BILL NUMBER: AB 1691 INTRODUCED
BILL TEXT
INTRODUCED BY Assembly Member Jones-Sawyer
FEBRUARY 13, 2014
An act to add Section 320.6 to the Penal Code, relating to gaming.
LEGISLATIVE COUNSEL'S DIGEST
AB 1691, as introduced, Jones-Sawyer. Charitable raffles.
The California Constitution authorizes the Legislature to permit
private, nonprofit, eligible organizations to conduct raffles as a
funding mechanism to support beneficial and charitable works, if,
among other conditions, at least 90% of the gross receipts from the
raffle go directly to beneficial or charitable purposes in
California. The California Constitution further authorizes the
Legislature to amend the percentage of gross receipts required to be
dedicated to beneficial or charitable purposes by a statute passed by
a 2/3 vote of each house of the Legislature. Existing statutory law
implements those provisions and requires the Department of Justice to
administer and enforce those provisions.
This bill would authorize a raffle conducted by an eligible
organization, as defined, for the purpose of directly supporting
specified beneficial or charitable purposes in California, or
financially supporting another private, nonprofit, eligible
organization, as defined, that performs those purposes if, among
other requirements, each ticket sold contains a unique and matching
identifier, 50% of the net receipts generated from the sale of raffle
tickets are used to benefit or provide support for beneficial or
charitable purposes, as defined, and the other 50% is paid to the
winner. The bill would authorize a random number generator to be used
to select the winning ticket. This bill would define an eligible
organization as a private, nonprofit organization established by, or
affiliated with, a team from specified sports organizations that has
been qualified to conduct business in California for at least one
year prior to conducting a raffle and is exempt from taxation
pursuant to specified provisions of federal and California law.
The bill would require, if an eligible organization conducts a
raffle for purposes of financially supporting another private,
nonprofit, eligible organization, the eligible organization
conducting the raffle to distribute to the other eligible
organization all proceeds not paid out to the winners within 15 days
of conducting the raffle. The bill would require an eligible
organization to disclose to all ticket purchasers the designated
private, nonprofit organization for which the raffle is being
conducted.
This bill would also prohibit an eligible organization from
conducting a raffle without first having obtained and thereafter
maintained a registration from the Department of Justice, as
specified. This bill would authorize the department to issue
regulations to enforce these provisions, to assess an annual
registration fee of $10 to be deposited in the General Fund to cover
the actual costs of establishing and operating this registration
system, and would require the department to maintain a database of
registrants, with specified exemptions, and conduct specified
proceedings in compliance with the Administrative Procedure Act.
Vote: 2/3. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 320.6 is added to the Penal Code, to read:
320.6. (a) Notwithstanding Section 320.5, this section shall
apply to an eligible organization, as defined in subdivision (c).
(b) A raffle conducted by an eligible organization as defined in
subdivision (c) for the purpose of directly supporting beneficial or
charitable purposes or financially supporting another private,
nonprofit eligible organization, as defined in subdivision (c) of
Section 320.5 that performs beneficial or charitable purposes may be
conducted in accordance with this section.
(c) For purposes of this section, "eligible organization" means a
private, nonprofit organization established by, or affiliated with, a
team from the Major League Baseball, National Hockey League,
National Basketball Association, National Football League, Women's
National Basketball Association, Professional Golfers Association,
Ladies Professional Golfers Association, National Association for
Stock Car Auto Racing, or Major League Soccer that has been qualified
to conduct business in California for at least one year prior to
conducting a raffle, is qualified for an exemption under Section 501
(3)(c) of the Internal Revenue Code, and is exempt from taxation
pursuant to Section 23701a, 23701b, 23701d, 23701e, 23701f, 23701g,
23701k, 23701l, 23701t, or 23701w of the Revenue and Taxation Code.
(d) For purposes of this section, "raffle" means a scheme for the
distribution of prizes by chance among persons who have paid money
for paper tickets that provide the opportunity to win these prizes,
in which all of the following are true:
(1) Each ticket sold contains a unique and matching identifier.
(2) Winners of the prizes are determined by draw from tickets
described in paragraph (1) that have been sold for entry in the draw.
A random number generator may be used to select the winning ticket.
