BILL NUMBER: AB 1036 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 27, 2009
AMENDED IN ASSEMBLY APRIL 20, 2009
INTRODUCED BY Assembly Member Niello
FEBRUARY 27, 2009
An act to amend Section Sectio
ns 326.3 and 326.4 of the Penal Code, relating to bingo.
LEGISLATIVE COUNSEL'S DIGEST
AB 1036, as amended, Niello. Bingo: electronic devices:
mitigation payments. Bingo.
The California Constitution allows the Legislature, by statute, to
authorize cities and counties to provide for bingo games for
charitable purposes. Existing statutory law permits cities and
counties to allow bingo games to be conducted by specified
organizations for charitable purposes, and also permits cities and
counties to allow remote caller bingo games, as defined.
Existing Existing law allows a maximum of 10
unaffiliated organizations to enter into an agreement to cosponsor a
remote caller bingo game if the game does not have more than 10
locations.
This bill would, instead, allow a maximum of 100 unaffiliated
organizations to enter into an agreement to cosponsor a remote caller
bingo game if the game does not have more than 100 locations.
Existing law prohibits electronics or video displays
from being used in connection with the game of bingo, except as
specified.
Existing law establishes the Charity Bingo Mitigation Fund,
administered by the California Gambling Control Commission, for the
purpose of making payments to specified nonprofit organizations that,
as of July 1, 2008, used electronic devices other than card-minding
devices to conduct bingo games. Existing law requires an organization
applying for mitigation payments to provide proof that its board of
directors has adopted a resolution and its chief executive officer
has signed a statement executed under penalty of perjury stating
that, as of January 1, 2009, the organization has ceased using
electronic devices, other than card-minding devices, as a fundraising
tool. Existing law allows each eligible organization to apply to the
commission no later than January 31, 2009, for the mitigation
payments.
This bill would, with respect to an organization applying for
mitigation payments from the Charity Bingo Mitigation Fund, extend
the date by which that organization must have ceased using electronic
devices to October 1, 2010 2009 . The
bill would also extend the deadline for applying to the commission
for mitigation payments to October 31, 2010
2009 .
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 326.3 of the Penal
Code is amended to read:
326.3. (a) The Legislature finds and declares all of the
following:
(1) Nonprofit organizations provide important and essential
educational, philanthropic, and social services to the people of the
State of California.
(2) One of the great strengths of California is a vibrant
nonprofit sector.
(3) Nonprofit and philanthropic organizations touch the lives of
every Californian through service and employment.
(4) Many of these services would not be available if nonprofit
organizations did not provide them.
(5) There is a need to provide methods of fundraising to nonprofit
organizations to enable them to provide these essential services.
(6) Historically, many nonprofit organizations have used
charitable bingo as one of their key fundraising strategies to
promote the mission of the charity.
(7) Legislation is needed to provide greater revenues for
nonprofit organizations to enable them to fulfill their charitable
purposes, and especially to meet their increasing social service
obligations.
(8) Legislation is also needed to clarify that existing law
requires that all charitable bingo must be played using a tangible
card and that the only permissible electronic devices to be used by
charitable bingo players are card-minding devices.
(b) Neither the prohibition on gambling in this chapter nor in
Chapter 10 (commencing with Section 330) applies to any remote caller
bingo game that is played or conducted in a city, county, or city
and county pursuant to an ordinance enacted under Section 19 of
Article IV of the California Constitution, if the ordinance allows a
remote caller bingo game to be played or conducted only in accordance
with the requirements of this section, including the following
requirements:
(1) The game may be conducted only by the following organizations:
(A) An organization that is exempted from the payment of the bank
and corporation tax by Section 23701a, 23701b, 23701d, 23701e,
23701f, 23701g, 23701k, 23701w, or 23701 of the Revenue and Taxation
Code.
(B) A mobilehome park association.
(C) A senior citizens organization.
