BILL NUMBER: AB 2291	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Jones-Sawyer

                        FEBRUARY 21, 2014

   An act to add Chapter 5.2 (commencing with Section 19990.01) to
Division 8 of, and to repeal Section 19990.86 of, the Business and
Professions Code, and to add Section 330d to the Penal Code, relating
to gambling, making an appropriation therefor, and declaring the
urgency thereof, to take effect immediately.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 2291, as introduced, Jones-Sawyer. Gambling: Internet poker:
unlawful gambling activity.
   (1) The Gambling Control Act provides for the licensure of certain
individuals and establishments that conduct controlled games, as
defined, and for the regulation of these gambling activities by the
California Gambling Control Commission. The Department of Justice has
related investigatory and enforcement duties under the act. Any
violation of these provisions is punishable as a misdemeanor, as
specified.
   This bill would establish a framework to authorize intrastate
Internet poker, as specified. The bill would authorize eligible
entities to apply to the commission for a 10-year nontransferable
license to operate an intrastate Internet poker Web site offering the
play of authorized Internet poker games to registered players within
California, as specified. The bill would require that the license be
automatically renewed every 10 years upon application, as specified.
The bill would prohibit the offer or play of any gambling game
provided over the Internet that is not an authorized Internet poker
game permitted by the state pursuant to this bill. The bill would
prohibit, among others, a federally recognized California Indian
tribe that operates a gaming facility that accepts bets from players
within the state but who are not physically present on Indian lands
when making bets from operating an Internet poker Web site. The bill
also would provide that it is unlawful for a person to patronize, or
to own or operate, a place of public accommodation within this state
in which computer terminals, laptop computers, hand-held devices, or
similar devices are made available for accessing Internet Web sites
to play gambling games, or where those devices are otherwise
empowered or enabled to access Internet Web sites to play gambling
games. The bill would provide that it is unlawful for a person to
aggregate computers or other access devices in a public setting
within this state for the purpose of playing a gambling game on the
Internet, or to promote, facilitate, or market that activity. The
bill would provide that any violation of these provisions is
punishable as a misdemeanor. By creating new crimes, the bill would
impose a state-mandated local program.
   This bill would require the commission, and any other state agency
with a duty pursuant to these provisions, to adopt regulations
within 270 days after the operative date of this bill, in
consultation with the department and federally recognized California
Indian tribes, to implement these provisions, and to facilitate the
operation of intrastate Internet poker Web sites and expedite the
state's receipt of revenues. The bill would require a license
applicant to apply to the commission and pay a registration fee
sufficient to cover all costs associated with the issuance of the
license, for deposit into the Internet Poker Fund, as created by the
bill, to be continuously appropriated to the department and the
commission in the amounts reasonably necessary to investigate and
evaluate the suitability of the licensee's subcontractors. An
applicant that is a federally reorganized Indian tribe also would be
required to submit a limited waiver of its sovereign immunity.
   This bill would require the payment of an unspecified annual
regulatory fee, for deposit into the Internet Poker Fund, to be
continuously appropriated for the actual costs of license oversight,
consumer protection, state regulation, problem gambling programs, and
other purposes related to this bill. The bill would require each
licensee to pay a one-time license fee in the amount of $5,000,000
for deposit in the General Fund. The license fee would be credited
against quarterly fees equivalent to 5% of the licensee's gross
gaming revenue proceeds, as specified. The bill would require an
applicant for an intrastate Internet Poker license to provide
documentation establishing that the applicant is qualified to pay the
one-time license fee from its own assets, or its owner's assets, or
through credit extended to the entity, as specified.
   This bill would establish the Unlawful Gambling Enforcement Fund
as a special fund within the General Fund for purposes of ensuring
adequate resources for law enforcement charged with enforcing the
prohibitions and protections of the provisions described above. The
bill would authorize the Attorney General, and other public
prosecutors, as specified, to bring a civil action to recover a civil
penalty in an unspecified amount against a person who engages in
those prohibited activities described above, or other specified
unlawful gambling activities involving lotteries and slot machines.
The bill would provide for an unspecified percentage of revenues from
civil penalties collected to be deposited into the fund and used for
law enforcement activities pursuant to these provisions, upon
appropriation by the Legislature.
   This bill would require the commission, in consultation with the
department, the Treasurer, and the Franchise Tax Board, to issue a
report to the Legislature describing the state's efforts to meet the
policy goals articulated in this bill within one year of the
operative date of this bill and, annually, thereafter. The bill would
also require the Bureau of State Audits, at least 4 years after the
issue date of any license by the state, but no later than 5 years
after that date, to issue a report to the Legislature detailing the
implementation of this bill, as specified.
   This bill would prohibit the state from affirmatively electing to
be subject to a federal Internet gambling law, as specified, and
would require the state to opt out of, or would prohibit the state
from opting into, any federal Internet gambling scheme. The bill
would provide that if the state violates these prohibitions, a
licensee shall not be required to pay the one-time license fee or the
quarterly fees described above and would require the state to refund
within 30 days all unused license fees paid to the state, as
specified. The bill would authorize a licensee to enforce this
provision in state court. The bill also would prohibit the state from
participating in any Internet gambling agreement between states or
foreign jurisdictions.
   This bill authorizes the department to revoke or suspend any
license or work permit upon reaching a finding that the licensee or
employee is in violation of the provisions described above, or any
regulation adopted pursuant to these provisions. However, the bill
would prohibit a tribal licensee from having its license suspended or
revoked, or be fined or otherwise penalized for complying with any
applicable federal law or regulation when operating an Internet poker
Web site on Indian lands. The bill would specify that to the extent
that any state requirement is more strict than any applicable federal
law requirement, the tribal licensee is required to comply with the
state requirement.
   (2) Existing law, subject to exceptions, generally prohibits the
possession and use of a "slot machine or device," as defined, and
prohibits certain other acts and transactions pertaining to slot
machines or devices. Existing law provides varying definitions of
"slot machine or device" for these purposes. A violation of these
provisions is punishable as a misdemeanor.
   This bill would provide that an "electronic sweepstakes device,"
as defined, is a slot machine or device within the meaning of these
provisions. By expanding the scope of existing crimes, the bill would
impose a state-mandated local program.
   (3) The bill would provide that its provisions are not severable.
   (4) The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.
   (5) This bill would declare that it is to take effect immediately
as an urgency statute.
   Vote: 2/3. Appropriation: yes. Fiscal committee: yes.
State-mandated local program: yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Chapter 5.2 (commencing with Section 19990.01) is added
to Division 8 of the Business and Professions Code, to read:
      CHAPTER 5.2.  THE INTERNET POKER CONSUMER PROTECTION ACT OF
2014



