BILL ANALYSIS Bill No: SB 1090 SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION Senator Roderick D. Wright, Chair 2009-2010 Regular Session Staff Analysis SB 1090 Author: Cedillo As Introduced: February 17, 2010 Hearing Date: March 23, 2010 Consultant: Chris Lindstrom SUBJECT Bingo: remote caller bingo. DESCRIPTION SB 1090 modifies the permissive model ordinance language contained in the Remote Caller Bingo Act of 2008 to allow an organization to file, along with its application to the local licensing official to operate a bingo game, "appropriate documentation" rather than "a certificate issued by the Franchise Tax Board" to demonstrate that the applicant is an eligible tax exempt organization authorized to operate a remote caller bingo game. EXISTING LAW Existing law provides that the Legislature, by statute, may authorize cities and counties to allow for the play of bingo games, but only for charitable purposes [California Constitution, Article IV, Section 19 (c)]. Existing law permits cities, counties, and cities and counties to allow remote caller bingo games to be conducted by specified tax exempt and nonprofit organizations for charitable purposes, subject to provisions of law which, if violated, constitute a crime. Existing law authorizes specified tax-exempt and nonprofit organizations that have been incorporated or in existence SB 1090 (Cedillo) continued Page 2 for three years or more and that are not organized for the primary purpose of operating bingo to conduct remote caller bingo games no more than one day per week. Existing law defines a "remote caller bingo game" as a game of bingo in which numbers or symbols on randomly drawn plastic balls are announced by a person present at the site at which the live game is conducted, and audio and video technology links in-state facilities for the purpose of transmitting the remote calling of a live bingo game from a single location to multiple locations. Existing law requires remote caller bingo games to be played using traditional paper or other tangible bingo cards and daubers, and shall not be played by using electronic devises, except card-minding devices. Existing law requires an authorized organization to provide the California Gambling Control Commission (CGCC) with at least 30 days advanced written notice of its intent to conduct remote caller bingo games, and submit specified information about the organizations, locations, vendors, and licensees involved in the operation of the games, as well as, a copy of the local ordinance for the counties in which the games will be played. Existing law contains "permissive model ordinance" language which local jurisdictions may adopt to authorize remote caller bingo. BACKGROUND Purpose of the bill . According to the author's office, "In 2008, the Legislature passed, and the Governor signed into law, SB 1369 which allows qualified non-profits to operate "remote caller" bingo games. "Once SB 1369 was chaptered, technical errors and omissions were identified by the implementing state entity, the California Gambling Control Commission. Charities have also raised issues as they organize themselves to apply and conduct the game. "The purpose of SB 1090 is to clean-up language and fine-tune implementation issues that have arisen as charities and local governments take steps toward SB 1090 (Cedillo) continued Page 3 authorizing and conducting the games." Background . In 2008, SB 1369 (Chapter 748, Statutes of 2008) was enacted. Primarily, SB 1369 banned the use of electronic bingo (ebingo) machines, authorized the play of remote caller bingo in jurisdictions that have a remote caller bingo ordinance, and created a mitigation fund to minimize the impacts to the charities that previously operated ebingo machines. Arguably, remote caller bingo was authorized to create an alternative or substitute revenue source to compensate charities for the loss of revenues that they previously realized from the operation of ebingo machines. Additionally, other charities which did not operate ebingo machines viewed remote caller bingo as a new opportunity to raise much needed funds to support their charitable work and were eager to begin the operation of remote caller bingo. Last year, charities indicated that their ability to operate remote caller bingo games was retarded as a result of local governments not adopting remote caller bingo ordinances. The charities solution was to place a permissive model ordinance in law that the locals could use as a template to adopt their own remote caller bingo ordinances. In response, amendments were taken in the Assembly to SB 126 (Chapter 562, Statutes of 2009) which added a permissive model ordinance to the Remote Caller Bingo Act. This year, the charities raise concern with respect to the permissive model ordinance in law. Specifically, the charities argue that it is difficult and time consuming to receive a certificate issued by the Franchise Tax Board (FTB) to demonstrate that they are a tax exempt organization. The charities recommended solution, which is contained in SB 1090, is to modify the language in the permissive model ordinance to require a charity to provide "appropriate documentation" certifying that it is a tax exempt organization rather than "a certificate issued by FTB" as certification of its tax exempt status. A document that may be useful and is easily accessible to verify the tax-exempt status of an organization is found on FTB's Website through this hotlink, http://www.ftb.ca.gov/businesses/Exempt_organizations/Entity _list.shtml . Through this hotlink, FTB provides a SB 1090 (Cedillo) continued Page 4 published list of all tax-exempt organizations that have tax-exempt or revoked status. The list is updated monthly. Staff comments . The permissive model ordinance in the Remote Caller Bingo Act is a template for local governments to use. It is not a requirement. State law only requires the tax exempt organization to be incorporated or in existence for three or more years and that the organization shall not be organized for the sole purpose of operating remote caller bingo. Changing the permissive local ordinance language, as written, has no effect on state law, however, it may require any local jurisdictions that have adopted a local ordinance using the template in the Penal Code to have to amend their ordinance. As such, the author may wish to consider the following change: On page 4, line 9, before the word "Appropriate", insert "A certificate issued by the Franchise Tax Board or" such that the sentence will read: (1) A certificate issued by the Franchise Tax Board or appropriateAppropriatedocumentation certifying that the applicant is exempt from the payment of the Bank and Corporation Tax pursuant to Section 23701d of the Revenue and Taxation Code. PRIOR/RELATED LEGISLATION SB 1484 (Governmental Organization), 2009-2010 Legislative Session . Corrects an inadvertent drafting error made to the permissive model code contained in the California Remote Caller Bingo Act relative to the number of days in a week that an eligible nonprofit organization may conduct a remote caller bingo game. The change will bring the model code in line with statute, which provides that eligible organizations may not operate remote caller bingo more than one day a week. (Pending in Senate Governmental Organization Committee) SB 126 (Cedillo), Chapter 562, Statutes of 2009 . Deletes reference to school districts in the provisions specifying the organizations that may conduct remote caller bingo games and instead authorizes "charitable organizations affiliated with a school district" to conduct remote caller bingo games. Contains permissive model ordinance language SB 1090 (Cedillo) continued Page 5 for local governing bodies to use. Deletes requirement that the California Gambling Control Commission establish criteria for registering manufacturers and distributors. Makes other technical and conforming changes. AB 1036 (Niello), 2009-2010 Legislative Session . Would 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. (Died in Assembly Governmental Organization Committee pursuant to Joint Rule 56) SB 1369 (Cedillo), Chapter 748, Statutes of 2008 . Authorizes nonprofit organizations, mobile-home park associations, senior citizens organizations, and organizations affiliated with school districts that have been incorporated or in existence for three years or more to conduct "remote caller bingo". SB 1328 (Cedillo), 2007-2008 Legislative Session . Would have permitted local jurisdictions to adopt an ordinance to allow specified not for profit organizations to play remote caller bingo, as defined. (Held in Senate Governmental Organization Committee) Support : As of March 19, 2010: California Association of Nonprofits Oppose None on file as of March 19, 2010 FISCAL COMMITTEE: No. **********