(D) Charitable organizations affiliated with a school district.
(2) The organization conducting the game shall have been
incorporated or in existence for three years or more.
(3) The organization conducting the game shall be licensed
pursuant to subdivision (l) of Section 326.5.
(4) The receipts of the game shall be used only for charitable
purposes. The organization conducting the game shall determine the
disbursement of the net receipts of the game.
(5) The operation of bingo may not be the primary purpose for
which the organization is organized.
(c) It is a misdemeanor for any person to receive or pay a profit,
wage, or salary from any remote caller bingo game, provided that
administrative, managerial, technical, financial, and security
personnel employed by the organization conducting the bingo game may
be paid reasonable fees for services rendered from the revenues of
bingo games, as provided in subdivision (l), except that fees paid
under those agreements shall not be determined as a percentage of
receipts or other revenues from, or be dependent on the outcome of,
the game.
(d) A violation of subdivision (c) shall be punishable by a fine
not to exceed ten thousand dollars ($10,000), which fine shall be
deposited in the general fund of the city, county, or city and county
that enacted the ordinance authorizing the remote caller bingo game.
A violation of any provision of this section, other than subdivision
(c), is a misdemeanor.
(e) The city, county, or city and county that enacted the
ordinance authorizing the remote caller bingo game, or the Attorney
General, may bring an action to enjoin a violation of this section.
(f) No minors shall be allowed to participate in any remote caller
bingo game.
(g) A remote caller bingo game shall not include any site that is
not located within this state.
(h) An organization authorized to conduct a remote caller bingo
game pursuant to subdivision (b) shall conduct the game only on
property that is owned or leased by the organization, or the use of
which is donated to the organization, provided that the operation of
bingo games may not be a primary purpose for which the organization
is organized. Nothing in this subdivision shall be construed to
require that the property that is owned or leased by, or the use of
which is donated to, the organization be used or leased exclusively
by, or donated exclusively to, that organization.
(i) (1) All remote caller bingo games shall be open to the public,
not just to the members of the authorized organization.
(2) No more than 750 players may participate in a remote caller
bingo game in a single location.
(3) If the Governor of California or the President of the United
States declares a state of emergency in response to a natural
disaster or other public catastrophe occurring in California, an
organization authorized to conduct remote caller bingo games may,
while that declaration is in effect, conduct those games pursuant to
this section with more than 750 participants in a single venue if the
net proceeds of the games, after deduction of prizes and overhead
expenses, are donated to or expended exclusively for the relief of
the victims of the disaster or catastrophe, and the organization
gives the California Gambling Control Commission at least 10 days'
written notice of the intent to conduct those games.
(4) An organization authorized to conduct remote caller bingo
games shall provide the commission with at least 30 days' advance
written notice of its intent to conduct those games. That notice
shall include all of the following:
(A) The legal name of the organization and the address of record
of the agent upon whom legal notice may be served.
(B) The locations of the caller and remote players, whether the
property is owned by the organization or donated, and if donated, by
whom.
(C) The name of the licensed caller and site manager.
(D) The names of administrative, managerial, technical, financial,
and security personnel employed.
(E) The name of the vendor and any person or entity maintaining
the equipment used to operate and transmit the game.
(F) The name of the person designated as having a fiduciary
responsibility for the game pursuant to paragraph (2) of subdivision
(j).
(G) The license numbers of all persons specified in subparagraphs
(A) to (F), inclusive, who are required to be licensed.
(H) A copy of the local ordinance for the counties in which the
game will be played. The commission shall post the ordinance on its
Internet Web site.
(j) (1) A remote caller bingo game shall be operated and staffed
only by members of the authorized organization that organized it.
Those members shall not receive a profit, wage, or salary from any
bingo game. Only the organization authorized to conduct a remote
caller bingo game shall operate that game, or participate in the
promotion, supervision, or any other phase of a remote caller bingo
game. Subject to the provisions of subdivision (l), this subdivision
shall not preclude the employment of administrative, managerial,
technical, financial, or security personnel who are not members of
the authorized organization at a location participating in the remote
caller bingo game by the organization conducting the game.
