BILL ANALYSIS Ó
------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 156|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
------------------------------------------------------------
THIRD READING
Bill No: AB 156
Author: Lara (D)
Amended: 6/29/11 in Senate
Vote: 21
SENATE GOVERNMENTAL ORG. COMMITTEE : 12-0, 6/28/11
AYES: Wright, Anderson, Berryhill, Calderon, Cannella,
Corbett, De León, Evans, Hernandez, Strickland, Wyland,
Yee
NO VOTE RECORDED: Padilla
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 74-0, 5/23/11 - See last page for vote
SUBJECT : Gambling control
SOURCE : Commerce Club Casino
DIGEST : This bill (1) amends the Gambling Control Act to
provide an absolute defense to any civil or criminal action
if a gambling establishment conducts play of a controlled
game that is later deemed unlawful, as specified, (2)
provides for disposition and redemption of outstanding
gaming chips in connection with the sale of a gambling
enterprise, and (3) provides that in any enforcement
action, the gambling enterprise shall have the burden of
proving that the department approved the controlled game
and that the game was played in the manner approved.
CONTINUED
AB 156
Page
2
ANALYSIS : Existing law:
1. Establishes the California Gambling Control Commission
(Commission), prescribes the requirements for obtaining
a gambling license, and defines a gambling establishment
or licensed premises for these purposes.
2. Provides for the enforcement of those gambling
activities by the Bureau of Gambling Control within the
Department of Justice (DOJ).
3. Limits the transfer of property if the Commission must
approve or license the transferee, and specifically
prohibits a contract for sale or lease of real or
personal property that requires approval of the
Commission from specifying a closing date earlier than
90 days after the submission of the contract to the
Commission.
4. Requires DOJ to approve the play of any controlled game,
including, but not limited to, placing restrictions and
limitations on how a controlled game is played.
This bill:
1. Provides that a contract for the sale or lease of real
or personal property that requires the approval or
licensing of the purchaser by the Commission shall not
specify a transaction closing date that is prior to the
approval or licensing by the Commission.
2. Specifies that if the commission has approved a contract
for sale or lease, it may permit the contract to specify
a closing date that is earlier than 90 days after
submission of the completed application, if so requested
by the parties to the contract.
3. Provides that a gambling enterprise that conducts play
of a controlled game that has been approved by 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
CONTINUED
AB 156
Page
3
unlawful.
4. Requires a contract for the sale of a gambling
enterprise shall state whether any outstanding gaming
chips from the seller will be honored by the purchaser,
and provides for redemption of gaming chips by either
the seller or the purchaser in the event the purchaser
does not intend to use the same gaming chips in use by
the seller.
Comments
Background on the absolute defense provisions in this bill .
In 1989 the California Attorney General notified licensed
card rooms, which were offering jackpots, of his opinion
that jackpot poker was unlawful because it violated
California constitutional and Penal Code proscriptions
against lotteries. The letter from the Attorney General
advised card room owners and operators that, beginning
November 1, 1989, the playing of illegal jackpot poker
constitutes a violation of the Penal Code, which may result
in administrative disciplinary action, as well as possible
criminal prosecution.
Several card rooms sought and obtained an injunction
prohibiting state and local officials from continuing to
enforce prohibitions against the play of jackpot poker.
However, an appellate court overturned the injunction and
held that the jackpot feature of the poker game is an
illegal lottery, given the predominance of the element of
chance in winning a jackpot. Among other things, the
appellate court in Bell Gardens Bicycle Club v. Department
of Justice held that:
"ÝJ]ust because poker itself is legal, this fact does not
make the jackpot variation of poker legal, as well? The
question in this case is not whether the slim possibility
of winning the jackpot money prize transforms the legal
game of poker into an illegal lottery. The question is
whether the jackpot feature itself is an illegal lottery
as defined by Penal Code section 319 and should be
disallowed as an attempt to disguise an illegal game
within a legal one... Based upon the law, as well as a
careful and complete reading of the record, it is clear
that the jackpot feature and the underlying poker games
CONTINUED
AB 156
Page
4
are completely severable, and that jackpot is an illegal
lottery."
After this ruling, the Attorney General required the card
clubs to disgorge the profits illegally received from the
conduct of jackpot poker after having received notice from
the DOJ to cease playing the game. It appears that the
clubs may have continued to conduct jackpot poker games for
approximately a nine-month period following receipt of the
notice from the Attorney General he considered jackpot
poker unlawful.
Prior Legislation
SB 1125 (Florez), 2009-10 Session, would have provided that
a gambling establishment that conducts play of a controlled
game that has been approved by DOJ, but is later found to
be unlawful, has an absolute defense to any criminal,
administrative, or civil action, so long as the game was
being played in the manner approved and during the time for
which it was approved. The bill was vetoed by Governor
Schwarzenegger. The veto message read in part:
"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."
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 8/15/11)
Commerce Club Casino (source)
Artichoke Joe's Casino
Bicycle Casino
CONTINUED
AB 156
Page
5
Hollywood Park Casino
Lucky Chances
Village Club
ARGUMENTS IN SUPPORT : The author's office states that
this bill will allow the Commission to permit a purchase
and sale agreement of real or personal property of a
gambling establishment to close earlier than 90 days after
submission to the Commission.
The author's office states that in the past, the Attorney
General brought an administrative action against several
card rooms and an appellate court held that the "manner in
which jackpot poker was played was unlawful even though it
had been earlier approved." The author's office states
further that, after the court ruling, the Attorney General
required the clubs to disgorge money they had made; the
Commerce Casino had to give almost a million dollars.
The author's office believes that there is minimal
protection for card clubs from civil, criminal and
administrative action when a game that is approved by DOJ
is later found to be operating unlawfully, and that if a
card club follows the law and receives approval from DOJ,
that they should be able to defend against any enforcement
action stemming from the approved game that was
subsequently declared to be unlawful.
The author's office states that other provisions of this
bill clarify that a contract for the sale of a gambling
enterprise shall state whether the purchaser will honor any
outstanding gaming chips from the sale.
ASSEMBLY FLOOR : 74-0, 5/23/11
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall,
Bill Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Butler, Charles Calderon, Campos,
Carter, Cedillo, Chesbro, Conway, Davis, Dickinson,
Feuer, Fletcher, Fong, Fuentes, Furutani, Beth Gaines,
Galgiani, Garrick, Gatto, Gordon, Hagman, Halderman,
Hall, Harkey, Hayashi, Roger Hernández, Hill, Huber,
Hueso, Huffman, Jeffries, Jones, Knight, Lara, Logue,
Bonnie Lowenthal, Ma, Mansoor, Mendoza, Miller, Mitchell,
CONTINUED
AB 156
Page
6
Monning, Morrell, Nestande, Nielsen, Norby, Olsen, Pan,
Perea, V. Manuel Pérez, Portantino, Silva, Skinner,
Smyth, Solorio, Swanson, Torres, Valadao, Wagner,
Wieckowski, Williams, John A. Pérez
NO VOTE RECORDED: Cook, Donnelly, Eng, Gorell, Grove,
Yamada
PQ:kc 8/15/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****
CONTINUED