The prize paid to the winner is comprised of one-half or 50 percent
of the net receipts generated from the sale of raffle tickets for a
raffle.
(3) The draw is conducted in California under the supervision of a
natural person who is 18 years of age or older.
(4) (A) Fifty percent of the net receipts generated from the sale
of raffle tickets for any given draw are used by the eligible
organization conducting the raffle to benefit or provide support for
beneficial or charitable purposes, or used to benefit another
private, nonprofit organization, provided that an organization
receiving these funds is itself an eligible organization as defined
in subdivision (c) of Section 320.5. As used in this section,
"beneficial purposes" excludes purposes that are intended to benefit
officers, directors, or members, as defined by Section 5056 of the
Corporations Code, of the eligible organization. Funds raised by
raffles conducted pursuant to this section shall not be used to fund
any beneficial, charitable, or other purpose outside of California.
This section does not preclude an eligible organization from using
funds from sources other than the sale of raffle tickets to pay for
the administration or other costs of conducting a raffle.
(B) An employee of an eligible organization who is a direct seller
of raffle tickets shall not be treated as an employee for purposes
of workers' compensation under Section 3351 of the Labor Code if the
following conditions are satisfied:
(i) Substantially all of the remuneration, whether or not paid in
cash, for the performance of the service of selling raffle tickets is
directly related to sales rather than to the number of hours worked.
(ii) The services performed by the person are performed pursuant
to a written contract between the seller and the eligible
organization and the contract provides that the person will not be
treated as an employee with respect to the selling of raffle tickets
for workers' compensation purposes.
(C) For purposes of this section, an employee selling raffle
tickets shall be deemed to be a direct seller as described in Section
650 of the Unemployment Insurance Code as long as he or she meets
the requirements of that section.
(e) A person who receives compensation in connection with the
operation of the raffle shall be an employee of the eligible
organization that is conducting the raffle, and in no event may
compensation be paid from revenues required to be dedicated to
beneficial or charitable purposes.
(f) No raffle otherwise permitted under this section may be
conducted by means of, or otherwise utilize, any gaming machine that
meets the definition of slot machine contained in Section 330a, 330b,
or 330.1.
(g) (1) No raffle otherwise permitted under this section may be
conducted, nor may tickets for a raffle be sold, within an operating
satellite wagering facility or racetrack inclosure licensed pursuant
to the Horse Racing Law (Chapter 4 (commencing with Section 19400) of
Division 8 of the Business and Professions Code) or within a
gambling establishment licensed pursuant to the Gambling Control Act
(Chapter 5 (commencing with Section 19800) of Division 8 of the
Business and Professions Code).
(2) A raffle may not be operated or conducted in any manner over
the Internet, nor may raffle tickets be sold, traded, or redeemed
over the Internet. For purposes of this paragraph, an eligible
organization shall not be deemed to operate or conduct a raffle over
the Internet, or sell raffle tickets over the Internet, if the
eligible organization advertises its raffle on the Internet or
permits others to do so. Information that may be conveyed on an
Internet Web site pursuant to this paragraph includes, but is not
limited to, all of the following:
(A) Lists, descriptions, photographs, or videos of the raffle
prizes.
(B) Lists of the prize winners.
(C) The rules of the raffle.
(D) Frequently asked questions and their answers.
(E) Raffle entry forms, which may be downloaded from the Internet
Web site for manual completion by raffle ticket purchasers, but shall
not be submitted to the eligible organization through the Internet.
(F) Raffle contact information, including the eligible
organization's name, address, telephone number, facsimile number, or
e-mail address.
(h) No individual, corporation, partnership, or other legal entity
shall hold a financial interest in the conduct of a raffle, except
the eligible organization that is itself authorized to conduct that
raffle, and any private, nonprofit, eligible organizations receiving
financial support from that charitable organization pursuant to
subdivisions (b) and (d).
(i) An eligible organization may conduct no more than one major
league sports raffle per home game.
(j) An employee may not sell raffle tickets in any seating area
designated as a family section.
(k) An eligible organization shall disclose to all ticket
purchasers the designated private, nonprofit, eligible organization
for which the raffle is being conducted.
