627. “That’s exactly the effect it would have on horse racing.”

The measure would have no direct impact on the total amount taken out of the betting dollar. However, it would virtually double what satellite betting outlets must pay to the state by bringing their fees up to the same level as live racing facilities. The additional money would have to come out of purses and other operating costs.

Right now, the intertrack operating tax is 2 1/2 cents out of every dollar bet to win, place or show, and four cents out of every dollar bet on “exotics” such as exactas, daily doubles and the pick six.

“If that bill were to go through, it would literally shut down the entire satellite network,” said Cliff Goodrich, president of the Los Angeles Turf Club, which operates Santa Anita Park.

The satellites and live tracks exist on a delicate balance. For example, when Hollywood Park plays host to thoroughbred racing, it loses considerable business to crosstown Santa Anita and Los Alamitos, acting as off-track sites. When Santa Anita goes live, Hollywood makes up its earlier losses by acting as a satellite.

“With the proposed increase, we simply could not afford to send our signals to the satellites,” Goodrich said.

The various factions of the racing industry are united in their opposition to SB 627. Track operators, horsemen and their lobbyists convened in an emergency meeting late last week in Sacramento to plead their case with Sen. Ken Maddy, minority leader of the state senate and a racehorse owner, and Assemblyman Richard Floyd, who has taken a number of pro-racing positions in the past.

“What (the legislature) did was start going down a lot of lists, looking for additional revenue,” said Jerry McFetridge, Floyd’s legislative assistant. “They’ve got a big gun to their heads, and people just aren’t listening to the same old arguments.”

Floyd is among a key group of Democrats in the assembly who would be needed to team with the Republican minority to defeat SB 627, should it come to a floor vote. As a tax measure, it would require a two-thirds majority of 54 votes to pass.

“I think our chances are reasonable that we will beat this back,” Goodrich said. “It would literally devastate the entire industry. But people say, ‘Look, everybody’s crying the way you are.’ All they’re looking for is dollars, and they’re not too sympathetic as to where it comes from.”

Although racing interests have vowed to fight the tax increase, they are preparing a possible fallback position in the form of a north-south satellite betting bill. Such a measure would legalize the transmission of full racing programs between Northern and Southern California racetracks and generate an estimated $15 million in tax revenue.

“There are some who look at SB 627 as a warning,” said Don Robbins, Hollywood Park president. “As if the legislature was saying, ‘This is what you’ll get if you don’t come up with something to increase revenue that you can live with.’ ”

The north-south simulcast bill is only in draft form, however, and it is far from having full support within the racing industry. “Certainly, we wouldn’t want to promote an alternative when we don’t even know the consequences,” Sweeney said. “Still, there is some thinking that by doing something now instead of later we could make SB 627 go away.”

Revenue from horse racing has come under increasing scrutiny this year, especially after the state budget office reported a significant decrease in racing’s contribution to the general fund.

Because the state’s share of the takeout is less at satellite betting sites than live racing sites, general fund revenue from racing has been decreasing since the beginning of crosstown simulcasting in the Los Angeles area last year.

Overall handle has not significantly decreased--people are simply betting in different places. And the bulk of the off-track tax money goes into a special fund earmarked for California fair grounds improvements.

“To some extent the legislature does not understand the dynamics of the industry or the shift from on-track to off-track betting,” McFetridge said.

Added Goodrich: “Racing is already bleeding. The industry pays more than its fair share already. Between Oak Tree and Santa Anita, we give about $45 million a year in direct license fees.”

Sweeney pointed out that purses were down at the 1992 Santa Anita meeting and are off by $500,000 at the current Golden Gate Fields meet.

“We are completely opposed to this idea that the legislature can just ask for more money whenever it needs more money,” Sweeney said. concluded. “As far as I’m concerned, racing would be contributing to the further mismanagement of the state government.”