      Article 1.  Title, Legislative Declarations, and Statement of
Legislative Intent


   19990.01.  This chapter shall be known and may be cited as the
Internet Poker Consumer Protection Act of 2014.
   19990.02.  The Legislature hereby finds and declares all of the
following:
   (a) Since the development of the Internet, Web sites offering
gambling have raised consumer protection and enforcement concerns for
federal and state governments as these Web sites are often operated
by unknown persons located in many different countries, subject to
little or no oversight, and have sought to attract customers from the
United States.
   (b) Californians participate in illegal online gambling on
unregulated Internet Web sites every week. Neither federal nor
California laws provide any consumer protections for California
players. California players assume all risks, any negative social or
financial impacts are borne by the citizens of California, and the
revenues generated from online gambling are being realized by
offshore operators and do not provide any benefits to the citizens of
California.
   (c) The presence, operation, and expansion of offshore,
unlicensed, and unregulated Internet gambling Web sites available to
Californians endanger Californians because the current Internet
gambling Web sites operate illegally and without regulation as
demonstrated by criminal prosecutions of some Internet gambling
purveyors, and questions often arise about the honesty and the
fairness of the games played on these Internet gambling Web sites as
well as the true purpose for, and use of, proceeds generated by these
unregulated Internet gambling Web sites. In addition, some of the
unlicensed and unregulated Internet gambling activity interferes with
rights Californians preserved to federally recognized tribal
governments when amending the state's Constitution, with that
amendment providing federally recognized tribes the sole and
exclusive right to engage in slot machine and house-banked
casino-style gaming in California.
   (d) These rights were separately guaranteed in 1999 and at various
times thereafter, when the state negotiated and entered into
compacts with tribes pursuant to the federal Indian Gaming Regulatory
Act of 1988 (IGRA), under which signatory tribes possess the
exclusive right within the state to operate "gaming devices," defined
to include any slot machines, and specifically, among other things,
any electronic device enabling a player to participate in games
involving an element of chance for the possible delivery of a prize
or something of value, as well as house-banked and percentage games.
The authorization of certain types of online gaming, including slot
machine or house-banked casino-style games, could impinge upon these
rights.
   (e) Tribally owned and operated casinos have contributed to local
economies, generated tens of thousands of jobs for Californians, and
provided hundreds of millions of dollars in revenues for the state
since the advent of Indian gaming, and are entitled to the full
protection of the laws of this state. As such, the state is presently
engaged in regulatory and enforcement efforts to combat the rise of
illegal gambling activity that threatens not only protected rights,
but the health and welfare of all Californians.
   (f) In October 2006, Congress passed the SAFE Port Act (Public Law
109-347), to increase the security of United States ports. Embedded
within the language of that act was a section entitled the Unlawful
Internet Gambling Enforcement Act of 2006 (UIGEA), which prohibits
the use of banking instruments, including credit cards, checks, or
fund transfers, for interstate Internet gambling. UIGEA includes
exceptions, including, but not limited to, one that permits
individual states to create a regulatory framework to enable
intrastate Internet gambling, provided the bets or wagers are made
exclusively within a single state whose state laws or regulations
comply with all of the following:
   (1) Contain certain safeguards regarding those transactions,
including both of the following:
   (A) Age and location verification requirements.
   (B) Data security standards designed to prevent access to minors
and persons located outside of that state.
   (2) Expressly authorize the bet or wager and the method by which
the bet or wager is made.
   (3) Do not violate any federal gaming statutes, including all of
the following:
   (A) The Interstate Horseracing Act of 1978.
   (B) The Professional and Amateur Sports Protection Act.
   (C) The Gambling Devices Transportation Act.
   (D) IGRA.
   (g) State authorization to operate Internet poker consistent with
federal law, and heightened regulation and enforcement regarding
Internet gambling activity that goes beyond poker, provides
California with the means to protect its citizens and consumers under
certain conditions by providing a framework to ensure that, among
other things, the state is not subject to an unnecessary and
unprecedented expansion of gambling, minors are prevented from
gambling, citizens participating in Internet poker activities are
protected, and the state is not deprived of income tax revenues to
which it would otherwise be entitled from these activities.
   (h) The Legislature recognizes that the regulation of gambling
activities within the state's jurisdiction is of particular concern
to the public interest, particularly with the advent of the Internet,
and inherent dangers associated with online gambling activities, and
accordingly recognizes the need to protect Californians from an
unprecedented expansion of gambling activities within the state. This
chapter is a vehicle to generate additional resources to protect
Californians from this increased illegal Internet gambling activity.
   (i) At the same time, the Legislature recognizes that
nonhouse-banked poker, as compared to other forms of gaming, poses
less risk to the general public given the element of skill involved.
Poker is unlike casino house-banked games or sports betting, in that
poker operators are not participants in the games and only receive a
set fee for hosting them. Poker players' winnings come not from the
house, but from the pool of other players. In addition, winning at
poker involves some measure of skill. Skillful poker players can earn
winnings in the long term, while players of house-banked games will
always play against odds favoring the house.
   (j) The state currently maintains and implements substantial
regulatory and law enforcement efforts to protect thousands of
Californians who gamble and play, among other things, real-money
poker in licensed California card rooms.
   (k) Federally recognized Indian tribes in California offer
real-money poker, including electronically aided poker, on their
Indian lands as a "class II" game under IGRA.
   (l) While the state, federal government, and tribal governments
exercise regulatory authority over various real-money poker games
offered in California, none of those entities presently provide
licensing requirements, regulatory structure, or law enforcement
tools to protect millions of Californians who play the same games
daily for money on the Internet.
   (m) In order to protect Californians who gamble online, allow
state law enforcement to ensure consumer protection, ensure
compliance with the California Constitution and negotiated compacts,
and keep the revenues generated from Internet gambling in California,
it is in the best interest of the state and its citizens to
authorize, implement, and create a legal system for intrastate
Internet gambling that is limited to the game of poker.
   (n) The California Gambling Control Commission and the Department
of Justice, in conjunction with other state agencies and tribal
governmental gaming regulators, have the expertise to issue licenses
to conduct intrastate Internet poker to existing operators of
regulated gaming that are otherwise eligible to conduct real-money
poker games in California.
   (o) The state also possesses a legitimate interest in protecting
the integrity of state-authorized intrastate Internet poker by
licensing only those entities that are otherwise eligible to offer
real-money poker games within the state that have significant
experience operating in a regulated land-based gaming facility
environment. The state's interests are best met, therefore, by
licensing only those entities in California that have experience
operating card rooms and tribal gaming facilities that are currently
permitted to offer live real-money poker games and are in good
standing with the appropriate state, federal, and tribal regulatory
agencies.
   (p) This chapter will permit a qualified card room to obtain a
license from the state to operate poker games via the Internet for
players within the jurisdiction of California. In addition, the
chapter will permit a qualified federally recognized California
Indian tribe to obtain a license from the state to operate poker
games via the Internet for players located within the jurisdiction of
California.
   (q) Participation by tribes will further the interests of the
state because tribes have significant experience operating and
regulating real-money games.
   (r) The authorization of intrastate Internet poker pursuant to
this chapter does not violate any tribal-state compact or the
California Constitution. Application of UIGEA in California, as set
forth in this chapter, also does not violate federal Indian law by
impinging upon protected tribal sovereignty. Accordingly, nothing in
this chapter shall alter, diminish, or impact the rights and
obligations of tribes in existing tribal-state compacts approved
pursuant to IGRA, or require that those compacts be renegotiated. At
the same time, a tribal licensee does not relinquish any rights under
its compact with the state by virtue of participating in intrastate
Internet poker pursuant to this chapter, which is intended to respect
the regulatory obligations and responsibilities of state, tribal,
and federal authorities.
   (s) The state can only protect Californians from the increased
onslaught of unlawful Internet gambling activity through diligent and
comprehensive enforcement efforts, and in particular, through
heightened enforcement efforts against unauthorized slot machines,
lotteries, sweepstakes cafés offering slot machine gambling and games
that mimic slot machines under the guise of selling Internet usage,
time, or other illusory items, and card rooms that play baccarat and
other banked or percentage card games.
   19990.03.  It is the intent of the Legislature to create a
licensing and regulatory framework and enforcement mechanisms to do
all of the following:
   (a) Ensure that authorized Internet poker games are offered for
play only in a manner that is consistent with federal and state law.
   (b) Ensure the state possesses sufficient resources to enforce
prohibitions of illegal gambling activity, in part, by establishing a
special regulatory enforcement fund and by empowering the department
to retain a portion of receipts collected from illegal operations
and, as necessary, receipts collected in accordance with this
chapter.
   (c) Authorize and direct the commission to issue a license to
certain existing operators of regulated real-money poker games in
California that meet the eligibility requirements and timely submit
the required application and registration fees.
   (d) Include all of the provisions in this chapter as terms of the
license between the state and each licensee, subject to the
enforcement provisions delineated in this chapter.
   (e) Ensure that each licensee complies with applicable laws and
regulations.
   (f) Grant power to the state agencies authorized in this chapter
to oversee the operations of each licensee and to enforce the
provisions of this chapter to ensure that the interests of the state
and registered players are protected.
   (g) Establish a process that includes a background investigation
and requires that each employee of each licensee or subcontractor
receives all necessary work permits from the state and, in the case
of a qualified Indian tribe, as applicable, from that tribe's gaming
regulatory authority.
   (h) Ensure that the state is able to collect income tax revenues
from registered players participating in Internet poker activity in
the state.
   (i) Distribute regulatory fees collected by the state from each
licensee to the Internet Poker Fund, as established in Section
19990.75, which shall be administered by the Controller, subject to
annual appropriation by the Legislature for the following:
   (1) The actual costs of license oversight, consumer protection,
state regulation, and problem gambling programs.
   (2) Other purposes related to this chapter as the Legislature may
decide, including, but not limited to, enforcement efforts related to
illegal Internet gambling activities.
   (j) Create systems to protect each registered player's private
information and prevent fraud and identity theft.
   (k) Ensure that registered players are able to have their
financial transactions processed in a secure, timely, and transparent
fashion.
   (l) Require that each licensee provide registered players with
accessible customer service.
   (m) Require that each licensee's Internet poker Web site contain
information relating to problem gambling, including a telephone
number that an individual may call to seek information and assistance
for a potential gambling addiction.
   (n) Require that each licensee, or consortia of eligible
licensees, be organized in California or be a federally recognized
Indian tribe located in California. The licensee, its facilities,
other than redundant servers, its bank accounts and accounting
records related to its intrastate Internet poker operations, and its
registered players' deposits, shall be located entirely within the
state.
   (o) Ensure that each licensee is the primary beneficiary and
majority owner of the Internet poker business. The Internet poker Web
site domain shall be owned by the licensee to ensure protection of
players by readily identifying who is the actual licensee.
   (p) Ensure that all employees of the licensee are physically
present in the state when working on the licensee's Internet poker
Web site or in its facilities connected to the play of Internet poker
in this state, or when in contact with registered players. However,
the licensee shall have discretion to use the expertise of personnel
not physically present in the state when necessary to protect
registered players and state interests, including, but not limited
to, for the purposes of diagnosing and addressing technological
problems, investigating fraud and collusion, and developing and
supervising software and configuration changes.
   (q) Create an express exemption from disclosure, pursuant to the
California Public Records Act under subdivision (b) of Section 6253
of the Government Code, that exempts from public disclosure
proprietary information of a license applicant or a licensee in order
to permit disclosure of confidential information to state agencies
while achieving the public policy goals of deploying secure systems
that protect the interests of both the state and players.
   (r) Require the state to opt out of, and decline to opt into, any
federal framework for Internet gambling.
   (s) As a matter of statewide concern, preempt any city, county, or
city and county from enacting any law or ordinance regulating or
taxing any matter covered in this chapter.

      Article 2.  Definitions


   19990.05.  For the purposes of this chapter, the following words
have the following meanings:
   (a) "Authorized Internet poker game" means any of several card
games, duly authorized by the commission and played on an Internet
poker Web site, that meets all of the following criteria:
   (1) Commonly understood to be a "poker game" that is legal under
state law as of the effective date of this chapter, including, but
not limited to, all of the following:
   (A) Hold'em.
   (B) Stud.
   (C) Omaha.
   (D) Lowball.
   (2) Not a percentage game or banked game in which a licensee,
player, or combination of players operates as the bank or house at
any time during the course of the game.
   (3) Played by individual players against one another, and never by
a field of players against one player, including, but not limited
to, Pai Gow poker, Three Card poker, and other poker variants with
similar rules.
   (b) "Background investigation" means a process of reviewing and
compiling personal and criminal history and financial information
through inquiries of various law enforcement and public sources to
establish a person's qualifications and suitability for any necessary
license or employee work permit issued pursuant to this chapter.
   (c) "Bet" means the placement of a wager in a game.
   (d) "Card room" means a gambling establishment, as defined in
subdivision (o) of Section 19805.
   (e) "Commission" means the California Gambling Control Commission.