Notwithstanding any other provisions of law, exclusive or other
agreements between the authorized organization and other entities or
persons to provide services in the administration, management, or
conduct of the game shall not be considered a violation of the
prohibition against holding a legally cognizable financial interest
in the conduct of the remote caller bingo game by persons or entities
other than the charitable organization, or other entity authorized
to conduct the remote caller bingo games, provided that those persons
or entities obtain the gambling licenses, the key employee licenses,
or the work permits required by, and otherwise comply with, Chapter
5 (commencing with Section 19800) of Division 8 of the Business and
Professions Code. Fees to be paid under any such agreements shall be
reasonable and shall not be determined as a percentage of receipts or
other revenues from, or be dependent on the outcome of, the game.
(2) An organization that conducts a remote caller bingo game shall
designate a person as having fiduciary responsibility for the game.
(k) No individual, corporation, partnership, or other legal
entity, except the organization authorized to conduct or participate
in a remote caller bingo game, shall hold a legally cognizable
financial interest in the conduct of such a game.
(l) An organization authorized to conduct a remote caller bingo
game pursuant to this section shall not have overhead costs exceeding
20 percent of gross sales, except that the limitations of this
section shall not apply to one-time, nonrecurring capital
acquisitions. For purposes of this subdivision, "overhead costs"
includes, but is not limited to, amounts paid for rent and equipment
leasing and the reasonable fees authorized to be paid to
administrative, managerial, technical, financial, and security
personnel employed by the organization pursuant to subdivision (c).
(m) No person shall be allowed to participate in a remote caller
bingo game unless the person is physically present at the time and
place where the remote caller bingo game is being conducted. A person
shall be deemed to be physically present at the place where the
remote caller bingo game is being conducted if he or she is present
at any of the locations participating in the remote caller bingo game
in accordance with this section.
(n) (1) An organization shall not cosponsor a remote caller bingo
game with one or more other organizations unless one of the following
is true:
(A) All of the cosponsors are affiliated under the master charter
or articles and bylaws of a single organization.
(B) All of the cosponsors are affiliated through an organization
described in paragraph (1) of subdivision (b), and have the same
Internal Revenue Service activity code.
(2) Notwithstanding paragraph (1), a maximum of 10
100 unaffiliated organizations described in
paragraph (1) of subdivision (b) may enter into an agreement to
cosponsor a remote caller game, provided the game shall have not more
than 10 100 locations.
(3) An organization shall not conduct remote caller bingo more
than one day per week.
(4) Before sponsoring or operating any game authorized under
paragraph (1) or (2), each of the cosponsoring organizations shall
have entered into a written agreement, a copy of which shall be
provided to the commission, setting forth how the expenses and
proceeds of the game are to be allocated among the participating
organizations, the bank accounts into which all receipts are to be
deposited and from which all prizes are to be paid, and how game
records are to be maintained and subjected to annual audit.
(o) The value of prizes awarded during the conduct of any remote
caller bingo game shall not exceed 37 percent of the gross receipts
for that game. Every remote caller bingo game shall be played until a
winner is declared. Progressive prizes are prohibited. The declared
winner of a remote caller bingo game shall provide his or her
identifying information and a mailing address to the onsite manager
of the remote caller bingo game. Prizes shall be paid only by check;
no cash prizes shall be paid. The organization conducting the remote
caller bingo game may issue a check to the winner at the time of the
game, or may send a check to the declared winner by United States
Postal Service certified mail, return receipt requested. All prize
money exceeding state and federal exemption limits on prize money
shall be subject to income tax reporting and withholding requirements
under applicable state and federal laws and regulations and those
reports and withholding shall be forwarded, within 10 business days,
to the appropriate state or federal agency on behalf of the winner. A
report shall accompany the amount withheld identifying the person on
whose behalf the money is being sent. Any game interrupted by a
transmission failure, electrical outage, or act of God shall be
considered void in the location that was affected. A refund for a
canceled game or games shall be provided to the purchasers.
