BILL NUMBER: SB 814 CHAPTERED 10/11/03 CHAPTER 799 FILED WITH SECRETARY OF STATE OCTOBER 11, 2003 APPROVED BY GOVERNOR OCTOBER 10, 2003 PASSED THE SENATE SEPTEMBER 11, 2003 PASSED THE ASSEMBLY SEPTEMBER 10, 2003 AMENDED IN ASSEMBLY SEPTEMBER 9, 2003 AMENDED IN ASSEMBLY AUGUST 18, 2003 AMENDED IN ASSEMBLY JULY 14, 2003 AMENDED IN ASSEMBLY JULY 2, 2003 AMENDED IN SENATE MAY 1, 2003 INTRODUCED BY Senator Vincent FEBRUARY 21, 2003 An act to amend Sections 19801, 19876, 19951, 19962, and 19963 of the Business and Professions Code, relating to gambling. LEGISLATIVE COUNSEL'S DIGEST SB 814, Vincent. Gambling. (1) Existing law regulates legal gaming in California and provides that until January 1, 2007, a governing body and the electors of a county, city, or city and county, which have not authorized legal gaming prior to January 1, 1996, may not authorize or expand legal gaming. Existing law also prohibits, until January 1, 2007, the California Gambling Control Commission from issuing a gambling license for a gambling establishment that was not licensed to operate in December 31, 1999, except as specified. This bill would extend the operative dates of those provisions until January 1, 2010, as specified. The bill would also make nonsubstantive changes to a related provision. (2) Existing law provides that the California Gambling Control Commission may grant or deny licenses to corporations, and requires that a license be renewed annually, as specified. Existing law requires the payment of a specified fee for the renewal of a license. This bill would permit the commission to renew a license for a longer period, not to exceed 2 years. The bill would also provide that a license that is renewed for a period longer than one year shall be reviewed by the commission, and may be amended to be for one year, upon the commission's order. The bill would also require that a licensee pay a specified fee in any year in which the licensee is not required to pay a fee for the renewal of the license. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 19801 of the Business and Professions Code is amended to read: 19801. The Legislature hereby finds and declares all of the following: (a) The longstanding public policy of this state disfavors the business of gambling. State law prohibits commercially operated lotteries, banked or percentage games, and gambling machines, and strictly regulates parimutuel wagering on horse racing. To the extent that state law categorically prohibits certain forms of gambling and prohibits gambling devices, nothing herein shall be construed, in any manner, to reflect a legislative intent to relax those prohibitions. (b) Gambling can become addictive and is not an activity to be promoted or legitimized as entertainment for children and families. (c) (1) Unregulated gambling enterprises are inimical to the public health, safety, welfare, and good order. Accordingly, no person in this state has a right to operate a gambling enterprise except as may be expressly permitted by the laws of this state and by the ordinances of local governmental bodies. (2) The State of California has permitted the operation of gambling establishments for more than one hundred years. Gambling establishments were first regulated by the State of California pursuant to legislation which was enacted in 1984. Gambling establishments currently employ more than twenty thousand people in the State of California, and contribute more than one hundred million dollars in taxes and fees to California's government. Gambling establishments are lawful enterprises in the State of California, and are entitled to full protection of the laws of this state. The industry is currently in significant decline, with more than half the gambling establishments in this state closing within the past four years. (d) It is the policy of this state that gambling activities that are not expressly prohibited or regulated by state law may be prohibited or regulated by local government. Moreover, it is the policy of this state that no new gambling establishment may be opened in a city, county, or city and county in which a gambling establishment was not operating on and before January 1, 1984, except upon the affirmative vote of the electors of that city, county, or city and county. (e) It is not the purpose of this chapter to expand opportunities for gambling, or to create any right to operate a gambling enterprise in this state or to have a financial interest in any gambling enterprise. Rather, it is the purpose of this chapter to regulate businesses that offer otherwise lawful forms of gambling games. (f) Public trust that permissible gambling will not endanger public health, safety, or welfare requires that comprehensive measures be enacted to ensure that gambling is free from criminal and corruptive elements, that it is conducted honestly and competitively, and that it is conducted