Davis OKs Expanded Horse-Race Wagering

Gov. Gray Davis signed legislation Monday permitting telephone and Internet wagering on horse races and giving workers who care for race horses union organizing rights and other protections.

Davis vetoed similar legislation last year, saying it would authorize an expansion of gambling. In signing this year’s version, Davis cited changes in federal law in December that he said meant his action would not amount to an expansion of gambling.

The governor also said the bill contains protections ensuring that minors won’t be able to place bets via phone or their computers.

State labor authorities began a series of raids on racetracks last year after a story in The Times documenting poor living and working conditions on the backstretch that in part resulted from exemptions in housing and labor laws obtained by the industry.

The state labor commissioner is continuing to target the industry for violations of minimum wage, overtime and record-keeping laws. At least four inspectors are working full time on the effort, officials said.

The horse racing industry long had been exempt from labor and living regulations that cover other California workers. The industry also was exempt from employee housing standards, so state housing officials had no power inspect or regulate the housing.

“The lives of 4,000 workers will be significantly improved,” said Assemblyman Herb Wesson (D-Culver City), a major proponent of the bill, AB 471.

Wesson carried the legislation last year, although he was not the listed author of this year’s bill. Rather, Speaker Bob Hertzberg (D-Sherman Oaks) was the lead author of the version that Davis signed into law. It goes into effect Jan. 1.

The horse racing industry, which has been in decline for years, contended that it could not extend protections to the backstretch workers unless it gained additional revenue. The prospect of Internet and telephone wagering is expected to provide the industry with a significant boost.

Wesson estimates that California’s horse racing industry will receive “anywhere from $20 million to $30 million” more annually.

“The important thing is that right now, today, I could call Pennsylvania, and place a bet at Santa Anita,” Wesson said. “All we’re doing is regulating something that is taking place already.”

Atty. Gen. Bill Lockyer echoed the industry’s charges that California residents can currently “place a wager on horse racing with a betting system operated out of state or offshore by using the Internet or telephone.”

“Thus, in our view,” Lockyer said in a letter, “the bill would not seem to contribute significantly to the expansion of such gambling, but rather would ensure that revenues derived from California residents engaged in that existing activity is used to support and fund the regulation of the horse racing industry in California.”

Gambling opponents, however, view the legislation as a significant expansion of gambling.

“For the first time ever, Californians will be able to gamble legally from their own homes,” said lobbyist Art Croney of the Committee on Moral Concerns. “This is going to be a big change in California. We’re going to see horse racing television channels in California that will carry the races live.”

Professor Nelson Rose, a gambling law expert from Whittier Law School, also said he believes the change “could be very big for the racing industry.” The industry has been searching for ways to attract a new generation of fans, and additional exposure on television and the Internet could help expand the audience.

“Racetracks are hurting,” Rose said. “They’re looking for anything that can help them.”

Unions, including Service Employees International, Hotel Employees, Restaurant Employees International and Teamsters, were major proponents of the legislation, seeing a opportunity to add to their ranks.

Horse racing interests, long a major source of campaign donations, have contributed roughly $189,000 to Davis since he took office, his campaign finance reports show.