Amended in Senate April 4, 2013

Senate Bill No. 190

Introduced by Senator Wright

February 7, 2013

An act to add Chapter 4.7 (commencing with Section 19750) to Division 8 of the Business and Professions Code, and to amend Sections 336.9 and 337a of the Penal Code, relating to gambling, and declaring the urgency thereof, to take effect immediately.

LEGISLATIVE COUNSEL’S DIGEST

SB 190, as amended, Wright. Gambling: sports wagering.

(1) The California Constitution prohibits various gaming activities within the state, including casino-style gaming, but authorizes the Governor, subject to ratification by the Legislature, to negotiate and conclude compacts for the operation of slot machines and the conduct of lottery games and banking and percentage card games by federally recognized Indian tribes on Indian lands in California in accordance with federal law. The California Constitution also authorizes the Legislature to provide for the regulation of horse racing, charitable bingo games, the California State Lottery, and charitable raffles.

Existing law prohibits a person, whether or not for gain, hire, or reward, from making a betting pool or placing a bet or wager on the result of any contest or event, including a sporting event, as specified.

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. Existing law provides for the enforcement of those regulations by the Department of Justice. Any violation of these provisions is punishable as a misdemeanor, as specified.

The Horse Racing Law provides for the licensure of every person who participates in, or has anything to do with, the racing of horses, and every employee of a parimutuel department by the California Horse Racing Board. The board is responsible for adopting rules and regulations for the protection of the public, the control of horse racing, and parimutuel wagering, as well as enforcing all laws, rules, and regulations dealing with horse racing and parimutuel wagering. The law permits the board to authorize an association licensed to conduct a racing meeting to also operate a satellite wagering facility at its racetrack inclosure, and for fairs to locate a satellite wagering facility at their fairgrounds, under specified conditions. Any violation of these provisions is punishable as a misdemeanor.

This bill would authorize the owner or operator of a gambling establishment, or the owner or operator of a horse racing track, including a horse racing association, begin delete or of a satellite wagering facility, end delete with a current license, to conduct wagering on professional and collegiate sports or athletic events, other than on collegiate sports or athletic events that take place in California or in which any California college team participates, by applying to the California Gambling Control Commission or the California Horse Racing Board, as specified, for authorization to conduct sports wagering, and by paying an annual fee for deposit in the Gambling Addiction Program Fund. The bill would require each licensed entity to remit to the begin delete treasurer end delete begin insert Treasurer end insert on a monthly basis for deposit in the begin delete general fund end delete begin insert General Fund end insert , an amount equal to 7.5% of its gross revenues begin insert generated by sports wagering activities end insert . The bill would require the commission, the board, and the department to adopt regulations to implement these provisions, including authority to adopt regulations establishing fees in a reasonable amount to recover costs incurred performing their duties pursuant to these provisions.

The bill would require the department, among other things, to investigate any request made by the board or the commission in connection with an application for authorization, and to investigate suspected violations of the above provisions. The bill would authorize the board, commission, and department to regulate sports wagering to the same extent these entities currently regulate other legal gambling in this state, including the ability to audit the books and records of a licensed entity begin insert related to the sports wagering activity end insert . The bill would also prohibit a licensed entity from, among other things, accepting a wager from any person who is under 21 years of age or whose name appears on a self-exclusion list. Any violation of these provisions would be punishable as a crime. By creating a new crime, the bill would impose a state-mandated local program.

(2) Existing federal law, the Indian Gaming Regulatory Act of 1988, provides for the negotiation and execution of tribal-state gaming compacts for the purpose of authorizing certain types of gaming on Indian lands within a state. The California Constitution authorizes the Governor to negotiate and conclude compacts, subject to ratification by the Legislature. Existing law expressly ratifies a number of tribal-state gaming compacts, and amendments of tribal-state gaming compacts, between the State of California and specified Indian tribes.

This bill would authorize a federally recognized Indian tribe that is not a gambling establishment or a horse racing track begin insert , or that has entered into a compact agreement with the state authorizing the operation of a satellite wagering facility, end insert to conduct sports wagering consistent with the requirements of the federal Indian Gaming Regulatory Act of 1988, and under terms no more stringent than those applicable to any other owner or operator in the state.

