BILL ANALYSIS Ó AB 156 Page 1 ASSEMBLY THIRD READING AB 156 (Lara) As Amended March 14, 2011 Majority vote GOVERNMENTAL ORGANIZATION 17-0 APPROPRIATIONS 17-0 ----------------------------------------------------------------- |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 Page 2 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. AB 156 Page 3 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. AB 156 Page 4 "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 FN: 0000761