   (f) "Core functions" and "core functioning" mean any of the
following:
   (1) The management, administration, or control of wagers on
authorized Internet poker games.
   (2) The management, administration, or control of the games with
which those wagers are associated.
   (3) The development, maintenance, provision, or operation of a
gaming system.
   (g) "Department" means the Department of Justice.
   (h) (1) "Eligible Entity" includes only (A) a card room operated
pursuant to Chapter 5 (commencing with Section 19800) whose owner or
owners have been authorized, subject to oversight by, and in good
standing with the applicable state regulatory authorities, or (B) a
federally recognized California Indian tribe that operates a gaming
facility pursuant to a facility license issued in accordance with a
tribal gaming ordinance approved by the Chair of the National Indian
Gaming Commission and that is eligible to conduct real-money poker at
that facility. An entity identified in this paragraph shall have
operated its gaming facility for at least five years immediately
preceding its application to secure a license to operate an Internet
poker Web site pursuant to this chapter, and shall be in good
standing during that time period with the applicable federal, state,
and tribal regulatory authorities.
   (2) A group of federally recognized California tribes or
California card rooms is eligible to jointly apply for a license
pursuant to this chapter, through an entity organized under state or
federal law, if each entity within the group independently satisfies
the requisite eligibility requirements identified in this chapter.
   (3) Subject to any applicable limited waiver of sovereign immunity
as set forth in subdivision (c) of Section 19990.21, this chapter
does not restrict a tribal licensee from participating as an
instrumentality of a tribal government or a political subdivision of
a tribe, or from forming a separate business entity organized under
federal, state, or tribal law.
   (i) "Employee" means any natural person employed in, or serving as
a consultant or independent contractor with respect to, the core
functioning of the actual operation of an intrastate Internet poker
Web site.
   (j) "Employee work permit" means a permit issued to an employee of
the licensee or a subcontractor by the commission or, if applicable,
tribal gaming regulatory authority, after a background
investigation.
   (k) "Finding of suitability" means a finding by the commission
that a subcontractor meets the qualification criteria described in
Article 4 (commencing with Section 19990.20), and that the person
would not be disqualified on any of the grounds specified in Article
4 (commencing with Section 19990.20).
   (l) "Gambling" means to deal, operate, carry on, conduct,
maintain, or expose for play any game for money.
   (m) "Game" means any gambling game.
   (n) "Gaming system" means the technology, including hardware and
software, used by a licensee to facilitate the offering of authorized
Internet poker games to registered players.
   (o) "Good standing" means that a person has not had a gambling
license suspended or revoked by a final decision of the commission or
been finally ordered by a court of competent jurisdiction to cease
conducting gaming activities.
   (p) "Gross gaming revenues" means the total amount of money paid
to, and retained by, a licensee in connection with the operation of
authorized Internet poker games under this chapter before deducting
the cost of operating those authorized Internet poker games. Gross
gaming revenues shall not include player account deposits, amounts
wagered, except any portion of the amount wagered that is retained by
the licensee as permitted by this chapter, discounts on goods or
services, rebates or promotional discounts or stakes provided to
players, or revenues from nongaming sources.
   (q) "Internet access device" means a personal computer or mobile
communications device used primarily for connection to the Internet,
and incidentally used for the purpose of playing authorized Internet
poker games offered by a licensee.
   (r) "Internet Poker Fund" means the fund established pursuant to
Section 19990.75 for annual appropriation by the Legislature.
   (s) "Internet poker Web site" means an Internet Web site, or
similar communications facility approved by the commission, through
which a bet or wager is initiated, received, or otherwise made for an
authorized Internet poker game.
   (t) "Intrastate" means within the borders and jurisdiction of
California.
   (u) "Key employee" means any natural person employed by a
licensee, subcontractor, or player recruiter, or by a holding or
intermediary company of a licensee, subcontractor, or player
recruiter, who is an officer or director of the licensee or
certificate holder, or who, in the judgment of the commission, has
the authority to exercise significant influence over decisions
concerning the operation of the licensee or certificate holder as
that operation relates to the Internet poker authorized by this
chapter.
   (v) "Land-based gaming facility" means a card room operated
pursuant to Chapter 5 (commencing with Section 19800) or a casino
operated by a federally recognized Indian tribe on Indian land in
California.
   (w) "Licensee" means an eligible entity licensed pursuant to this
chapter to offer the play of authorized Internet poker games to
registered players on an intrastate Internet poker Web site.
   (x) "Online self-exclusion form" means a form on which an
individual notifies a licensee that he or she must be excluded from
participation in authorized Internet poker games for a stated period
of time.
   (y) "Owner" means any person that has a financial interest in, or
control of, a subcontractor or other entity required to be found
suitable under this chapter. An owner of a licensee shall include
only those persons eligible to own a land-based gaming facility in
California. Owner does not include the members or government
officials of a federally recognized California Indian tribe.
   (z) "Per hand charge" means the amount charged by the licensee for
registered players to play in a per hand game.
   (aa) "Per hand game" means an authorized Internet poker game for
which the licensee charges the player for each hand played.
   (ab) "Person" means an individual, corporation, business trust,
estate, trust, partnership, limited liability company, association,
joint venture, government, governmental subdivision, agency, or
instrumentality, public corporation, or any other legal or commercial
entity, including any federally recognized California Indian tribe,
or an entity that is wholly owned by the tribe.
   (ac) "Play settings" means the options and default parameters made
available by a licensee to a registered player in the play of
authorized Internet poker games.
   (ad) "Proprietary information" means and includes all information
that, whether or not patentable or registerable under patent,
copyright, trademark, or similar statutes, (1) can be protected as a
trade secret under California law or any other applicable state law,
federal law, or foreign law, or (2) derives independent economic
value, actual or potential, from not being generally known to the
public or to other persons that can obtain economic value from its
disclosure or use. "Proprietary information" includes, but is not
limited to, computer programs, databases, data, algorithms, formulae,
expertise, improvements, discoveries, concepts, inventions,
developments, methods, designs, analyses, drawings, techniques,
strategies, new products, reports, unpublished financial statements,
budgets, projections, billing practices, pricing data, contacts,
client and supplier lists, business and marketing records, working
papers, files, systems, plans, and all registrations and applications
related thereto.
   (ae) "Proxy player" means the use of a machine, device, or agent,
other than the registered player, to play an authorized Internet
poker game.
   (af) "Registered player" means a player who has registered with a
licensee to play authorized Internet poker games on the licensee's
intrastate Internet poker Web site.
   (ag) "Registration information" means the information provided by
a person to a licensee in order to become a registered player.
   (ah) "Robotic play" means the use of a machine or software by a
registered player or licensee to automate the next player action at
any point in a game, including the use of a proxy player.
   (ai) "State" means the State of California.
   (aj) (1) "Subcontractor" means any person, other than an employee,
that does any of the following:
   (A) On behalf of a licensee, manages, administers, or controls
wagers on authorized Internet poker games provided over the Internet
by a licensee pursuant to this chapter.
   (B) On behalf of a licensee, manages, administers, or controls the
games with which those wagers are associated.
   (C) On behalf of a licensee, develops, maintains, provides, or
operates a gaming system.
   (D) Sells, licenses, or otherwise receives compensation for
selling or licensing information on individuals in California who
made wagers on games over the Internet that were not licensed under
this chapter via a database or customer lists.
   (E) Provides any product, service, financing, or asset to a
licensee and is paid a percentage of gaming revenue by the licensee,
not including fees to financial institutions and payment providers
for facilitating a deposit by a customer.
              (F) Provides intellectual property, including the
trademarks, trade names, service marks, or similar intellectual
property under which a licensee identifies its games to its
customers.
   (G) Receives compensation as part of an affiliate marketing
program for bringing players or potential players to a licensee's
intrastate Internet poker Web site.
   (2) "Subcontractor" shall not include a provider of goods or
services that provides similar goods or services to the public for
purposes other than the operation of Internet gambling activities,
and is not otherwise directly or indirectly involved in the operation
of an Internet poker Web site pursuant to a license issued under
this chapter.
   (ak) "Terms of Use Registered Player's Agreement" means the
agreement offered by a licensee and accepted by a registered player
delineating, among other things, permissible and impermissible
activities on an intrastate Internet poker Web site and the
consequences of engaging in impermissible activities.
   (al) "Tournament" means a commission-approved competition in which
registered players play a series of authorized Internet poker games
to decide the winner.
   (am) "Tournament charge" means the amount charged by the licensee
for registered players to play in a tournament.
   (an) "Tournament winnings" means the amount of any prize awarded
to a registered player in a tournament.
   (ao) "Tribal gaming regulatory authority" means the gaming
regulatory authority of a federally recognized California Indian
tribe that has the authority to regulate gaming on the tribe's Indian
lands pursuant to the federal Indian Gaming Regulatory Act of 1988.
   (ap) "Tribe" means a federally recognized California Indian tribe,
including, but not limited to, the governing body of that tribe or
any entity that is wholly owned by the tribe.
   (aq) "Unlawful Gambling Enforcement Fund" means the special fund
established pursuant to Section 19990.77, the revenue of which are
dedicated to enforcing the prohibitions of this chapter.

      Article 3.  Legal Authorized Internet Poker Games Offered Over
the Internet in California


   19990.10.  Under the federal Unlawful Internet Gambling
Enforcement Act of 2006, California is permitted to authorize games
played via the Internet as long as all players and the online
wagering is located within the jurisdiction of the state and the
games are not played by minors.
   19990.11.  Notwithstanding any other law, a person in California
21 years of age or older is hereby permitted to participate as a
registered player in an authorized Internet poker game provided over
the Internet by a licensee on an approved intrastate Internet poker
Web site as described in this chapter.
   19990.12.  (a) A person shall not offer any game of poker on the
Internet in this state, other than a game operated pursuant to
federal law that is confined to Indian lands with all players
physically present on the Indian lands within this state, unless that
person holds a valid license issued by the state to offer the play
of authorized Internet poker games on an intrastate Internet poker
Web site pursuant to this chapter. A federally recognized California
Indian tribe that operates a gaming facility that accepts bets from
players within this state but who are not physically present on
Indian lands when making the bet shall not be eligible to operate an
Internet poker Web site pursuant to this chapter.
   (b) It is unlawful for any person to offer or play any gambling
game provided on the Internet that is not authorized by the state
pursuant to this chapter.
   (c) It is unlawful for any person to use a device other than an
Internet access device to play any authorized Internet poker game.
   (d) A violation of this chapter is punishable as a misdemeanor.
   19990.13.  Chapter 5 (commencing with Section 19800) does not
apply to this chapter.
   19990.14.  Only poker games consistent with the definition in
Section 19990.05, and approved by the commission for play on an
intrastate Internet poker Web site, may be offered for play on an
intrastate Internet poker Web site pursuant to this chapter. All
other forms of Internet gambling other than Internet poker played in
this state pursuant to this chapter, are prohibited and subject to
penalty as provided in this chapter. This prohibition includes, but
is not limited to, any game offered in Nevada or New Jersey other
than poker, sports betting, any banked or percentage game, and any
game that would be considered class III gaming as that term is used
in the federal Indian Gaming Regulatory Act of 1988 if played on
Indian lands.
   19990.15.  (a) It is unlawful for a person to patronize, or to own
or operate, a place of public accommodation within this state,
including a club or association limited to dues-paying members or
similar restricted groups, or similar establishments, in which
computer terminals, laptop computers, hand-held devices, or similar
devices are made available for accessing Internet Web sites to play
gambling games, or where those devices are otherwise empowered or
enabled to access Internet Web sites to play gambling games.
   (b) It is unlawful for a person to aggregate computers or other
access devices in a public setting within this state for the purpose
of playing a gambling game on the Internet, or to promote,
facilitate, or market that activity.
   (c) This chapter does not restrict a federally recognized Indian
tribal government, or its wholly owned tribal entities, from
participating in activities described in subdivision (a) exclusively
within Indian lands as defined by the federal Indian Gaming
Regulatory Act.
   19990.16.  (a) To protect Californians from an unprecedented and
unwanted expansion of gambling activity on the Internet, and also to
protect California's investments in land-based gaming facilities,
which generate thousands of jobs for Californians and hundreds of
millions of dollars for the state every year, the state shall not
affirmatively elect to be subject to a federal Internet gambling law
that would permit persons, other than tribes operating under
tribal-state gaming compacts, to operate "gaming devices," as that
term is defined by state law and tribal-state gaming compacts, or to
operate house-banked games.
   (b) If a federal law authorizing Internet gambling in the state is
enacted, and if that federal law provides that states may opt out of
the federal Internet gambling scheme, the state shall opt out of
that federal Internet gambling scheme in the manner and time frame
provided by that federal law. In the event the federal law allows
states to affirmatively opt into any federal Internet gambling
scheme, this state shall decline to do so. If the state violates this
subdivision, a licensee shall not be required to pay the fees set
forth in Section 19990.47 and the state shall refund within 30 days
all unused license fees paid to the state to each licensee as
follows:
   (1) The state shall provide any refund owed to licensees from the
Internet Poker Fund.
   (2) In the event that there are insufficient funds in the Internet
Poker Fund to provide these refunds, the state shall provide the
remaining amount from the General Fund.
   (c) A licensee may bring suit to enforce subdivision (b) in state
court.
   (d) If a federal law authorizes Internet gambling agreements
between states or foreign jurisdictions, this state shall not
participate in any such agreement.

