BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 156
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          ASSEMBLY THIRD READING
          AB 156 (Lara)
          As Amended  March 14, 2011
          Majority vote 

           GOVERNMENTAL ORGANIZATION 17-0  APPROPRIATIONS      17-0        
           
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          |Ayes:|Hall, Nestande, Atkins,   |Ayes:|Fuentes, Harkey,          |
          |     |Block, Blumenfield,       |     |Blumenfield, Bradford,    |
          |     |Chesbro, Cook, Galgiani,  |     |Charles Calderon, Campos, |
          |     |Garrick, Gatto, Hill,     |     |Davis, Donnelly, Gatto,   |
          |     |Jeffries, Ma, Perea, V.   |     |Hall, Hill, Lara,         |
          |     |Manuel Pérez, Silva,      |     |Mitchell, Nielsen, Smyth, |
          |     |Torres                    |     |Solorio, Wagner           |
          |     |                          |     |                          |
           ----------------------------------------------------------------- 
           SUMMARY  :  Amends the Gambling Control Act (Act) by adding a 
          "hold harmless" provision if a controlled game is later deemed 
          unlawful, as specified, and permits a closing date of less than 
          90 days, for a contract approved by the California Gambling 
          Control Commission (CGCC) for sale or lease of a real or 
          personal property, as defined, if requested by the parties to 
          the contract.  Specifically,  this bill  :  

          1)Provides that a gambling establishment that conducts play of a 
            controlled game that has been approved by the Department of 
            Justice (DOJ), but is later found to be unlawful, has an 
            absolute defense to any criminal, administrative, or civil 
            action provided the game was being played in the manner 
            approved and, during the time for which it was approved, and 
            play ceases upon notice that the game has been found unlawful. 


          2)Permits a contract for the sale or lease of real or personal 
            property, subject to the limitations described above, to 
            specify a closing date earlier than 90 days after the 
            submission of the contract to the CGCC if the CGCC has 
            approved the contract and the parties have requested it. 

           EXISTING LAW  :

          1)Provides, pursuant to the Act, the licensure of certain 
            individuals and gambling establishments involved in various 








                                                                  AB 156
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            gambling activities, and for the regulation of those 
            activities, by the CGCC.

          2)Provides for the enforcement of those activities by the Bureau 
            of Gambling Control (Bureau) within DOJ.

          3)Limits the transfer of property if the transferee has to be 
            approved or licensed by the CGCC, and specifically prohibits a 
            contract for sale or lease of real or personal property that 
            requires approval of CGCC, as specified, from specifying a 
            closing date earlier than 90 days after the submission of the 
            contract to the CGCC, as specified.

          4)Requires CGCC to approve the play of any controlled game, 
            including, but not limited to, placing restrictions and 
            limitations on how a controlled game is played.  

          5)Provides that a banking game does not include a controlled 
            game if the published rules of the game feature a 
            player-dealer position and provide that this position must be 
            continuously and systematically rotated amongst each of the 
            participants during the play of the game, and if other 
            specified conditions are met.

          6)Defines "house" to mean the gambling enterprise, and any 
            owner, shareholder, partner, key          employee, or 
            landlord thereof.

          7)Defines "gambling enterprise" to mean a natural person or an 
            entity, whether individual, corporate, or otherwise, that 
            conducts a gambling operation and that by virtue thereof is 
            required to hold a state gambling license under the Act.

           FISCAL EFFECT  :  According to the Assembly Appropriations 
          Committee, no significant costs associated with this 
          legislation.

           COMMENTS  :  According to the bill's sponsor, Commerce Club 
          Casino, this bill will provide that if a card club is playing a 
          controlled game approved by the Bureau in the manner in which it 
          was approved, the approval by the Bureau shall be an absolute 
          defense to any action that is brought through the criminal 
          courts, administrative courts, or civil courts if the game being 
          played is later ruled to be deemed unlawful. 








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          In at least one situation, a game approved by Bureau was 
          subsequently found to be unlawful by the Court of Appeal.  The 
          Attorney General then brought administrative action against 
          numerous card clubs for playing a game which they had approved.  
          This bill seeks to insulate a club from criminal, civil and 
          administrative action if a game that has been approved by the 
          Bureau and is played in the manner in which it was approved.

          A second provision of this bill will give the CGCC the authority 
          to allow the sale of a gambling establishment to occur prior to 
          90 days expiring from the time that the contract is first 
          submitted to CGCC for approval.  This provision was placed in 
          the Act to give CGCC staff the time to approve a purchase and 
          sale agreement.  However, once the agreement is approved nothing 
          is served by delaying the closing transaction.

          The sponsor states, there may be situations where the affected 
          parties want a particular transaction to close sooner rather 
          than later.  This change will give the CGCC the authority, after 
          they have approved a purchase/sale agreement to allow that 
          transaction to take place prior to expiration of 90 days, 
          provided the CGCC has, in fact, approved the purchase/sale.

           Similar language vetoed last year  .  SB 1125 (Florez) of 2009, 
          was vetoed by Governor Schwarzenegger.  SB 1125 (Florez) 
          contained two provisions, one of which is in this bill.  SB 1125 
          contained the same "absolute defense" language which stated that 
          a gambling establishment that conducts play of an approved 
          controlled game that is subsequently found to be unlawful shall 
          be protected from any criminal, administrative, or civil action, 
          provided the game was played in an approved manner and was not 
          played after it was found to be illegal.
           
          The veto message stated in part  .  "This past legislative 
          session, my Administration sponsored several bills to address 
          the issue of tort reform.  Similar to this measure, one of these 
          measures        provided for limited immunity for businesses 
          that engaged in conduct that was approved by a federal or state 
          agency.  However, even this modest reform contained a provision 
          that prevented an absolute defense if the business in question 
          intentionally misrepresented material information or defrauded 
          the public entity that gave its approval.









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          "I am unable to sign this bill because, unlike the measure 
          previously mentioned, this bill does not take into account 
          possible misconduct by a gambling establishment that may have 
          induced the Bureau to erroneously approve a controlled game.  In 
          addition, there may be other instances where a gambling 
          establishment may be playing a controlled game in bad faith and 
          in violation of other provisions of existing law.  
          Notwithstanding the fact that the Bureau may have approved such 
          conduct, that approval alone should not constitute an absolute 
          defense to all civil, criminal, or administration actions." 

           
          Analysis Prepared by  :    Eric Johnson / G. O. / (916) 319-2531 


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