(3) 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.

(4) This bill would declare that it is to take effect immediately as an urgency statute.

Vote: ²⁄₃. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

SECTION 1.  

Chapter 4.7 (commencing with Section 19750)
is added to Division 8 of the Business and Professions Code, to
read:

 

Chapter  4.7. Sports Wagering

 

19750.  

The following entities may conduct wagering on sports
events as authorized pursuant to this chapter:

(a) The owner or operator of a gambling establishment with a
current license issued by the California Gambling Control
Commission pursuant to Chapter 5 (commencing with Section
19800).

(b) The owner or operator of a horse racing track, including a
horse racing association, begin delete or of a satellite wagering facility, end delete with a
current license issued by the California Horse Racing Board
pursuant to Chapter 4 (commencing with Section 19400). A
licensed horse racing track is authorized to conduct sports wagering
pursuant to this subdivision if it has an agreement in place with
the organization recognized by the board that is responsible for
negotiating purse agreements, satellite wagering agreements, and
all other business agreements on behalf of the horsemen and
horsewomen participating in a racing meeting.

(c) A federally recognized Indian tribe that is not authorized
pursuant to subdivision (a) or (b) begin insert , or that has entered into a
compact agreement with the state authorizing the operation of a
satellite wagering facility, end insert may conduct sports wagering as
authorized by the federal Indian Gaming Regulatory Act of 1988
(18 U.S.C. Secs. 1166 to 1168, incl., and 25 U.S.C. Sec. 2701 et
seq.), and under terms no more stringent than those applicable to
any other owner or operator of a gambling establishment in the
state.

19752.  

As used in this chapter, the following definitions apply:

(a) “Board” means the California Horse Racing Board.

(b) “Commission” means the California Gambling Control
Commission.

(c) “Department” means the Department of Justice.

(d) “Licensed operator” means any of the entities listed in
Section 19750 that begin delete is end delete begin insert are end insert authorized pursuant to this chapter to
conduct sports wagering.

(e) “Prohibited sports event” means any collegiate sport or
athletic event that takes place in California, or a sports event in
which any California college team participates, regardless of the
location at which the event takes place.

(f) “Sports event” shall include any professional sports or
athletic event, and any collegiate sports or athletic event, except
a prohibited sports event.

(g) “Sports wagering” means the business of accepting wagers
on a sports event by any legal system or method of wagering,
including, but not limited to, exchange wagering, parlays, over
and under, money line, and straight bets.

19754.  

(a) (1) An owner or operator of a gambling
establishment seeking to conduct sports wagering shall apply to
the commission for authorization to conduct sports wagering.

(2) An owner or operator of a horse racing track begin delete or satellite
wagering facility end delete seeking to conduct sports wagering shall apply
to the board for authorization to conduct sports wagering.

(b) The board or the commission, as the case may be, shall hear
and decide promptly, and in reasonable order, all applications to
conduct sports wagering from owners and operators of licensed
gambling establishments begin delete , end delete begin insert and end insert licensed horse racing tracks begin delete , and
satellite wagering facilities end delete . Authorization to conduct sports
wagering shall not be unreasonably withheld for any applicant that
is in good standing and has a current license issued pursuant to
Chapter 4 (commencing with Section 19400) or Chapter 5
(commencing with Section 19800).

(c) An owner or operator of a gambling establishment begin delete and an
owner or operator of end delete begin insert or end insert a horse racing track begin delete or satellite wagering
facility end delete that conducts sports wagering shall pay an annual fee of
three thousand dollars ($3,000) to the State Department of Alcohol
and Drug Programs for deposit in the Gambling Addiction Program
Fund.

(d) Each licensed operator shall remit to the treasurer on a
monthly basis for deposit in the general fund an amount equal to
7.5 percent of its gross revenues begin insert generated by sports wagering
activities end insert . Each monthly payment shall be due on the 10th day of
the following month. For the purposes of determining gross
revenues, the licensed operator and the treasurer shall use generally
accepted accounting principles.

19756.  