      Article 4.  Licensing of Intrastate Internet Poker Web Sites


   19990.20.  (a) (1) Within 270 days after the effective date of
this chapter, the commission, and any other state agency with a duty
pursuant to this chapter, shall adopt 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), in
consultation with the department and federally recognized California
Indian tribes, to implement this chapter, and to facilitate the
operation of intrastate Internet poker Web sites and expedite the
state's receipt of revenues in compliance with this chapter. The
initial adoption, amendment, or repeal of a regulation authorized by
this section is deemed to address an emergency, for purposes of
Sections 11346.1 and 11349.6 of the Government Code, and the
commission and those other state agencies are hereby exempted for
that purpose from the requirements of subdivision (b) of Section
11346.1 of the Government Code. After the initial adoption,
amendment, or repeal of an emergency regulation pursuant to this
section, the commission and those other state agencies shall not
request approval from the Office of Administrative Law to readopt the
regulation as an emergency regulation pursuant to Section 11346.1 of
the Government Code, but shall promulgate permanent regulations in
accordance with all applicable law.
   (2) The regulations adopted by the commission shall address
underage gambling and problem gambling.
   (3) The regulations of the commission also shall provide for
temporary or provisional approvals, licenses, or certificates for
heirs, executors, receivers, trustees, conservators, key employees,
and other persons where an approval, license, or certificate is
required.
   (b) (1) Each state agency with a duty pursuant to this chapter
shall identify a contact person at that agency and describe the
responsibility of the contact with respect to the state agency's
duty.
   (2) Any notice provided by a licensee to a state agency pursuant
to this chapter shall be addressed to the contact identified by the
state agency pursuant to paragraph (1).
   (3) Unless otherwise provided by this chapter, notice by a
licensee to the state shall be deemed effectively given upon personal
delivery, three days after deposit in the United States mail by
certified or registered mail, return receipt requested, one business
day after its deposit with any return receipt express courier,
prepaid, or one business day after electronically confirmed
transmission by facsimile.
   19990.21.  (a) An entity seeking to be licensed to offer
authorized Internet poker games shall apply to the commission for a
license to engage in that activity. The commission shall charge the
license applicant a registration fee sufficient to cover the
reasonable costs associated with the issuance of the license.
   (b) An applicant for an intrastate Internet poker license pursuant
to this chapter shall provide documentation establishing that if the
license is granted, the license applicant is qualified to pay the
license fee required by subdivision (a) of Section 19990.47 from its
own assets, its owner's assets, or through credit extended to the
entity in an amount not to exceed the entity's own assets, or its
owner's assets.
   (c) An applicant for an intrastate Internet poker license pursuant
to this chapter that is a federally recognized California Indian
tribe shall include with its license application a limited waiver of
the applicant's sovereign immunity exclusively to the state and no
other party solely for the limited purpose of enforcing this chapter
and any regulations promulgated thereunder, and with regard to any
claim, sanction, or penalty arising therefrom against the licensee by
the state, and for no other purpose.
   (d) The commission shall issue a license to operate an intrastate
Internet poker Web site to an applicant determined by the commission
to qualify as an eligible entity under this chapter within 90 days of
receiving an application, if the applicant submits a completed
application form and pays the required registration fee within the
time frame specified in subdivision(a).
   (e) The state may only issue licenses to eligible entities
identified within this chapter. Any of the eligible entities may
jointly apply for a license, either as a consortium or by forming an
entity comprised entirely of eligible entities. Each eligible entity
may have an interest in only a single license.
   (f) A license to operate an intrastate Internet poker Web site
pursuant to this chapter shall be issued for a term of 10 years.
Subject to the power of the commission to revoke, suspend, condition,
or limit any license, as provided in this chapter, a license shall
be automatically renewed every 10 years thereafter upon application.
Failure of a licensee to file an application for renewal may be
deemed a surrender of the license.
   (g) All licenses issued pursuant to this chapter before January 1,
2015, shall thereafter take effect on the same date, and in
particular, on January 1, 2015, absent good cause for all of those
licenses to take effect in unison on a subsequent date, as determined
by the commission. Subject to those conditions, all licenses issued
after January 1, 2015, shall take effect on the date issued.
   (h) If commercial infeasibility develops as a result of a change
in federal law rendering the provision of intrastate Internet poker
services illegal, or some other event, a licensee may abandon its
operations after providing the commission with 90 days' advance
notice of its intent and a statement explaining its interpretation
that continuing to operate the intrastate Internet poker Web site is
commercially infeasible. In response to that notice, the state may
file an action in the Superior Court of the County of Sacramento as
it deems necessary to protect any state interests, including, but not
limited to, the interests of registered players.
   19990.22.  (a) All facilities, with the exception of redundant
servers, bank accounts, and accounting records of the license
applicant related to intrastate Internet poker shall be located in
California.
   (b) All subcontractors of a licensee are subject to this
subdivision. If a licensee desires to enter into an agreement with a
subcontractor to provide goods or services in connection with the
operation of authorized Internet poker games, that subcontractor is
subject to this subdivision and investigation and a finding of
suitability as set forth in Section 19990.23.
   (c) In addition to any other confidentiality protections afforded
to license applicants, the state and its agencies shall treat the
proprietary information of a license applicant as confidential to
protect the license applicant and to protect the security of any
prospective intrastate Internet poker Web site. This chapter does not
prohibit the exchange of confidential information among state
agencies considering a license application. The confidentiality
provisions of this chapter exempt proprietary information supplied by
a license applicant to a state agency from public disclosure
consistent with subdivision (b) of Section 6253 of the Government
Code.
   (d) A license applicant shall submit to the commission, together
with its application, a registration fee as specified in subdivision
(a) of Section 19990.21. All moneys collected by the state pursuant
to this subdivision shall be deposited into the Internet Poker Fund.
   19990.23.  (a) The department shall review the suitability of a
subcontractor providing goods or services in connection with a
licensee's operation of an intrastate Internet poker Web site.
   (b) The department may establish a process to conduct a
preliminary determination of suitability based on a partial
investigation of a subcontractor along with a determination of which
subcontractors may be subject to a partial investigation. A partial
investigation is intended to screen out applicants that do not meet
the suitability requirements of this chapter. A partial investigation
shall include fingerprint-based state and federal criminal history
checks and clearances, and inquiries into various public databases
regarding credit history and any civil litigation. A partial
investigation shall also include a review of the subcontractor's
financial status, which shall include the required submission of a
report prepared on behalf of the subcontractor by a
department-approved forensic accounting, audit, or investigative
firm, in a format developed by the department, and at the
subcontractor's expense. The report shall include the financial
information necessary for the department to make a preliminary
determination of suitability. The department may specify additional
requirements regarding the contents of the report and any other
financial information or documentation required to be submitted. A
full investigation shall be conducted of only those subcontractors
that pass the partial investigation and that will undergo a full
investigation pursuant to subdivision (c). Those subcontractors that
do not pass the partial investigation may appeal the decision to the
commission.
   (c) The department shall conduct a full investigation into the
suitability of any subcontractor of a licensee. The investigation
shall include all of the following persons:
   (1) All officers of the subcontractor.
   (2) The owner or owners of the following:
   (A) The subcontractor.
   (B) Any affiliate of the subcontractor.
   (C) Any persons otherwise providing goods to, or performing
services for, the subcontractor related to core functions.
   (D) Any person deemed by the department to have significant
influence over the license applicant or its subcontractors or their
respective operations.
   (3) In the case of a tribe or a wholly owned tribal entity that is
a subcontractor, the investigation shall be limited to the business
officers of the tribal entity that will serve as the subcontractor.
   (d) A full investigation shall include a review and evaluation of
the subcontractor's qualifications and experience to provide the
services anticipated, which shall include the required submission of
a report prepared on each subcontractor by an outside firm contracted
and supervised by the department, in a format developed by the
department, and at the subcontractor's expense. The report shall
include information necessary for the department to make a
determination of suitability, as specified in regulation, consisting
of, but not limited to, personal history, prior activities and
associations, credit history, civil litigation, past and present
financial affairs and standing, and business activities. The
department may specify additional requirements regarding the contents
of the report and other information or documentation required to be
submitted.
   (e) A subcontractor shall not be deemed suitable if the
subcontractor, or any affiliate of the subcontractor, accepted a
wager from any person in California on any form of Internet gaming
prior to ___.