(p) (1) The California Gambling Control Commission shall regulate
remote caller bingo, including, but not limited to, licensure and
operation. The commission shall establish reasonable criteria
regulating, and shall require the licensure and registration of, the
following:
(A) Any person who conducts remote caller bingo games pursuant to
this section, including, but not limited to, owners, employees,
persons having fiduciary responsibility for remote caller bingo
games, site managers, and bingo callers.
(B) Any person who directly or indirectly manufactures,
distributes, supplies, vends, leases, or otherwise provide supplies,
devices, services, or other equipment designed for use in the playing
of bingo games by any nonprofit organization registered to conduct
bingo games.
(C) Beginning January 31, 2009, or a later date as may be
established by the commission, all persons described in subparagraph
(A) or (B) may submit to the commission a letter of intent to submit
an application for registration or licensure. The letter shall
clearly identify the principal applicant, all categories under which
the application will be filed, and the names of all those particular
individuals who are applying. Each charitable organization shall
provide an estimate of the frequency with which it plans to conduct
remote caller bingo operations, including the number of locations.
The letter of intent may be withdrawn or updated at any time.
(2) (A) The Department of Justice shall conduct background
investigations and conduct field enforcement as it relates to remote
caller bingo consistent with the Gambling Control Act (Chapter 5
(commencing with Section 19800) of Division 8 of the Business and
Professions Code) and as specified in regulations promulgated by the
commission.
(B) Fees to cover background investigation costs shall be paid and
accounted for in accordance with Section 19867 of the Business and
Professions Code.
(3) (A) Every application for a license or approval shall be
accompanied by a nonrefundable fee, the amount of which shall be
adopted by the commission by regulation.
(B) Fees and revenue collected pursuant to this paragraph shall be
deposited in the California Bingo Fund, which is hereby created in
the State Treasury. The funds deposited in the California Bingo Fund
shall be available, upon appropriation by the Legislature, for
expenditure by the commission and the department exclusively for the
support of the commission and department in carrying out their duties
and responsibilities under this section and Section 326.5.
(C) A loan is hereby authorized from the Gambling Control Fund to
the California Bingo Fund on or after January 1, 2009, in an amount
of up to five hundred thousand dollars ($500,000) to fund operating,
personnel, and other startup costs incurred by the commission
relating to this act. Funds from the California Bingo Fund shall be
available to the commission upon appropriation by the Legislature in
the annual Budget Act. The loan shall be subject to all of the
following conditions:
(i) The loan shall be repaid to the Gambling Control Fund as soon
as there is sufficient money in the California Bingo Fund to repay
the amount loaned, but no later than five years after the date of the
loan.
(ii) Interest on the loan shall be paid from the California Bingo
Fund at the rate accruing to moneys in the Pooled Money Investment
Account.
(iii) The terms and conditions of the loan are approved, prior to
the transfer of funds, by the Department of Finance pursuant to
appropriate fiscal standards.
The commission may assess and collect reasonable fees and deposits
as necessary to defray the costs of regulation and oversight.
(q) The administrative, managerial, technical, financial, and
security personnel employed by an organization that conducts remote
caller bingo games shall apply for, obtain, and thereafter maintain
valid work permits, as defined in Section 19805 of the Business and
Professions Code.
(r) An organization that conducts remote caller bingo games shall
retain records in connection with the remote caller bingo game for
five years.
(s) (1) All equipment used for remote caller bingo shall be
approved in advance by the California Gambling Control Commission
pursuant to regulations adopted pursuant to subdivision (r) of
Section 19841 of the Business and Professions Code.