(a) Application for authorization to conduct sports
wagering shall be made on forms furnished by the board and the
commission.

(b) The application for authorization to conduct sports wagering
shall include all of the following:

(1) The name of the licensee.

(2) The name and location of the gambling establishment begin delete , end delete begin insert or end insert
horse racing track begin delete , or satellite wagering facility end delete .

(3) The names of all persons directly or indirectly interested in
the business and the nature of the interest.

(4) A description of the proposed sports wagering operation.

(5) Any other information and details the board or the
commission may require in order to discharge its duty properly.

19758.  

The board and the commission shall adopt regulations
for the administration of this chapter, and may adopt regulations
establishing fees in a reasonable amount necessary to recover costs
incurred by the board or the commission relating to the
administration of this chapter. The board and the commission shall
consult with each other in the adoption of regulations pursuant to
this section, and may adopt joint regulations.

19760.  

The regulations adopted by the board and the
commission shall do all of the following:

(a) Provide for the approval of wagering rules and equipment
by the department to ensure fairness to the public and compliance
with state law, including, but not limited to, all of the following:

(1) Acceptance of wagers on a series of sports events.

(2) Types of wagering tickets that may be used.

(3) The method of issuing tickets.

(b) Govern all of the following:

(1) The extension of credit.

(2) The cashing, deposit, and redemption of checks or other
negotiable instruments.

(3) The amount of cash reserves to be maintained by licensed
operators to cover winning wagers.

(4) The provision of reliable records, accounts, and reports of
transactions, operations, and events, the method of accounting to
be used by licensed operators, and the types of records required
to be maintained.

19762.  

The sports wagering authorized pursuant to this chapter
may be conducted only at the gambling establishment begin delete , end delete begin insert or end insert horse
racing track begin delete , or satellite wagering facility end delete of the licensed operator,
or on Indian lands consistent with the federal Indian Gaming
Regulatory Act of 1988 (18 U.S.C. Secs. 1166 to 1168, incl., and
25 U.S.C. Sec. 2701 et seq.).

19764.  

A licensed operator shall not do any of the following:

(a) Accept a wager on a sports event from any person who is
not physically present at the facility where the sports wagering is
conducted.

(b) Accept a wager from a person using any form of credit to
place the wager.

(c) Accept a wager from a person who is under 21 years of age.

(d) Admit into the sports wagering facility, or accept wagers
from, any person whose name appears on any self-exclusion list.

19766.  

A licensed operator shall establish the odds it will pay
on wagers placed on sports events.

19768.  

(a) A licensed operator shall not conduct any sports
wagering in violation of any provision of this chapter, any
regulation adopted pursuant to this chapter, or any governing local
ordinance.

(b) Any person who willfully violates any provision of this
chapter is guilty of a misdemeanor.

19770.  

(a) The department shall have all of the following
responsibilities:

(1) To investigate any request made by the board or the
commission in connection with an application for authorization
pursuant to this chapter. The department may recommend the
denial or the limitation, conditioning, or restriction of any
authorization.

(2) To monitor the conduct of all licensed operators and other
persons having a material involvement, directly or indirectly, with
a sports wagering operation.

(3) To investigate suspected violations of this chapter.

(4) To investigate complaints that are lodged against licensed
operators, or other persons associated with a sports wagering
operation, by members of the public.

(5) To initiate, when appropriate, disciplinary actions. In
connection with any disciplinary action, the department may seek
restriction, limitation, suspension, or revocation of any license,
permit, authorization, or approval pursuant to this chapter, Chapter
4 (commencing with Section 19400), or Chapter 5 (commencing
with Section 19800), or the imposition of any fine upon any person
licensed, permitted, authorized, or approved pursuant to those
chapters.

(6) To adopt regulations reasonably related to its functions and
duties as specified in this chapter.

(7) To adopt regulations establishing fees in the reasonable
amount necessary to recover costs incurred by the department
relating to the enforcement of this chapter.

(b) The department has all powers necessary and proper to
enable it to carry out fully and effectually its duties and
responsibilities specified in this chapter.

19772.  

(a) The department shall make appropriate
investigations as follows:

(1) To determine whether there has been any violation of this
chapter or any regulations adopted under this chapter.