      Article 5.  Requirements for the Operation of an Intrastate
Internet Poker Web Site


   19990.30.  (a) A licensee shall ensure that registered players are
eligible to play authorized Internet poker games and implement
appropriate data security standards to prevent access by a person
whose age and location have not been verified in accordance with this
chapter.
   (b) A registered player shall be physically located within the
State of California at the time of gambling.
   (c) A registered player shall not be less than 21 years of age.
   (d) Each licensee shall do all of the following:
   (1) Prior to registering a person as a registered player or
permitting a person to play an authorized Internet poker game, the
licensee shall verify that the person is 21 years of age or older.
The licensee shall attempt to match the name, address, and date of
birth provided by the person to information contained in records in a
database of individuals who have been verified to be 21 years of age
or older by reference to an appropriate database of government
records. The licensee also shall verify that the physical billing
address on the check or credit card offered for payment by the person
seeking to be a registered player matches the address listed in the
database.
   (2) If the licensee is unable to verify that the person is 21
years of age or older pursuant to subparagraph (1), the licensee
shall require the person to submit age-verification documents
consisting of an attestation signed by the person that he or she is
21 years of age or older and a copy of a valid form of government
identification. For the purposes of this section, a valid form of
government identification includes a driver's license, state
identification card, passport, official naturalization or immigration
document, such as an alien registration receipt card or an immigrant
visa, or United States military identification. The licensee also
shall verify that the physical billing address on the check or credit
card provided by the person matches the address listed in the
government identification.
   (3) The licensee shall not permit registered players to make
payments or withdrawals by money order or cash, except at a
land-based gaming facility operated by the licensee. The licensee
shall submit to each credit card company with which it has credit
card sales information in an appropriate form and format so that the
words "Internet poker" may be printed on the purchaser's credit card
statement when a payment to a licensee is made by credit card.
   (e) If a licensee complies with the requirements of paragraphs (1)
and (2) of subdivision (d), and a person under 21 years of age
participates in an authorized Internet poker game provided by the
licensee, the licensee is not in violation of this section.
   (f) The department may assess civil penalties against a person who
violates this section, whether a licensee, owner, subcontractor, or
player, according to the following schedule:
   (1) Not less than one thousand dollars ($1,000) and not more than
two thousand dollars ($2,000) for the first violation.
   (2) Not less than two thousand five hundred dollars ($2,500) and
not more than three thousand five hundred dollars ($3,500) for the
second violation.
   (3) Not less than four thousand dollars ($4,000) and not more than
five thousand dollars ($5,000) for the third violation.
   (4) Not less than five thousand five hundred dollars ($5,500) and
not more than six thousand five hundred dollars ($6,500) for the
fourth violation.
   (5) Ten thousand dollars ($10,000) for a fifth or subsequent
violation.
   (g) The commission shall, by regulation, provide a process for a
licensee to exclude from play any person who has filled out an online
self-exclusion form.
   (1) The commission shall develop an online self-exclusion form
within six months of the effective date of this chapter.
   (2) The commission shall deliver the form to each licensee.
   (3) A licensee shall prominently display a link to the department'
s Responsible Gambling Internet Web page and the online
self-exclusion form on the Internet Web site that is displayed when
either of the following occurs:
   (A) A person registers as a registered player.
   (B) Each time a registered player accesses the intrastate Internet
poker Web site prior to playing.
   (4) A licensee shall retain the online self-exclusion form to
identify persons who want to be excluded from play. A licensee shall
exclude those persons from play.
   (5) A licensee that has made commercially reasonable efforts to
comply with this subdivision shall not be held liable in any way if a
person who has filled out an online self-exclusion form plays
despite that person's request to be excluded.
   19990.31.  A licensee shall offer only authorized Internet poker
games and process bets in accordance with the specified game and
betting rules established by the licensee and approved by the
commission pursuant to Sections 19990.14 and 19990.32.
   19990.32.  (a) In order to propose a game for play, a licensee
shall provide the commission with both of the following:
   (1) Game rules and betting rules it proposes to offer to
registered players.
   (2) Documentation relating to development and testing of the game'
s software.
   (b) A licensee shall not offer a game for play until the
commission has approved the game rules and betting rules.
   19990.33.  (a) A licensee shall ensure that games are fair.
   (b) A licensee shall display a link on its Internet poker Web site
that includes the following information for each game offered:
   (1) The name of the game.
   (2) Any restrictions on play.
   (3) The rules of the game.
   (4) All instructions on how to play.
   (5) The unit and total bets permitted.
   (6) The registered player's current account balance, which shall
be updated in real time.
   (7) Any other information that a licensee determines is necessary
for the registered player to have in real time to compete fairly in
the game.
   (c) Data used to create game results shall be unpredictable so
that it is infeasible to predict the next occurrence in a game, given
complete knowledge of the algorithm or hardware generating the
sequence and all previously generated numbers.
   (d) A licensee shall deploy controls and technology to minimize
fraud or cheating through collusion, including external exchange of
information between different players, or any other means.
   (1) If a licensee becomes aware that fraud or cheating is taking
place or has taken place, it shall take steps to stop those
activities immediately and inform the department of all relevant
facts.
   (2) The department shall not impose a fine against a licensee to
prevent fraud or cheating if the licensee can demonstrate that it
acted responsibly to prevent those activities as soon as the licensee
became aware of them.
   (e) In a per hand game, if the gaming server or software does not
allow a game to be completed, the game shall be void and all funds
relating to the incomplete game shall be returned to the registered
player's account.
   (f) In a tournament, if the gaming server or software does not
allow the tournament to be completed, all prize money shall be
distributed among players in accordance with the procedure published
by the licensee prior to the commencement of the tournament.
   (g) A licensee shall not display or allow the results from any
authorized Internet poker game, including the redemption of winnings
from any game, to be displayed or represented through any means other
than showing the card faces of the winning hand and the dollar
amount won. No casino game graphics, themes, or titles may be used,
including, but not limited to, depictions of slot machine-style
symbols, banked or banking card games, craps, roulette, keno, lotto,
or bingo.
   (h) A licensee shall not permit the use of robotic play at any
time by itself, a subcontractor, or a player.
   (i) A licensee shall not permit the use of poker game outcomes to
be used in a manner that mimics a slot machine or any other casino
style game.
   19990.34.  (a) A licensee shall register players and establish
player accounts prior to play.
                                              (b) A person shall not
participate in any game provided by a licensee unless the person is a
registered player and holds an account.
   (c) Accounts may be established in person, or by United States
mail, telephone, or by any electronic means.
   (d) To register and establish an account, a person shall provide
the following registration information:
   (1) First name and surname.
   (2) Principal residence address.
   (3) Telephone number.
   (4) Social security number.
   (5) Identification or certification to prove that person is at
least 21 years of age.
   (6) Valid e-mail address.
   (e) A licensee shall provide registered players with the means to
update the registration information provided to the licensee, and
shall require that registered players keep registration information
current.
   (f) This section does not prevent a licensee from entering into a
marketing agreement with a third party, who has been determined to be
suitable as a subcontractor, to recruit people to become registered
players if the registration process described in this section is
under the sole control of the licensee.
   19990.35.  (a) A licensee shall provide a means for registered
players to put funds into a registered player account and transfer
funds out of that account.
   (b) A registered player shall identify the source of funds to be
used to put money into the account established once the registration
process is complete, and a licensee shall provide a means for a
registered player to transfer money into and out of the player's
intrastate Internet poker Web site account.
   (c) At the time of establishing an intrastate Internet poker Web
site account, a registered player shall designate the bank account
into which funds from the registered player's intrastate Internet
poker Web site account are to be transferred.
   (d) A registered player shall establish only one account on any
intrastate Internet poker Web site.
   (e) While playing an authorized Internet poker game, the game
system shall not permit a registered player to increase the amount of
money that player has available at a game table while a hand is in
play. Any increase to the funds available to a player during a hand
shall not take effect until the following hand.
   (f) A licensee shall maintain records on the balance of each
registered player's account.
   (g) A licensee shall not permit a registered player to place a
wager unless the registered player's account has sufficient funds to
cover the amount of the wager.
   (h) A licensee shall not provide credit to a registered player's
account or act as agent for a credit provider to facilitate the
provision of funds.
   (i) No interest shall be paid by a licensee with respect to
registered player accounts.
   (j) A licensee shall segregate funds it holds in all registered
player accounts from all of its other assets.
   (k) A licensee shall not commingle funds in the segregated account
containing funds paid by registered players with any other funds
held by the licensee, including, but not limited to, operating funds
of the licensee. Both the accounts of the licensee and its segregated
registered player accounts shall be held in financial institutions
located in the state.
   (l) Funds held in a registered player's account shall only be used
for the following purposes:
   (1) To pay per hand or tournament charges owed by a registered
player to the licensee for play of authorized Internet poker games.
   (2) To transfer funds from one registered player's account to the
account of another registered player to reconcile the result of a
loss in the play of an authorized Internet poker game.
   (3) To transfer funds from a registered player's account to a
temporary account to be held by a licensee pending the outcome of an
authorized Internet poker game.
   (4) To remit tax proceeds due and owing from a registered player
to the Franchise Tax Board.
   (5) To transfer funds from a registered player's account with the
licensee to an account specified by that registered player upon that
registered player's request.
   19990.36.  Prior to completing the registration process, a
licensee shall explain to the person who is registering in a
conspicuous fashion the privacy policies of the intrastate Internet
poker Web site, and the person shall assent to the following
policies:
   (a) No personally identifiable information shall be shared with
any nongovernment third parties except as provided in subdivision (j)
of Section 19990.41.
   (b) All personally identifiable information about registered
players shall be shared with state agencies, including, but not
limited to, the department, the commission, the Franchise Tax Board,
and the Department of Child Support Services as necessary to assist
them in fulfilling their obligations.
   (c) Personally identifiable information may be shared with
government agencies only as set forth in subdivision (b) or subject
to court order as provided in subdivision (j) of Section 19990.41.
   19990.37.  A licensee may require that a registered player, or a
person registering as a player, agree to a Terms of Use Registered
Player's Agreement.
   19990.38.  A licensee may suspend or revoke the account of a
registered player for any of the following reasons:
   (a) A person or registered player provided false information to
the licensee, including, but not limited to, in the registration
process.
   (b) The registered player has not updated registration information
to keep it current.
   (c) The registered player has violated the intrastate Internet
poker Web site's Terms of Use Registered Player's Agreement.
   (d) The person has already been registered.
   (e) The licensee suspects that the registered player has
participated in an illegal or unauthorized activity on the intrastate
Internet poker Web site.
   (f) The licensee is directed by a state agency to suspend or
revoke the registered player's account.
   19990.39.  Upon registration, and each time a registered player