(2) The California Gambling Control Commission shall monitor
operation of the transmission and other equipment used for remote
caller bingo, and monitor the game.
(t) (1) As used in this section, "remote caller bingo game" means
a game of bingo, as defined in subdivision (o) of Section 326.5, in
which the numbers or symbols on randomly drawn plastic balls are
announced by a natural person present at the site at which the live
game is conducted, and the organization conducting the bingo game
uses audio and video technology to link any of its in-state
facilities for the purpose of transmitting the remote calling of a
live bingo game from a single location to multiple locations owned,
leased, or rented by that organization, or as described in
subdivision (n). The audio or video technology used to link the
facilities may include cable, Internet, satellite, broadband, or
telephone technology, or any other means of electronic transmission
that ensures the secure, accurate, and simultaneous transmission of
the announcement of numbers or symbols in the game from the location
at which the game is called by a natural person to the remote
location or locations at which players may participate in the game.
The drawing of each ball bearing a number or symbol by the natural
person calling the game shall be visible to all players as the ball
is drawn, including through a simultaneous live video feed at remote
locations at which players may participate in the game.
(2) The caller in the live game must be licensed by the California
Gambling Control Commission. A game may be called by a nonlicensed
caller if the drawing of balls and calling of numbers or symbols by
that person is observed and personally supervised by a licensed
caller.
(3) Remote caller bingo games shall be played using traditional
paper or other tangible bingo cards and daubers, and shall not be
played by using electronic devices, except card-minding devices, as
described in paragraph (1) of subdivision (p) of Section 326.5.
(4) Prior to conducting a remote caller bingo game, the
organization that conducts remote caller bingo shall submit to the
commission the controls, methodology, and standards of game play,
which shall include, but not be limited to, the equipment used to
select bingo numbers and create or originate cards, control or
maintenance, distribution to participating locations, and
distribution to players. Those controls, methodologies, and standards
shall be subject to prior approval by the commission, provided that
the controls shall be deemed approved by the commission after 90 days
from the date of submission unless disapproved.
(u) A location shall not be eligible to participate in a remote
caller bingo game if bingo games are conducted at that location in
violation of Section 326.5 or any regulation adopted by the
commission pursuant to Section 19841 of the Business and Professions
Code, including, but not limited to, a location at which unlawful
electronic devices are used.
(v) (1) The vendor of the equipment used in a remote caller bingo
game shall have its books and records audited at least annually by an
independent California certified public accountant and shall submit
the results of that audit to the California Gambling Control
Commission within 120 days after the close of the vendor's fiscal
year. In addition, the California Gambling Control Commission shall
audit the books and records of the vendor at any time.
(2) An organization that conducts remote caller bingo games shall
provide copies of the records pertaining to those games to the
California Gambling Control Commission within 30 days after the end
of each calendar quarter. In addition, those records shall be audited
by an independent California certified public accountant at least
annually and copies of the audit reports shall be provided to the
California Gambling Control Commission within 120 days after the
close of the organization's fiscal year.
(3) The costs of the licensing and audits required by this section
shall be borne by the person or entity required to be licensed or
audited. The audit shall enumerate the receipts for remote caller
bingo, the prizes disbursed, the overhead costs, and the amount
retained by the nonprofit organization. The commission may audit the
books and records of an organization that conducts remote caller
bingo games at any time.
(4) If, during an audit, the commission identifies practices in
violation of this section, the license for the audited entity may be
suspended pending review and hearing before the commission for a
final determination.
(5) No audit required to be conducted by the commission shall
commence before January 1, 2010.
(w) (1) The provisions of this section are severable. If any
provision of this section or its application is held invalid, that
invalidity shall not affect other provisions or applications that can
be given effect without the invalid provision or application.
(2) Notwithstanding paragraph (1), if paragraph (1) or (3) of
subdivision (t), or the application of either of those provisions, is
held invalid, this entire section shall be invalid.