(2) To determine any facts, conditions, practices, or matters that
it may deem necessary or proper to aid in the enforcement of this
chapter or any regulation adopted under this chapter.

(3) To aid in adopting regulations.

(b) If, after any investigation, the department is satisfied that a
license, permit, authorization, or approval pursuant to this chapter,
Chapter 4 (commencing with Section 19400), or Chapter 5
(commencing with Section 19800) should be suspended or revoked,
it shall file an accusation in accordance with Chapter 5
(commencing with Section 11500) of Part 1 of Division 3 of Title
2 of the Government Code.

(c) In addition to any action that the board or commission may
take against a license, permit, finding of suitability, or approval,
the board or commission may also require the payment of fines or
penalties. However, any fine imposed shall not exceed twenty
thousand dollars ($20,000) for each separate violation of any
provision of this chapter or any regulation adopted under this
chapter.

19773.  

The board, commission, and department shall have the
authority to regulate sports wagering to the same extent that these
entities regulate other legal gambling in this state, including the
ability to audit the books and records of a licensed operator begin insert related
to the sports wagering activity end insert .

SEC. 2.  

Section 336.9 of the Penal Code is amended to read:

336.9.  

(a) Notwithstanding Section 337a, and except as
provided in subdivision (b), any person who, not for gain, hire, or
reward other than that at stake under conditions available to every
participant, knowingly participates in any of the ways specified in
paragraph (2), (3), (4), (5), or (6) of subdivision (a) of Section
337a in any bet, bets, wager, wagers, or betting pool or pools made
between the person and any other person or group of persons who
are not acting for gain, hire, or reward, other than that at stake
under conditions available to every participant, upon the result of
any lawful trial, or purported trial, or contest, or purported contest,
of skill, speed, or power of endurance of person or animal, or
between persons, animals, or mechanical apparatus, is guilty of
an infraction, punishable by a fine not to exceed two hundred fifty
dollars ($250).

(b) Subdivision (a) does not apply to any of the following
situations:

(1) Any bet, bets, wager, wagers, or betting pool or pools made
via the Internet.

(2) Betting pools with more than two thousand five hundred
dollars ($2,500) at stake.

(3) Any sports wagering authorized pursuant to Chapter 4.7
(commencing with Section 19750) of Division 8 of the Business
and Professions Code.

SEC. 3.  

Section 337a of the Penal Code is amended to read:

337a.  

(a) Except as provided in Section 336.9, and as
authorized pursuant to Chapter 4.7 (commencing with Section
19750) of Division 8 of the Business and Professions Code, every
person who engages in one of the following offenses shall be
punished for a first offense by imprisonment in a county jail for a
period of not more than one year or in the state prison, or by a fine
not to exceed five thousand dollars ($5,000), or by both
imprisonment and fine:

(1) Pool selling or bookmaking, with or without writing, at any
time or place.

(2) Whether for gain, hire, reward, or gratuitously, or otherwise,
keeps or occupies, for any period of time whatsoever, any room,
shed, tenement, tent, booth, building, float, vessel, place, stand,
or enclosure, of any kind, or any part thereof, with a book or books,
paper or papers, apparatus, device, or paraphernalia, for the purpose
of recording or registering any bet or bets, any purported bet or
bets, wager or wagers, any purported wager or wagers, selling
pools, or purported pools, upon the result, or purported result, of
any trial, purported trial, contest, or purported contest, of skill,
speed, or power of endurance of person or animal, or between
persons, animals, or mechanical apparatus, or upon the result, or
purported result, of any lot, chance, casualty, or unknown or
contingent event whatsoever.

(3) Whether for gain, hire, reward, or gratuitously, or otherwise,
receives, holds, or forwards, or purports or pretends to receive,
hold, or forward, in any manner whatsoever, any money, thing, or
consideration of value, or the equivalent or memorandum thereof,
staked, pledged, bet, or wagered, or to be staked, pledged, bet, or
wagered, or offered for the purpose of being staked, pledged, bet,
or wagered, upon the result, or purported result, of any trial, or
purported trial, or contest, or purported contest, of skill, speed, or
power of endurance of person or animal, or between persons,
animals, or mechanical apparatus, or upon the result, or purported
result, of any lot, chance, casualty, or unknown or contingent event
whatsoever.