in suitable locations. (g) Public trust and confidence can only be maintained by strict and comprehensive regulation of all persons, locations, practices, associations, and activities related to the operation of lawful gambling establishments and the manufacture and distribution of permissible gambling equipment. (h) All gambling operations, all persons having a significant involvement in gambling operations, all establishments where gambling is conducted, and all manufacturers, sellers, and distributors of gambling equipment must be licensed and regulated to protect the public health, safety, and general welfare of the residents of this state as an exercise of the police powers of the state. (i) To ensure that gambling is conducted honestly, competitively, and free of criminal and corruptive elements, all licensed gambling establishments in this state must remain open to the general public and the access of the general public to licensed gambling activities must not be restricted in any manner, except as provided by the Legislature. However, subject to state and federal prohibitions against discrimination, nothing herein shall be construed to preclude exclusion of unsuitable persons from licensed gambling establishments in the exercise of reasonable business judgment. (j) In order to effectuate state policy as declared herein, it is necessary that gambling establishments, activities, and equipment be licensed, that persons participating in those activities be licensed or registered, that certain transactions, events, and processes involving gambling establishments and owners of gambling establishments be subject to prior approval or permission, that unsuitable persons not be permitted to associate with gambling activities or gambling establishments, and that gambling activities take place only in suitable locations. Any license or permit issued, or other approval granted pursuant to this chapter, is declared to be a revocable privilege, and no holder acquires any vested right therein or thereunder. (k) The location of lawful gambling premises, the hours of operation of those premises, the number of tables permitted in those premises, and wagering limits in permissible games conducted in those premises are proper subjects for regulation by local governmental bodies. However, consideration of those same subjects by a state regulatory agency, as specified in this chapter, is warranted when local governmental regulation respecting those subjects is inadequate or the regulation fails to safeguard the legitimate interests of residents in other governmental jurisdictions. (l) The exclusion or ejection of certain persons from gambling establishments is necessary to effectuate the policies of this chapter and to maintain effectively the strict regulation of licensed gambling. (m) Records and reports of cash and credit transactions involving gambling establishments may have a high degree of usefulness in criminal and regulatory investigations and, therefore, licensed gambling operators may be required to keep records and make reports concerning significant cash and credit transactions. SEC. 2. Section 19876 of the Business and Professions Code is amended to read: 19876. (a) Subject to the power of the commission to deny, revoke, suspend, condition, or limit any license, as provided in this chapter, a license shall be renewed annually, or for a longer period that the commission may set, not to exceed two years, by the commission from the date of issuance, upon proper application for renewal and payment of state gambling fees as required by statute or regulation. Any license that is renewed for a period of longer than one year shall be reviewed by the commission, and may be amended to be for one year, upon order of the commission. All licensees shall pay any state gambling fee set forth in Section 19951, regardless of the renewal term. (b) An application for renewal of a gambling license shall be filed by the owner licensee with the commission no later than 120 calendar days prior to the expiration of the current license. The commission shall act upon any application for renewal prior to the date of expiration of the current license. Upon renewal of any owner license, the commission shall issue an appropriate renewal certificate or validating device or sticker. (c) Unless the commission determines otherwise, renewal of an owner's gambling license shall be deemed to effectuate the renewal of every other gambling license endorsed thereon. (d) In addition to the penalties provided by law, any owner licensee who deals, operates, carries on, conducts, maintains, or exposes for play any gambling game after the expiration date of the gambling license is liable to the state for all license fees and penalties that would have been due upon renewal. (e) If an owner licensee fails to renew the gambling license as provided in this chapter, the commission