BILL ANALYSIS Ó AB 1691 Page 1 Date of Hearing: May 14, 2014 ASSEMBLY COMMITTEE ON APPROPRIATIONS Mike Gatto, Chair AB 1691 (Jones-Sawyer) - As Amended: May 6, 2014 Policy Committee: Governmental Organization Vote: 11-2 Urgency: No State Mandated Local Program: No Reimbursable: No SUMMARY This bill authorizes a private, nonprofit organization established by, or affiliated with, one of the following professional sports organizations to conduct a 50/50 raffle to directly support charitable purposes in California: 1)A team from Major League Baseball, the National Hockey League, the National Basketball Association, the National Football League, the Women's National Basketball Association, or Major League Soccer. 2)The Professional Golfers Association, Ladies Professional Golfers Association, or National Association for Stock Car Auto Racing. In summary, this bill places the following additional restrictions on the raffles: 1)50% of the gross receipts shall be used to benefit the charitable organization, and in no event may any compensation be paid to the persons operating the raffle from the proceeds required to be dedicated to beneficial or charitable purposes. 2)Only one raffle may be conducted per home game, and must be conducted by manual draw. 3)No raffle may be conducted nor may tickets for a raffle be sold at a satellite wagering facility or racetrack, within a gambling establishment, or over the internet, although the organization may advertise its raffle tickets over the internet. AB 1691 Page 2 4)Specifies the Department of Justice (DOJ) may require an eligible organization to pay an annual registration fee of $10 to cover enforcement and administration costs, and allows the DOJ to adjust the annual registration fee by regulation to ensure that amounts collected fully offset actual costs. 5)All organizations conducting the raffles must register with the DOJ via a registration form available on the internet and provide annual reports to the DOJ regarding the net receipts, costs, and charitable uses of the proceeds from the raffles conducted. The bill requires the DOJ to conduct a study on the effects of this bill, including the number of raffles per year, amounts raised for charities, a comparison of moneys raised under this provision compared with other raffles, other impacts on charitable giving, and consumer complaints, and report it to the Assembly Committee on Governmental Organization prior to March 31, 2017. The bill sunsets on December 31, 2017. Because this bill amends the percentage of gross receipts from a raffle required to be dedicated to beneficial or charitable purposes, the California Constitution requires a 2/3 vote of each house of the Legislature. FISCAL EFFECT 1)General Fund costs to the DOJ for Charitable Trusts Section staffing, administration of the charitable organization registry and annual reporting, and ongoing enforcement of approximately $350,000 to $475,000 per year. Those costs may be recovered, at least in part, through annual registration fees. 2)Potentially significant GF costs to the DOJ to compile and analyze the data, and produce the report on the effects of this bill. COMMENTS 1) Purpose. According to the author, this bill would allow professional sports franchises to operate game-day 50/50 AB 1691 Page 3 charitable raffles, in which 50% of the proceeds are awarded to the winning ticket holder and 50% of the proceeds are donated to local charities. The author contends AB 1691 will maintain current legal protections while making charitable raffles more attractive to participants and raising additional contribution money. The author asserts the current 90/10 restriction limits charities' ability to attract participation, reducing the overall amount of contributions. According to the author, advances in raffle technologies allow for secure, real-time transactions and auditing. This technology has proven to be popular in several other states, and has helped generate considerable interest in professional sports charitable raffles of the type proposed in this bill. 2) Existing Law. The California Constitution permits charitable organizations to conduct raffles to raise contribution funding if at least 90% of the gross receipts from the raffle go directly to the beneficial or charitable purposes in California. The Constitution permits the Legislature to amend the percentage of gross receipts required by statute exacted with a 2/3 vote of each house. 3) 50/50 Raffles. According to the author, 50/50 raffles conducted at sports teams in Arizona have been very successful. The Phoenix Coyotes, a professional hockey team, conducted several 50/50 raffles during the 2013-14 season, averaging around $18,000 in gross receipts per raffle with a high of $38,000 on one occasion. The Arizona Diamondbacks, a professional baseball team with a considerably larger stadium and greater number of attendees, received approximately $100,000 in gross receipts on one occasion. Analysis Prepared by : Joel Tashjian / APPR. / (916) 319-2081