logs into an intrastate Internet poker Web site, the licensee shall
permit a registered player to adjust his or her play settings to:
   (a) Set a limit on the deposits that can be made per day.
   (b) Set a limit on the aggregate losses in a registered player's
account within a specified period of time.
   (c) Set a limit on the amount of time that a registered player can
play.
   19990.40.  A licensee shall offer customer support that shall be
available to registered players 24 hours per day, 365 days a year.
All employees shall be physically present in the state while in
contact with registered players. However, the licensee shall have
discretion to use the expertise of personnel not physically present
in the state when necessary to comply with this chapter and protect
registered players and state interests, including, but not limited
to, for the purposes of diagnosing and addressing technological
problems, investigating fraud and collusion, and supervising software
and configuration changes. The licensee shall give notice to the
commission when using personnel who are out of state.
   19990.41.  (a) A licensee shall protect the privacy of registered
players and their personally identifiable information.
   (b) A licensee shall comply with all applicable state and federal
privacy and data protection laws.
   (c) At the time of registration with a licensee as a registered
player, and at least once a year thereafter, a licensee shall provide
notice in the form of a separate, written statement, delivered via
the United States Postal Service or electronic mail, to the
registered player that clearly and conspicuously informs the
registered player of all of the following:
   (1) The nature of personally identifiable information collected or
to be collected with respect to the registered player and the nature
of the use of that information.
   (2) The nature, frequency, and purpose of any disclosure that may
be made of personally identifiable information, including an
identification of the types of persons to whom the disclosure may be
made.
   (3) The period during which personally identifiable information
will be maintained by the licensee.
   (4) The times and place at which the registered player may have
access to personally identifiable information in accordance with
subdivision (h).
   (5) The limitations provided by this section with respect to the
collection and disclosure of personally identifiable information by a
licensee.
   (d) A licensee shall not collect personally identifiable
information concerning any registered player without the prior
written or electronic consent of the registered player.
   (e) A licensee may collect personally identifiable information in
order to do both of the following:
   (1) Obtain information necessary to operate the intrastate
Internet poker Web site and offer authorized Internet poker games to
registered players pursuant to this chapter.
   (2) Detect unauthorized play, activities contrary to a licensee's
Terms of Use Registered Player's Agreement, or activities contrary to
state or federal law.
   (f) Except as provided in subdivision (g), a licensee shall not
disclose personally identifiable information concerning any
registered player without the prior written or electronic consent of
the registered player and shall take actions necessary to prevent
unauthorized access to that information by a person other than the
registered player or licensee.
   (g) A licensee may disclose personally identifiable information if
the disclosure is any of the following:
   (1) Necessary to render, or conduct a legitimate business activity
related to, the provision of authorized Internet poker games to the
registered player by the licensee.
   (2) Subject to subdivision (j), made pursuant to a court order
authorizing the disclosure, if the registered player is notified of
the order by the person to whom the order is directed.
   (3) A disclosure of the names and addresses of registered players
to any tournament third party, if both of the following apply:
   (A) The licensee has provided the registered player the
opportunity to prohibit or limit the disclosure.
   (B) The disclosure does not reveal, directly or indirectly, the
nature of any transaction made by the registered player over the
intrastate Internet poker Web site.
   (4) A disclosure to the commission to fulfill its obligations
under this chapter or a state agency as authorized in this chapter.
   (5) A disclosure to persons found suitable under this chapter if
the registered player is notified and consents to the information
being shared.
   (h) A registered player shall be provided access to all personally
identifiable information regarding that registered player that is
collected and maintained by a licensee. The information shall be made
available to the registered player at reasonable times and at a
place designated by the licensee. A registered player shall be
provided reasonable opportunity to correct any error in the
information.
   (i) A licensee shall destroy personally identifiable information
if the information is no longer reasonably necessary for the purpose
for which it was collected, and there are no pending requests or
orders for access to the information under subdivision (j).
   (j) Except as provided in subdivision (g), a governmental or
nongovernmental third party may obtain personally identifiable
information concerning a registered player pursuant to a court order
only if, in the court proceeding relevant to the court order, both of
the following apply:
   (1) The third party offers clear and convincing evidence that the
subject of the information is reasonably suspected of engaging in
criminal activity or otherwise relevant to a pending civil action and
that the information sought would be material evidence in the case.
   (2) The registered player about whom the information is requested
is afforded the opportunity to appear and contest the third-party's
claim.
   19990.42.  A licensee shall establish a book of accounts and
regularly audit all of its financial records and reports, which
shall, at a minimum, include all of the following:
   (a) Monthly auditable and aggregate financial statements of
gambling transactions.
   (b) Monthly calculation of all amounts payable to the state.
   (c) The identity of registered players.
   (d) The balance on each registered player's account at the start
of a session of play, the amount won or lost by each registered
player during a game, and the balance on the registered player's
account.
   (e) The wagers placed on each game, time stamped by the games
server.
   (f) The result of each game, time stamped by the games server.
   (g) The amount, if any, as determined by the registered player,
withheld from winnings for federal or state income tax purposes.
   19990.43.  (a) A licensee shall make all financial records
established and maintained pursuant to Section 19990.42, including,
but not limited to, all books, records, documents, financial
information, and financial reports, available on an electronic basis,
as required by the commission or other state agencies so that those
state agencies can fulfill their responsibilities under this chapter.
A state agency may request specific printed hard copies of records
for good cause.
   (b) The licensee's data shall be retained in a manner by which it
may be accessed online by a state agency with responsibilities under
this chapter. The commission shall identify which state agencies
require online access.
   (c) Notwithstanding subdivision (b), data covered by subdivisions
(d), (e), and (f) of Section 19990.42, shall be accessible to the
state agencies online for 120 days, and, thereafter, archived and
retained for one year.
   19990.44.  (a) A licensee shall implement technical systems that
materially aid the commission in the protection of registered
players. Software shall meet, at a minimum, international industry
standards as verified by a commission-approved gaming laboratory.
   (b) A licensee shall define and document its methodology for
developing software and applications and describe the manner in which
software protects registered players from fraud and other risks in
the play of authorized Internet poker games and in the management of
registered player accounts.
   (c) A licensee shall meet minimum game server connectivity
requirements to ensure that registered players are protected from
losses due to connectivity problems.
   (d) A licensee shall ensure that all transactions involving
registered players' funds shall be recoverable by the system in the
event of a failure or malfunction.
   (e) All information required for reviewing a game interrupted due
to loss of connectivity shall be recoverable by the licensee.
   (f) Preventative and detective controls addressing money
laundering and fraud risks shall be documented and implemented by the
licensee.
   19990.45.  (a) A licensee may charge registered players to play in
authorized Internet poker games.
   (b) Per hand charges are permitted.
   (1) A per hand charge shall be designated and conspicuously posted
on the intrastate Internet poker Web site.
   (2) A licensee may vary the per hand charges to registered players
based on betting limits or other factors.
   (c) Tournament charges shall be permitted.
   (1) A tournament charge shall be designated and conspicuously
posted on the intrastate Internet poker Web site.
   (2) A licensee may vary tournament charges based on tournament
prizes or other factors.
   (d) A licensee shall provide notice to the commission of the
charges to registered players prior to initiating play.
   19990.46.  A licensee may do any of the following:
   (a) Enter into an agreement with any third party to sponsor or
underwrite prizes for a tournament, subject to the approval of the
commission and, if applicable, the tribal gaming regulatory
authority.
   (b) Enter into an agreement to sell advertisement space on any
Internet Web site it controls.
   (c) Enter into an agreement with a third-party subcontractor for
marketing, or any other purpose consistent with this chapter,
including, but not limited to, displaying the name of a marketing
partner on a screen viewed by a registered player. However, a
licensee shall not utilize any brand or business name, including any
derivative brand name with the same or similar wording, or any trade
or service mark, software, technology, operational system, customer
information, or other data acquired, derived, or developed directly
or indirectly from any operation that has accepted a wager from any
person in California on any form of Internet gaming prior to ___. To
the extent any business relationships or financial arrangements were
utilized or existed to further illegal Internet gambling, those
relationships and arrangements shall be discontinued.
   (d) Enable a chat function between registered players if it has in
place effective controls against collusion.
   (e) Post Internet Web links on the Internet Web sites it controls
to permit registered players to access remote Internet Web sites.
However, each licensee is limited to ___ Internet poker Web site for
which ___ which it may offer Internet poker to registered players.
   (f) Enter into contractual agreements with one or more licensees
for the purpose of ensuring adequate player liquidity.
   19990.47.  (a) In support of the application for a license
pursuant to this chapter, the licensee shall remit to the Treasurer a
one-time license fee in the amount of five million ($5,000,000), to
be deposited into the General Fund, and credited against charges
imposed pursuant to subdivision (b) on the licensee's gross gaming
revenues. Upon depletion of the license fee, the commission shall
notify the licensee to commence quarterly payments to the state in
accordance with subdivision (b).
   (b) In consideration of the substantial value of each license, a
licensee shall remit to the Treasurer on a quarterly basis for
deposit in the General Fund an amount equal to 5 percent of its gross
gaming revenues.
   (1) Each quarterly payment shall be due on the 10th day of the
month following the end of each quarter.
   (2) A licensee shall make all electronic and written financial
records available to the Treasurer, the commission, and the
department on an electronic basis.
   (c) Each licensee shall pay a regulatory fee, to be deposited in
the Internet Poker Fund, in an amount, not to exceed ____ ($____) per
year, to be determined by the commission for the reasonable costs of
license oversight, consumer protection, state regulation, problem
gambling programs, and other purposes related to this chapter.
   19990.48.  (a) The licensee shall facilitate the collection of
personal income taxes from registered players by the Franchise Tax
Board and shall be responsible for providing current and accurate
documentation on a timely basis to all state agencies, as provided in
this chapter.
   (b) The state and its agencies shall treat the proprietary
information provided by a licensee as confidential to protect the
licensee and to protect the security of the intrastate Internet poker
Web site.
   (c) The confidentiality provisions of this chapter exempt
proprietary information supplied by a licensee to a state agency from
public disclosure consistent with subdivision (b) of Section 6253 of
the Government Code.
   19990.49.  (a) A licensee shall act expeditiously to cure any
violation of this chapter, or any violation of a regulation adopted
pursuant to this chapter, in the offer or administration of
authorized Internet poker games that interferes with its obligations
to the state or registered players under this chapter.
   (b) If a licensee becomes aware of any violation, it shall notify
the commission immediately and work with the commission to develop a
plan to rectify the violation.
   (c) If the commission becomes aware of any violation, or if it
becomes aware of any activities that might lead to a violation, the
commission shall provide notice of that violation to the licensee and
a reasonable opportunity to cure the violation, before referring the
matter to the department for investigation and possible enforcement.