may order the immediate closure of the premises and a cessation of all gambling activity therein until the license is renewed. SEC. 3. Section 19951 of the Business and Professions Code is amended to read: 19951. (a) Every application for a license or approval shall be accompanied by a nonrefundable fee of five hundred dollars ($500). (b) (1) Any fee paid pursuant to this section, including all licenses issued to key employees and other persons whose names are endorsed upon the license, shall be assessed against the gambling license issued to the owner of the gambling enterprise. (2) (A) The fee for initial issuance of a state gambling license shall be an amount determined by the division pursuant to the schedule in subdivision (c). (B) The fee for the renewal of a state gambling license shall be determined pursuant to the schedule in subdivision (c) or the schedule in subdivision (d), whichever amount is greater. (C) In any year in which a licensee does not pay a fee pursuant to subparagraph (A) or (B), a licensee shall pay a state gambling fee which shall be determined pursuant to the schedule in subdivision (c) or the schedule in subdivision (d), whichever amount is greater. (c) The schedule based on the number of tables is as follows: (1) For a license authorizing one to five tables, inclusive, at which games are played, two hundred fifty dollars ($250) for each table. (2) For a license authorizing six to eight tables, inclusive, at which games are played, four hundred fifty dollars ($450) for each table. (3) For a license authorizing 9 to 14 tables, inclusive, at which games are played, one thousand fifty dollars ($1,050) for each table. (4) For a license authorizing 15 to 25 tables, inclusive, at which games are played, two thousand one hundred fifty dollars ($2,150) for each table. (5) For a license authorizing 26 to 70 tables, inclusive, at which games are played, three thousand two hundred dollars ($3,200) for each table. (6) For a license authorizing 71 or more tables at which games are played, three thousand seven hundred dollars ($3,700) for each table. (d) Without regard to the number of tables at which games may be played pursuant to a gambling license, if, at the time of any license renewal, or when a licensee is required to pay the fee described in subparagraph (C) of paragraph (2) of subdivision (b) it is determined that the gross revenues of an owner licensee during the licensee's previous fiscal year fell within the following ranges, the annual fee shall be as follows: (1) For a gross revenue of two hundred thousand dollars ($200,000) to four hundred ninety-nine thousand nine hundred ninety-nine dollars ($499,999), inclusive, the amount specified by the division pursuant to paragraph (2) of subdivision (c). (2) For a gross revenue of five hundred thousand dollars ($500,000) to one million nine hundred ninety-nine thousand nine hundred ninety-nine dollars ($1,999,999), inclusive, the amount specified by the division pursuant to paragraph (3) of subdivision (c). (3) For a gross revenue of two million dollars ($2,000,000) to nine million nine hundred ninety-nine thousand nine hundred ninety-nine dollars ($9,999,999), inclusive, the amount specified by the division pursuant to paragraph (4) of subdivision (c). (4) For a gross revenue of ten million dollars ($10,000,000) or more, the amount specified by the division pursuant to paragraph (5) of subdivision (c). (e) The commission may provide for payment of the annual gambling license fee on an annual or installment basis. (f) For the purposes of this section, each table at which a game is played constitutes a single game table. SEC. 4. Section 19962 of the Business and Professions Code is amended to read: 19962. (a) On and after the effective date of this chapter, neither the governing body nor the electors of a county, city, or city and county that has not authorized legal gaming within its boundaries prior to January 1, 1996, shall authorize legal gaming. (b) An ordinance in effect on January 1, 1996, that authorizes legal gaming within a city, county, or city and county may not be amended to expand gaming in that jurisdiction beyond that permitted on January 1, 1996. (c) This section shall remain operative only until January 1, 2010, and as of that date is repealed. SEC. 5. Section 19963 of the Business and Professions Code is amended to read: 19963. (a) In addition to any other limitations on the expansion of gambling imposed by Section 19962 or any provision of this chapter, the commission may not issue a gambling license for a gambling establishment that was not licensed to operate on December 31, 1999, unless an application to operate that establishment was on file with the division prior to September 1, 2000. (b) This section shall remain in effect only until January 1, 2010, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2010, deletes or extends that date.