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  
               appropriate   Appropriate  documentation 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.



                                   **********