(l) An eligible organization that conducts a raffle to financially
support another private, nonprofit eligible organization as defined
in subdivision (c) of Section 320.5 shall distribute all proceeds not
paid out to the winners of the prizes to the private, nonprofit
organization within 15 days of conducting the raffle, in accordance
with this section.
(m) Any raffle prize remaining unclaimed by a winner at the end of
the season for a team with an affiliated eligible organization that
conducted a raffle to financially support another private, nonprofit
eligible organization as defined in subdivision (c) of Section 320.5
shall be donated within 30 days from the end of the season by the
eligible organization to the designated private, nonprofit
organization for which the raffle was conducted.
(n) (1) An eligible organization may not conduct a raffle
authorized under this section, unless it registers annually with the
Department of Justice. The department shall furnish a registration
form via the Internet or upon request to eligible nonprofit
organizations. The department shall, by regulation, collect only the
information necessary to carry out the provisions of this section on
this form. This information shall include, but is not limited to, the
following:
(A) The name and address of the eligible organization.
(B) The federal tax identification number, the corporate number
issued by the Secretary of State, the organization number issued by
the Franchise Tax Board, or the California charitable trust
identification number of the eligible organization.
(C) The name and title of a responsible fiduciary of the
organization.
(2) The department may require an eligible organization to pay an
annual registration fee of ten dollars ($10) to cover the actual
costs of the department to administer and enforce this section. The
department may, by regulation, adjust the annual registration fee as
needed to ensure that revenues will fully offset, but do not exceed,
the actual costs incurred by the department pursuant to this section.
The fee shall be deposited by the department into the General Fund.
(3) The department shall receive moneys for the costs incurred
pursuant to this section subject to an appropriation by the
Legislature.
(4) The department shall adopt regulations necessary to effectuate
this section, including emergency regulations, pursuant to the
Administrative Procedure Act (Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code).
(5) The department shall maintain an automated database of all
registrants. Each local law enforcement agency shall notify the
department of any arrests or investigation that may result in an
administrative or criminal action against a registrant. The
department may audit the records and other documents of a registrant
to ensure compliance with this section.
(6) Once registered, an eligible organization must file annually
thereafter with the department a report that includes the following:
(A) The aggregate net receipts from the operation of raffles.
(B) The aggregate direct costs incurred by the eligible
organization from the operation of raffles.
(C) The charitable or beneficial purposes for which proceeds of
the raffles were used, or identify the eligible recipient
organization to which proceeds were directed, and the amount of those
proceeds.
(7) The department shall annually furnish to registrants a form to
collect this information.
(8) The registration and reporting provisions of this section do
not apply to any religious corporation sole or other religious
corporation or organization that holds property for religious
purposes, to a cemetery corporation regulated under Chapter 19
(commencing with Section 9600) of Division 3 of the Business and
Professions Code, or to any committee as defined in Section 82013 of
the Government Code that is required to and does file any statement
pursuant to the provisions of Article 2 (commencing with Section
84200) of Chapter 4 of Title 9 of the Government Code, or to a
charitable corporation organized and operated primarily as a
religious organization, educational institution, hospital, or a
health care service plan licensed pursuant to Section 1349 of the
Health and Safety Code.
(o) The department may take legal action against a registrant if
it determines that the registrant has violated this section or a
regulation adopted pursuant to this section, or that the registrant
has engaged in any conduct that is not in the best interests of the
public's health, safety, or general welfare. An action taken pursuant
to this subdivision does not prohibit the commencement of an
administrative or criminal action by the Attorney General, a district
attorney, city attorney, or county counsel.
(p) An action and hearing conducted to deny, revoke, or suspend a
registry, or other administrative action taken against a registrant
shall be conducted pursuant to the Administrative Procedure Act
(Chapters 4.5 (commencing with Section 11400) and 5 (commencing with
Section 11500) of Part 1 of Division 3 of Title 2 of the Government
Code). The department may seek recovery of the costs incurred in
investigating or prosecuting an action against a registrant or
applicant in accordance with those procedures specified in Section
125.3 of the Business and Professions Code. A proceeding conducted
under this subdivision is subject to judicial review pursuant to
Section 1094.5 of the Code of Civil Procedure.