(x) The commission shall submit a report to the Legislature, on or
before January 1, 2012, on the fundraising effectiveness and
regulation of remote caller bingo, and other matters that are
relevant to the public interest regarding remote caller bingo.
(y) The following definitions apply for purposes of this section:
(1) "Commission" means the California Gambling Control Commission.
(2) "Person" includes a natural person, corporation, limited
liability company, partnership, trust, joint venture, association, or
any other business organization.
SECTION 1. SEC. 2. Section 326.4 of
the Penal Code is amended to read:
326.4. (a) Consistent with the Legislature's finding that
card-minding devices, as described in subdivision (p) of Section
326.5, are the only permissible electronic devices to be used by
charity bingo players, and in an effort to ease the transition to
remote caller bingo on the part of those nonprofit organizations
that, as of July 1, 2008, used electronic devices other than
card-minding devices to conduct games in reliance on an ordinance of
a city, county, or city and county that, as of July 1, 2008,
expressly recognized the operation of electronic devices other than
card-minding devices by organizations purportedly authorized to
conduct bingo in the city, county or city and county, there is hereby
created the Charity Bingo Mitigation Fund.
(b) The Charity Bingo Mitigation Fund shall be administered by the
California Gambling Control Commission.
(c) Mitigation payments to be made by the Charity Bingo Mitigation
Fund shall not exceed five million dollars ($5,000,000) in the
aggregate.
(d) (1) To allow the Charity Bingo Mitigation Fund to become
immediately operable, five million dollars ($5,000,000) shall be
loaned from the accrued interest in the Indian Gaming Special
Distribution Fund to the Charity Bingo Mitigation Fund on or after
January 1, 2009, to make mitigation payments to eligible nonprofit
organizations. Five million dollars ($5,000,000) of this loan amount
is hereby appropriated to the Gambling Control Commission for the
purposes of providing mitigation payments to certain charitable
organizations, as described in subdivision (e). Pursuant to Section
16304 of the Government Code, after three years the unexpended
balance shall revert back to the Charity Bingo Mitigation Fund.
(2) To reimburse the Special Distribution Fund, those nonprofit
organizations that conduct a remote caller bingo game pursuant to
Section 326.3 shall pay to the Gambling Control Commission an amount
equal to 5 percent of the gross revenues of each remote caller bingo
game played until the time that the full advanced amount plus
interest on the loan at the rate accruing to moneys in the Pooled
Money Investment Account is reimbursed.
(e) (1) An organization meeting the requirements in subdivision
(a) shall be eligible to receive mitigation payments from the Charity
Bingo Mitigation Fund only if the city, county, or city and county
in which the organization is located maintained official records of
the net revenues generated for the fiscal year ending June 30, 2008,
by the organization from the use of electronic devices or the
organization maintained audited financial records for the fiscal year
ending June 30, 2008, which show the net revenues generated from the
use of electronic devices.
(2) In addition, an organization applying for mitigation payments
shall provide proof that its board of directors has adopted a
resolution and its chief executive officer has signed a statement
executed under penalty of perjury stating that, as of October 1,
2009, the organization has ceased using electronic devices other than
card-minding devices, as described in subdivision (p) of Section
326.5, as a fundraising tool.
(3) Each eligible organization may apply to the California
Gambling Control Commission no later than October 31, 2009, for the
mitigation payments in the amount equal to net revenues from the
fiscal year ending June 30, 2008, by filing an application, including
therewith documents and other proof of eligibility, including any
and all financial records documenting the organization's net revenues
for the fiscal year ending June 30, 2008, as the commission may
require. The commission is authorized to access and examine the
financial records of charities requesting funding in order to confirm
the legitimacy of the request for funding. In the event that the
total of those requests exceeds five million dollars ($5,000,000),
payments to all eligible applicants shall be reduced in proportion to
each requesting organization's reported or audited net revenues from
the operation of electronic devices.
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