   (d) All state agencies with responsibilities under this chapter
shall report any actual or suspected violation of this chapter, or
any regulation adopted pursuant to this chapter, or activities that
may lead to a violation, to the department immediately so that the
department can assess whether it needs to commence an investigation
or enforcement action.
   (e) A licensee shall be afforded a reasonable time period to cure
any reported violation.
   (f) The department shall have subpoena power in an investigation
of any violation of this chapter, or any regulation adopted pursuant
to this chapter.
   (g) The department may revoke or suspend any license or work
permit under this chapter upon reaching a finding that the licensee
or employee is in violation of any provision of this chapter, or any
regulation adopted pursuant to this chapter. However, a tribal
licensee shall not have its license suspended or revoked, or be fined
or otherwise penalized, for complying with any applicable federal
law or regulation when operating an Internet poker Web site on Indian
lands. To the extent that any state requirement is more strict than
any applicable federal requirement, the tribal licensee shall comply
with the more strict state requirement unless the federal requirement
preempts state law.
   (h) A licensee may appeal any decision of the department pursuant
to this section to the superior court. The superior court shall hear
any appeal de novo.
   (i) The department shall protect the rights and assets of
registered players on an intrastate Internet poker Web site if the
licensee's license pursuant to this chapter is revoked or the
licensee becomes bankrupt.
   19990.50.  (a) A license issued pursuant to this chapter is not
transferable. To the extent a licensee seeks to change ownership of
its land-based gaming facility, the license held by the licensee
shall be rendered void upon the date of any change of ownership in
the land-based gaming facility. In anticipation of a change in
ownership, the acquiring person shall apply for a license in advance,
at which point the commission shall determine whether the applicant
is legally qualified to be a licensee under this chapter.
   (b) The commission shall investigate to ensure that any person
acquiring an interest in a licensee is suitable and otherwise
financially, technically, and legally qualified to be a licensee
pursuant to this chapter. If an acquiring person is found to be
unsuitable to be a licensee, or otherwise not financially,
technically, or legally qualified to be a licensee, the licensee or
the acquiring person may challenge that determination.
   19990.51.  All facilities, software, including downloadable
programs, and any other property, both tangible and intangible, used
by the licensee in offering authorized Internet poker games for play
on an intrastate Internet poker Web site shall be the property of the
licensee or its subcontractors, and shall be subject to the approval
of the commission.
   19990.52.  If any dispute arises between the state and the
licensee, either the commission or a licensee may file an action in
the superior court of any county in which the commission has an
office for an interpretation of the rights and responsibilities of
the state and the licensee pursuant to this chapter.

      Article 6.  Employee Work Permits


   19990.60.  (a) A licensee shall apply to the commission and, if
applicable, the tribal regulatory authority, for an employee work
permit on behalf of each employee.
   (b) Prior to initiating operations and thereafter, a licensee
shall ensure that every employee has been issued an employee work
permit by the commission and, if applicable, the tribal gaming
regulatory authority, prior to that person having access to the
licensee's facilities. The permit shall be renewed every two years.
   (c) An employee work permit shall not be issued unless, based on
all of the information and documents submitted, the commission and,
if applicable, the tribal gaming regulatory authority is satisfied
that the applicant is, at a minimum, all of the following:
   (1) A person of good character, honesty, and integrity.
   (2) A person whose prior activities, criminal record, if any,
reputation, habits, and associations do not pose a threat to the
integrity of a gaming operation or public interest of this state, or
to the effective regulation and control of controlled gambling, or
create or enhance the dangers of unsuitable, unfair, or illegal
practices, methods, and activities in the conduct of controlled
gambling or in the carrying on of incidental business and financial
arrangements.
   (3) A person who is in all other respects qualified to hold an
employee work permit as provided in this chapter.
   (d) An employee work permit shall not be issued unless the
applicant meets the qualification standards adopted by the
commission. A tribal gaming regulatory authority may impose
additional qualifications with respect to activities on Indian lands.

   19990.61.  An applicant for an employee work permit is
disqualified for any of the following reasons:
   (a) Failure of the applicant to clearly establish eligibility and
qualification in accordance with this chapter.
   (b) Failure of the applicant to provide timely information,
documentation, and assurances required by this chapter or requested
by any state official, failure of the applicant to reveal any fact
material to the qualification, or the supplying of information that
is untrue or misleading as to a material fact pertaining to the
qualification criteria.
   (c) Conviction of a felony, including a conviction by a federal
court, a court in another state, or a court in another country, for a
crime that would constitute a felony if committed in California.
   (d) Conviction of the applicant for any misdemeanor involving
dishonesty or moral turpitude within the 10-year period immediately
preceding the submission of the application, unless the applicant has
been granted relief pursuant to Section 1203.4, 1203.4a, or 1203.45
of the Penal Code. However, the granting of relief pursuant to
Section 1203.4, 1203.4a, or 1203.45 of the Penal Code shall not
constitute a limitation on the discretion of the department or affect
the applicant's burden under subdivision (b).
   (e) Association of the applicant with criminal profiteering
activity or organized crime, as defined by Section 186.2 of the Penal
Code.
   (f) Contemptuous defiance by the applicant of any legislative
investigative body, or other official investigative body of any state
or of the United
States, when that body is engaged in the investigation of crimes
relating to gambling, official corruption related to gambling
activities, or criminal profiteering activity or organized crime, as
defined by Section 186.2 of the Penal Code.
   (g) The applicant is less than 21 years of age.
   19990.62.  The commission and, if applicable, the tribal gaming
regulatory authority shall establish fees to be paid by a licensee
for the reasonable cost of background investigation on employee work
permit applications. The commission shall establish processes for the
revocation or suspension of an intrastate Internet poker license or
employee work permit, and to withdraw an application for an
intrastate Internet poker license or employee work permit. These
processes shall also be followed by the tribal gaming regulatory
authority with respect to activities on Indian lands.
   19990.63.  (a) A licensee or subcontractor of a licensee shall not
enter into, without prior approval of the commission and, if
applicable, the tribal gaming regulatory authority, a contract or
agreement with a person who is denied a gambling license or employee
work permit pursuant to Chapter 5 (commencing with Section 19800), or
whose gambling license or employee work permit is suspended or
revoked by the department or tribal gaming regulatory authority, or
with any business enterprise under the control of that person, after
the date of receipt of notice of the action of the department or
tribal gaming regulatory authority.
   (b) A licensee or subcontractor of a licensee shall not enter into
a contract or agreement with a person or entity that has accepted a
wager from any person in California on any form of Internet gaming
prior to ___, or has been the holder of a direct or indirect
financial interest in a person or entity that has accepted that
wager.
   19990.64.  (a) A licensee or subcontractor of a licensee shall not
employ, without prior approval of the commission and, if applicable,
the tribal gaming regulatory authority, a person in any capacity for
which he or she is required to have an employee work permit, if the
person has been denied a gambling license or an employee work permit
pursuant to Chapter 5 (commencing with Section 19800), or if his or
her gambling license or employee work permit has been suspended or
revoked after the date of receipt of notice of the action by the
commission or tribal gaming regulatory authority. A licensee or
subcontractor of a licensee shall not enter into a contract or
agreement with a person whose application for a gambling license or
an employee work permit has been withdrawn with prejudice, or with a
business enterprise under the control of that person, for the period
of time during which the person is prohibited from filing a new
application for a gambling license or an employee work permit.
   (b) (1) If an employee who is required to hold an employee work
permit pursuant to this chapter is denied an employee work permit, or
has his or her employee work permit revoked by the commission or
tribal gaming regulatory authority, the employee shall be terminated
immediately in all capacities. Upon notifying the licensee of the
action of the commission or tribal gaming regulatory authority, the
employee shall have no further involvement in the gambling operation.

   (2) If an employee who is required to hold an employee work permit
pursuant to this chapter has his or her employee work permit
suspended, the employee shall be suspended in all capacities. Upon
notifying the licensee of the action of the commission or tribal
gaming regulatory authority, the employee shall not be permitted to
have any involvement in the gambling operation during the period of
suspension.
   (3) A licensee or subcontractor of a licensee shall not designate
another employee to replace the employee whose employment was
terminated or suspended, unless the other employee has an existing
work permit.
   (c) A licensee or subcontractor of a licensee shall not pay to a
person whose employment has been terminated or suspended pursuant to
subdivision (b) any remuneration for any service performed in any
capacity in which the person is required to hold an employee work
permit, except for amounts due for services rendered before the date
of receipt of notice of the action of the department or tribal gaming
regulatory authority.
   (d) Except as provided in subdivision (b), a contract or agreement
for the provision of services or property to a licensee or
subcontractor or for the conduct of any activity pertaining to the
operation of an intrastate Internet poker Web site, that is to be
performed by a person required by this chapter, or by regulations
adopted pursuant to this chapter, to hold an employee work permit,
shall be terminated upon a suspension or revocation of the person's
employee work permit.
   (e) In a case in which a contract or agreement for the provision
of services or property to a licensee or an affiliate thereof, or for
the conduct of any activity at an intrastate Internet poker Web
site, is to be performed by a person required by this chapter or by
regulations adopted by the department to hold an employee work
permit, the contract shall be deemed to include a provision for its
termination without liability on the part of the licensee, affiliate,
or subcontractor upon a suspension or revocation of the person's
employee work permit. In any action brought by the commission to
terminate a contract pursuant to subdivision (d) or this subdivision,
it shall not be a defense that the agreement does not expressly
include the provision described in this subdivision, and the lack of
express inclusion of the provision in the agreement shall not be a
basis for enforcement of the contract by a party thereto.

