BILL ANALYSIS Ó
-----------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 1332|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
-----------------------------------------------------------------
THIRD READING
Bill No: AB 1332
Author: Hagman (R)
Amended: 8/14/13 in Senate
Vote: 27 - Urgency
SENATE GOVERNMENTAL ORGANIZATION COMMITTEE : 10-0, 6/11/13
AYES: Wright, Nielsen, Calderon, Cannella, Correa, De León,
Galgiani, Hernandez, Lieu, Padilla
NO VOTE RECORDED: Berryhill
ASSEMBLY FLOOR : 70-0, 5/16/13 - See last page for vote
SUBJECT : California State Lottery: assignment of prize
payments
SOURCE : Author
DIGEST : This bill allows California State Lottery prize
winners to assign any portion of their last three years of prize
winnings to another person or entity and clarifies that those
assignments are not valid or allowed unless entered into on or
after the effective date of this bill.
Senate Floor Amendments of 8/14/13 add an urgency clause and add
clarifying language ensuring that assignment of prize payments
occurs after the effective date of this bill.
ANALYSIS :
Existing law:
CONTINUED
AB 1332
Page
2
1. Authorizes the California State Lottery and provides for its
operation and administration by the California State Lottery
Commission and the Director of the California State Lottery.
2. Prohibits the assignment of the right of any person to a
prize, except that the payment of any lottery prize may be
assigned under specified circumstances, including as
collateral to secure certain loans and for future payments to
another person designated pursuant to a judicial order of a
California superior court, or a federal court having
jurisdiction over properly located in California, if the
court makes a specified determination.
3. Provides that a prize winner, by entering into an agreement
to assign prize payments, as specified, is deemed to have
waived any statutory period of limitation as to the State of
California enforcing any rights against annual prize payments
due after the last assigned payment is paid or released, if
assigned as collateral, from the lien granted the secured
creditor.
4. Provides that these assignments of prize payments as
collateral to secure loans or for future payments to another
person designated pursuant to a judicial order, as described
above, are not valid or allowed for the final three annual
prize payments from the lottery to the prize winner.
This bill:
1. Allows California State Lottery prize winners to assign any
portion of their last three years of prize winnings to
another person or entity; and provides that the assignment is
not valid or allowed unless the contract assignment the
payment is entered into on or after this bill's effective
date.
2. Declares that the bill's provisions further the purpose of
the California State Lottery Act enacted by Proposition 37 at
the November 6, 1984 general election.
Background
Almost 20 years ago, when the California State Lottery Act first
CONTINUED
AB 1332
Page
3
allowed for the assignability of payments, the Legislature
included a ban on the assignability of the last three years in
large part because of the limited search capabilities that
government agencies and other entities had at the time, which
made it difficult to track down tax liens and other legal
obligations (e.g. child support payments).
Today, the State Controller's Office, other government agencies
and originators, like Seneca One, can find this information in
mere seconds. Seneca One, and other originators, will not
purchase payments unless these obligations are satisfied.
Unfortunately, only those who elect to receive their prize
winnings as installment payments are impacted by this three-year
carve-out. All winners who elect to receive their winnings as a
lump sum (roughly 90% of winners) do not have any restrictions
on the timing of their payout.
Comments
According to the author's office, approximately 87% of prize
winners now select the "Cash Value" option when they win. Thus,
for those who choose the 26-year or other long-term payment
option, there is no compelling reason to withhold the right to
assign prize winnings.
Companies that specialize in purchasing lottery payments streams
desire certainty in their dealings. As a result, their
pre-contract searches are quite comprehensive, because of the
implications of purchasing a future payment stream in exchange
for a cash payment, only to have that future prize be contested
due to an unanticipated legal bind.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local:
No
SUPPORT : (Verified 8/15/13)
Seneca One Finance
Stone Street Capital
ARGUMENTS IN SUPPORT : According to the author, this bill will
"offer victors added flexibility when making decisions with
their earnings."
CONTINUED
AB 1332
Page
4
Supporters say that many of its customers have expressed
frustration over the restriction currently in the California
lottery law that does not permit winners receiving their prize
in installments to sell the last three years of payments.
Supporters further argue that this bill is necessary to correct
an out-of-date statute, and one that discriminates against those
lottery winners (roughly 10% of winners) who elect to receive
their winnings in installment payments rather than as a lump
sum.
ASSEMBLY FLOOR : 70-0, 5/16/13
AYES: Achadjian, Alejo, Atkins, Bigelow, Bloom, Blumenfield,
Bocanegra, Bonilla, Bonta, Bradford, Brown, Ian Calderon,
Campos, Chau, Chávez, Chesbro, Conway, Cooley, Dahle, Daly,
Dickinson, Donnelly, Eggman, Fong, Fox, Frazier, Garcia,
Gatto, Gomez, Gordon, Gorell, Gray, Hagman, Hall, Harkey,
Roger Hernández, Jones, Jones-Sawyer, Levine, Linder, Logue,
Lowenthal, Maienschein, Mansoor, Medina, Mitchell, Mullin,
Muratsuchi, Nazarian, Nestande, Olsen, Pan, Patterson, Perea,
V. Manuel Pérez, Quirk, Quirk-Silva, Rendon, Salas, Skinner,
Ting, Torres, Wagner, Waldron, Weber, Wieckowski, Wilk,
Williams, Yamada, John A. Pérez
NO VOTE RECORDED: Allen, Ammiano, Buchanan, Beth Gaines, Grove,
Holden, Melendez, Morrell, Stone, Vacancy
MW:k 8/15/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****
CONTINUED