(4) Whether for gain, hire, reward, or gratuitously, or otherwise,
at any time or place, records, or registers any bet or bets, wager
or wagers, upon the result, or purported result, of any trial, or
purported trial, or contest, or purported contest, of skill, speed, or
power of endurance of person or animal, or between persons,
animals, or mechanical apparatus, or upon the result, or purported
result, of any lot, chance, casualty, or unknown or contingent event
whatsoever.

(5) Being the owner, lessee, or occupant of any room, shed,
tenement, tent, booth, building, float, vessel, place, stand,
enclosure, or grounds, or any part thereof, whether for gain, hire,
reward, or gratuitously, or otherwise, permits that space to be used
or occupied for any purpose, or in any manner prohibited by
paragraph (1), (2), (3), or (4).

(6) Lays, makes, offers, or accepts any bet or bets, or wager or
wagers, upon the result, or purported result, of any trial, or
purported trial, or contest, or purported contest, of skill, speed, or
power of endurance of person or animal, or between persons,
animals, or mechanical apparatus.

(b) In any accusatory pleading charging a violation of this
section, if the defendant has been once previously convicted of a
violation of any subdivision of this section, the previous conviction
shall be charged in the accusatory pleading, and, if the previous
conviction is found to be true by the jury, upon a jury trial, or by
the court, upon a court trial, or is admitted by the defendant, the
defendant shall, if he or she is not imprisoned in the state prison,
be imprisoned in a county jail for a period of not more than one
year and pay a fine of not less than one thousand dollars ($1,000)
and not to exceed ten thousand dollars ($10,000). Nothing in this
paragraph shall prohibit a court from placing a person subject to
this subdivision on probation. However, that person shall be
required to pay a fine of not less than one thousand dollars ($1,000)
nor more than ten thousand dollars ($10,000) or be imprisoned in
a county jail for a period of not more than one year, as a condition
thereof. In no event does the court have the power to absolve a
person convicted pursuant to this subdivision from either being
imprisoned or from paying a fine of not less than one thousand
dollars ($1,000) and not more than ten thousand dollars ($10,000).

(c) In any accusatory pleading charging a violation of this
section, if the defendant has been previously convicted two or
more times of a violation of any subdivision of this section, each
previous conviction shall be charged in the accusatory pleadings.
If two or more of the previous convictions are found to be true by
the jury, upon a jury trial, or by the court, upon a court trial, or are
admitted by the defendant, the defendant shall, if he or she is not
imprisoned in begin delete a end delete begin insert the end insert state prison, be imprisoned in a county jail for
a period of not more than one year or pay a fine of not less than
one thousand dollars ($1,000) nor more than fifteen thousand
dollars ($15,000), or be punished by both imprisonment and fine.
Nothing in this paragraph shall prohibit a court from placing a
person subject to this subdivision on probation. However, that
person shall be required to pay a fine of not less than one thousand
dollars ($1,000) nor more than fifteen thousand dollars ($15,000),
or be imprisoned in a county jail for a period of not more than one
year as a condition thereof. In no event does the court have the
power to absolve a person convicted and subject to this subdivision
from either being imprisoned or from paying a fine of not more
than fifteen thousand dollars ($15,000).

(d) Except where the existence of a previous conviction of any
subdivision of this section was not admitted or not found to be true
pursuant to this section, or the court finds that a prior conviction
was invalid, the court shall not strike or dismiss any prior
convictions alleged in the information or indictment.

(e) This section applies not only to persons who commit any of
the acts designated in paragraphs (1) to (6), inclusive, of
subdivision (a), as a business or occupation, but also applies to
every person who in a single instance engages in any one of the
acts specified in paragraphs (1) to (6), inclusive, of subdivision
(a).

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 liberty interests of Californians, to ensure
that the state realizes significant revenues from this popular,
pervasive, and legitimate activity, and to ensure that suitable and
qualified persons operate sports betting venues, it is necessary that
this act take effect immediately.