      Article 7.  Protection of Registered Players


   19990.70.  A licensee shall use its best efforts to protect
registered players. Subject to the approval of the commission, and
consistent with uniform standards established by the commission by
regulation, each licensee shall establish administrative procedures
to resolve registered player complaints.
   19990.71.  (a) If a registered player has a complaint against a
licensee, the exclusive remedy shall be to register the complaint
with the commission.
   (b) The commission, in consultation with the department, shall
establish regulations with respect to registered player complaints.
   (c) Under the regulations, the commission shall do all of the
following:
   (1) Investigate registered player complaints to determine if a
licensee has failed to meet its obligations to a registered player.
   (2) Attempt to resolve complaints by registered players if a
licensee fails to meet an obligation to a registered player.
   (3) Initiate enforcement actions to require specific performance
of any obligation that the commission has determined a licensee has
failed to fulfill with respect to a registered player.
   (d) A licensee may appeal any action by the commission pursuant to
this article to the superior court, which shall review the appeal de
novo.

      Article 8.  Financial Provisions for State Regulation and
Unlawful Gambling Enforcement


   19990.75.  The Treasurer shall transfer all amounts received from
a licensee pursuant to subdivision (d) of Section 19990.22 and
subdivision (c) of Section 19990.47 to the Controller for deposit in
the Internet Poker Fund, which is created in the State Treasury, to
be administered by the department. Notwithstanding Section 13340 of
the Government Code, all moneys in the fund are continuously
appropriated to the department and the commission, without regard to
fiscal years, in the amounts necessary for the department and the
commission to perform their duties under Sections 19990.22 and
19990.23, and subdivision (c) of Section 19990.47.
   19990.76.  (a) The state agencies shall submit revenue needs to
fulfill their obligations under this chapter for the upcoming fiscal
year to the Senate Committee on Budget and Fiscal Review and the
Assembly Committee on Budget, as well as the Senate and Assembly
Committees on Governmental Organization and the Department of Finance
on or before March 31 of the preceding fiscal year. A justification
of those costs shall be provided with each submission of revenue
needs.
   (b) The State Department of Alcohol and Drug Programs, Office of
Problem Gambling, shall submit revenue needs for programs to
alleviate problem gambling that results from the offering of
authorized Internet poker games for the upcoming fiscal year to the
Senate Committee on Budget and Fiscal Review and the Assembly
Committee on Budget, as well as the Senate and Assembly Committees on
Governmental Organization, the Senate and Assembly Committees on
Human Services, and the Department of Finance on or before March 31
of the preceding fiscal year. A justification of those costs shall be
provided with each submission of revenue needs.
   (c) With the exception of funding paid into the Unlawful Gambling
Enforcement Fund, as set forth in this article, all remaining
proceeds not allocated pursuant to subdivisions (a) and (b) shall
remain in the Internet Poker Fund subject to appropriation by the
Legislature.
   19990.77.  The Unlawful Gambling Enforcement Fund is hereby
established as a special fund within the General Fund for purposes of
ensuring adequate resources for law enforcement charged with
enforcing the prohibitions and protections of this chapter. The fund
shall be funded by depositing ____ percent of the revenue from the
civil penalties recovered by law enforcement authorities pursuant to
Section 19990.78 into the fund prior to the distribution required
under subdivision (c) of Section 19990.78. Up to ____ million dollars
($____) in the fund may be expended annually by the Attorney
General, upon appropriation by the Legislature, for the purposes of
this chapter.
   19990.78.  (a) A person who engages or conspires to engage in
activities prohibited by this chapter, or by Section 321, 322, 323,
324, 326, 330, 330a, 330b, 330c, 330d, 330.1, 330.4, or 331 of the
Penal Code, is liable for a civil penalty not to exceed ____ dollars
($____) for each violation, in addition to any other penalty or
remedy that may be imposed by law, which shall be assessed and
recovered in a civil action brought in the name of the people of the
State of California by the Attorney General, a district attorney, a
county counsel authorized by agreement with the district attorney in
an action involving the violation of a county ordinance, the city
attorney of a city having a population in excess of 750,000 persons,
the city attorney of a city and county, or, with the consent of the
district attorney, the city prosecutor in a city with a full-time
city prosecutor, in a court of competent jurisdiction.
   (b) The court shall impose a civil penalty for each violation of
this chapter and each violation of Section 321, 322, 323, 324, 326,
330, 330a, 330b, 330c, 330d, 330.1, 330.4, or 331 of the Penal Code.
In determining the amount of the civil penalty, the court shall
consider any relevant circumstance presented by a party to the case,
including, but not limited to, any of the following:
   (1) The nature and seriousness of the misconduct.
   (2) The number of violations.
   (3) The persistence of the misconduct.
   (4) The length of time over which the misconduct occurred.
   (5) The willfulness of the defendant's misconduct.
   (6) The defendant's assets, liabilities, and net worth.
   (c) (1) Civil penalties recovered by law enforcement authorities
pursuant to this section shall be allocated as follows:
   (A) If the action is brought by the Attorney General, one-half of
the penalty collected shall be paid to the treasurer of the county in
which the judgment was entered for deposit into that county's
general fund, and one-half to the Treasurer for deposit into the
Unlawful Gambling Enforcement Fund.
   (B) If the action is brought by a district attorney or county
counsel, the penalty collected shall be paid to the treasurer of the
county in which the judgment was entered for deposit into that county'
s general fund.
   (C) If the action is brought by a city attorney or city
prosecutor, one-half of the penalty collected shall be paid to the
treasurer of the city in which the judgment was entered for deposit
into that city's general fund, and one-half to the treasurer of the
county in which judgment was entered for deposit into that county's
general fund. If the action is brought by the city attorney of a city
and county, the entire amount of the penalty collected shall be paid
to the treasurer of the city and county in which the judgment was
entered.
   (2) The revenue from all civil penalties allocated pursuant to
subparagraph (A) of paragraph (1), upon appropriation by the
Legislature, shall be used by the Attorney General exclusively to
support the investigation and enforcement of violations of California'
s gambling laws, including the implementation of judgments obtained
from prosecution and investigation of those violations and other
activities that are in furtherance of this chapter and Sections 321,
322, 323, 324, 326, 330, 330a, 330b, 330c, 330d, 330.1, 330.4, and
331 of the Penal Code.
   (3) The revenue from all civil penalties allocated pursuant to
subparagraphs (B) and (C) of paragraph (1) shall be for the exclusive
use of the district attorney, the county counsel, the city attorney,
or the city prosecutor, whichever is applicable, for the enforcement
of this chapter and existing laws prohibiting illegal gambling
activity.

      Article 9.  Preemption of Local Regulation


   19990.80.  A city, county, or city and county shall not regulate,
tax, or enter into a contract with respect to any matter related to
this chapter. This section shall not prohibit or limit the
investigation and prosecution of any violation of this chapter.

      Article 10.  Reports to the Legislature


   19990.85.  Notwithstanding Section 10231.5 of the Government Code,
within one year of the operative date of this chapter, and annually
thereafter, the commission, in consultation with the department, the
Treasurer, and the Franchise Tax Board, shall issue a report to the
Legislature describing the state's efforts to meet the policy goals
articulated in this chapter. The report shall be submitted in
compliance with Section 9795 of the Government Code.
   19990.86.  (a) At least four years after the issue date of any
license pursuant to this chapter, but no later than five years after
that date, the Bureau of State Audits shall issue a report to the
Legislature detailing the implementation of this chapter.
   (b) A report submitted pursuant to subdivision (a) shall be
submitted in compliance with Section 9795 of the Government Code.
   (c) Pursuant to Section 10231.5 of the Government Code, this
section is repealed four years after the date on which this chapter
becomes operative.

      Article 11.  Nonseverability


   19990.87.   The provisions of this act are not severable. If any
provision of this act or the application thereof to any person or
circumstances is held invalid, the entire act shall be invalid.
  SEC. 2.  Section 330d is added to the Penal Code, to read:
   330d.  (a) An "electronic sweepstakes device" is a slot machine or
device within the meaning of Section 330b, and is subject to that
section.
   (b) For the purposes of this section, an "electronic sweepstakes
device" is a computer or other mechanically or electronically
operated machine or device, or network of machines or devices, that
is capable of displaying information on a screen or other mechanism,
and that is intended to be used at least in part for the purpose of
conducting or promoting a sweepstakes through the use of an
entertaining display, including the entry process or the reveal of a
prize, regardless of whether that computer, machine, device, or
network also serves other purposes, such as Internet access, and
regardless of whether consideration is required in order to enter the
sweepstakes or to operate the device in connection with the conduct
or promotion of the sweepstakes.
   (c) For the purposes of this section, "entertaining display" means
a video or mechanical representation of the outcome of the
sweepstakes, including, but not limited to, video or mechanical reels
or other casino game themes.
   (d) For the purposes of this section, a "sweepstakes" is defined
as a game, advertising scheme or plan, or other promotion conducted
in connection with the sale of a consumer product, with or without
payment of consideration, that a person may enter to win or become
eligible to receive a prize of money, credit, allowance, or thing of
value, or that may be given in trade, the determination of which is
based upon skill or chance, or both, and regardless of the point at
which the prize is determined.
  SEC. 3.  The Legislature finds and declares that Chapter 5.2
(commencing with Section 19990.01) of Division 8 of the Business and
Professions Code, as added by this act, imposes a limitation on the
public's right of access to the meetings of public bodies or the
writings of public officials and agencies within the meaning of
Section 3 of Article I of the California Constitution. Pursuant to
that constitutional provision, the Legislature makes the following
findings to demonstrate the interest protected by this limitation and
the need for protecting that interest:
   The limitations on the people's rights of access set forth in this
chapter are necessary to protect the privacy and integrity of
information submitted by the registered players as well as the
proprietary information of the license applicants and licensees.
  SEC. 4.  No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.
  SEC. 5.  This act is an urgency statute necessary for the immediate
preservation of the public peace, health, or safety within the
meaning of Article IV of the Constitution and shall go into immediate
effect. The facts constituting the necessity are:
   In order to protect the interests of Californians who play online
gambling games and to ensure that people play fair games, that the
state realizes the revenues, and that suitable persons operate
intrastate Internet poker Web sites, it is necessary that this act
take effect immediately.