BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 200|
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THIRD READING
Bill No: SB 200
Author: Correa (D)
Amended: 4/16/09
Vote: 21
SENATE GOVERNMENTAL ORG. COMMITTEE : 13-0, 4/14/09
AYES: Wright, Harman, Benoit, Calderon, Denham, Florez,
Negrete McLeod, Oropeza, Padilla, Romero, Wiggins,
Wyland, Yee
SUBJECT : Raffles: Internet advertisement
SOURCE : Ocean Institute
DIGEST : This bill authorizes private, nonprofit, and
eligible organizations to advertise raffles over the
Internet.
ANALYSIS : Article IV, Section 19 (f) of the California
Constitution provides the Legislature may authorize
private, nonprofit, eligible organizations, as defined by
the Legislature, to conduct raffles as a funding mechanism
to provide support for their own or another private,
nonprofit, eligible organization's beneficial and
charitable works, provided that (1) at least 90 percent of
the gross receipts from the raffle go directly to
beneficial or charitable purposes in California, and (2)
any person who receives compensation in connection with the
operation of a raffle is an employee of the private
nonprofit organization that is conducting the raffle. The
CONTINUED
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Legislature, two-thirds of the membership of each house
concurring, may amend the percentage of gross receipts
required by this subdivision to be dedicated to beneficial
or charitable purposes by means of a statute that is signed
by the Governor.
Existing law allows private, nonprofit, eligible
organizations to conduct raffles as a funding mechanism to
support charitable purposes or financially supporting
another private, nonprofit, eligible organization that
performs beneficial or charitable purposes, if at least 90
percent of the gross receipts from the raffle go directly
to beneficial or charitable purposes in California.
Existing law defines "eligible organization," for the
purpose of specifying who can conduct a raffle, as a
private, nonprofit organization that has been licensed to
conduct business for one year in California and is exempt
from taxation pursuant to specified provisions of the
California Revenue and Taxation Code.
Existing law prohibits the advertisement, operation, or
conduct of a raffle on the Internet, as well as, the sale,
trading, or redemption of raffle tickets on the Internet.
Allows announcements of a raffle on the Web site of the
organization responsible for conducting the raffle.
Existing law prohibits an eligible organization from
conducting a raffle unless it registers annually with the
Department of Justice (DOJ).
Existing law requires eligible organizations to annually
file a report with DOJ that includes the following: (1)
the aggregate gross receipts from the operation of raffles,
(2) the aggregate direct costs incurred by the eligible
organization from the operation of raffles, and, the
charitable or beneficial purposes for which proceeds of the
raffles were used, or to identify the eligible recipient
organization to which proceeds were directed, and the
amount of those proceeds.
This bill:
1.Deletes the prohibition on advertising raffles over the
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Internet.
2.Deletes language authorizing an announcement of a raffle
on the Web site of the organization responsible for
conducting the raffle.
3.Provides that an eligible organization shall not be
deemed to operate or conduct a raffle over the Internet,
or sell raffle tickets over the Internet, if the eligible
organization advertises its raffle on the Internet or
permits others to do so.
4.Provides that information that may be conveyed on an
Internet Web site includes, but is not limited to:
A. Lists, descriptions, photographs, or videos of the
raffle(s) prizes.
B. List of the prize winners.
C. The rules of the raffle.
D. Frequently asked questions and their answers.
E. Raffle entry forms, including forms that may be
downloaded from the Internet Web site to be completed
manually by raffle ticket purchasers.
F. Raffle contact information, including the eligible
organization's name, address, telephone number,
facsimile number, or e-mail address.
5.Makes other technical and clarifying changes.
Comments
Last year, the Attorney General (AG) sent letters to
approximately 20 nonprofit organizations ordering them to
cease and desist from conducting any raffle activities
until they have revised the organization's Web site to stop
advertising raffles. The AG notified the organizations
that a violation of Penal Code section 320 may result in
the suspension or revocation of the organization's
registration. After lengthy discussions between the AG's
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office and the organization's involved, the AG transferred
these matters to the county district attorneys where the
matters now rest.
This bill is intended to clarify what the sponsor argues is
a gray area in the law, while at the same time, strengthen
the prohibition in the law regarding the sale of raffle
tickets over the Internet.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 4/16/09)
Ocean Institute (source)
American Legion
California Association of Nonprofits
City of Dana Point
City of San Juan Capistrano
Dana Point Chamber of Commerce
DesertArc
Huntington Beach Chamber of Commerce
Irvine Chamber of Commerce
Irvine Public Schools Foundation
Laguna Niguel Chamber of Commerce
Orange County Department of Education
Palos Verdes Art Center
Patricia Bates, Chair, Orange County Board of Supervisors
Ronald McDonald House Charities of San Diego, Inc.
Ronald McDonald House Charities Northern California
San Diego District Attorney
Yerba Buena Center for the Arts
ARGUMENTS IN SUPPORT : According to the sponsor, many
nonprofit organizations that hold charitable raffles were
unaware of the law that bans the use of the Internet to
advertise raffles. In this new age of technology and with
so may people getting all of their information
electronically, having the ability to advertise charitable
raffles online is a must. Patrons can get the information
on what they need to do to purchase raffle tickets. The
sponsor supports keeping the prohibition on selling raffle
tickets over the Internet. The sponsor believes
prohibiting tickets sales on the Internet will help prevent
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fraudulent activities that would reflect poorly on
legitimate charitable organizations.
Other supporters of the bill argue that many organizations
utilize raffles to raise funds for programs which help
children and families in need. Because many of the raffles
are for big ticket items, such as homes or cars, the
organizations need to be able to get the information out to
as large a pool of potential ticket buyers as possible.
Many of the raffles are advertised in newspapers,
magazines, or newsletters which tell the reader to go to a
Web site for more information on the raffle. So many
people depend on the Internet for information. Charitable
organizations need to be able to use this medium to
advertise and provide information as to how to buy raffle
tickets. Additionally, the proponents support the
tightening up of language prohibiting the actual sale of
raffle tickets online. Allowing online sales via credit
card could encourage fraudulent online raffles to pop up.
By prohibiting online sales, legitimate nonprofits are
protected from being tainted by scammers.
TSM:cm 4/17/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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