Amended in Assembly June 27, 2013

Senate BillNo. 472


Introduced by Senator Hill

February 21, 2013


An act to amend Sectionbegin delete 19855end deletebegin insert 19852.2, 19855, and 19858end insert of the Business and Professions Code, relating to gaming.

LEGISLATIVE COUNSEL’S DIGEST

SB 472, as amended, Hill. Gaming: licenses.

The Gambling Control Act provides for the licensure of certain individuals and establishments involved in various gambling activities, and for the regulation of those activities, by the California Gambling Control Commission. The act requires every person who is required to hold a state license to obtain the license prior to engaging in the activity or occupying the position with respect to which the license is required, except as specified. Existing law requires every person who, by order of the commission, is required to apply for a gambling license or a finding of suitability to file an application within 30 calendar days after receipt of the order.

This bill would instead require the application described above to be filed within 45 calendar days after receipt of an order of the commission.

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The act also provides that, if the owner of a gambling enterprise is not a person, the owner is not eligible for a gambling license unless specified persons involved in the enterprise obtain a gambling license. Existing law authorizes the commission to exempt specified limited partners in limited partnerships from the licensing requirements described above solely for the purpose of the licensure of a card club located on the grounds of a racetrack that is owned by a limited partnership that also owns the racetrack.

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This bill would instead authorize the commission to exempt specified limited partners in limited partnerships from the licensing requirements described above solely for the purpose of the licensure of a card club located on any portion of, or contiguous to, the grounds upon which a racetrack is or had been previously located and horse race meetings were authorized to be conducted by the California Horse Racing Board one or before January 1, 2012, that is owned by a limited partnership that also owns or owned the racetrack.

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Existing law provides that a person is deemed unsuitable to hold a state gambling license to own a gambling establishment if the person, or any partner, officer, director, or shareholder of the person, has any financial interest in any business or organization that is engaged in a prohibited form of gambling, whether within or without this state, except as specified.

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This bill would exempt from these provisions a person who is licensed or had an application to be licensed on file with the commission on or before February 1, 2013, has a financial interest in a business or organization engaged in gambling prohibited by state law that was closed and was not engaged in prohibited gambling at the time the person was either licensed or had filed an application to be licensed with the commission, and has a financial interest in a gambling establishment that is located on any portion of, or contiguous to, the grounds on which a racetrack is or had been previously located and horserace meetings were authorized to be conducted by the California Horse Racing Board on or before January 1, 2012, that is directly or indirectly owned by a racetrack limited partnership owner, as defined. The bill would require an exempted person described above, within 3 years of obtaining a financial interest in a business or organization that is engaged in any form of prohibited gambling, as specified, to either divest that person’s interest in the business or organization, or divest that person’s interest in the gambling enterprise or gambling establishment for which the person is licensed or has applied to be licensed by the commission. The bill would also require an exempted person to inform the commission within 30 days of the date on which a business or organization in which the person has a financial interest begins to engage in any form of prohibited gambling, as specified.

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Vote: majority. Appropriation: no. Fiscal committee: begin deleteno end deletebegin insertyesend insert. State-mandated local program: no.

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

P3    1begin insert

begin insertSECTION 1.end insert  

end insert

begin insertSection 19852.2 of the end insertbegin insertBusiness and Professions
2Code
end insert
begin insert is amended to read:end insert

3

19852.2.  

(a) Notwithstanding Section 19852 or any other
4provision ofbegin delete law to the contrary,end deletebegin insert law,end insert and solely for the purpose
5of the licensure of a card club locatedbegin delete on the grounds of a racetrackend delete
6begin insert on any portion of, or contiguous to, the grounds upon which a
7racetrack is or had been previously located and horse race
8meetings were authorized to be conducted by the California Racing
9Board on or before January 1, 2012,end insert
that is owned by a limited
10partnership that also ownsbegin insert or ownedend insert the racetrack, thebegin delete commission,
11in its discretion, mayend delete
begin insert commission may, at its discretion,end insert exempt
12begin delete from the licensing requirements of this chapter all of the following:end delete
13begin insert all of the following from the licensing requirements of this chapter:end insert

14(1) The limited partners in a limited partnership that holds
15interest in a holding company if all of the following criteria are
16met:

17(A) The limited partners of the limited partnership in the
18aggregate directly hold at least 95 percent of the interest in the
19holding company.

20(B) The limited partner is one of the following:

21(i) An “institutional investor” as defined in subdivision (w) of
22Section 19805.

23(ii) An “employee benefit plan” as defined in Section 1002(3)
24of Title 29 of the United States Code.

25(iii) An investment company that manages a state university
26endowment.

27(2) Other limited partners in a limited partnership described in
28paragraph (1), if the partners do not number more than five and
29each partner indirectly owns 1 percent or less of the shares of the
30interest in the holding company.

31(3) A limited partner in a limited partnership that holds in the
32aggregate less than 5 percent of the interest in a holding company.

33(b) Nothing in this section shall be construed to limit the
34licensure requirements for a general partner of a limited partnership
35or a limited partner that is not specifically described in this section.

36

begin deleteSECTION 1.end delete
37begin insertSEC. 2.end insert  

Section 19855 of the Business and Professions Code
38 is amended to read:

P4    1

19855.  

Except as otherwise provided by statute or regulation,
2every person who, by statute or regulation, is required to hold a
3state license shall obtain the license prior to engaging in the activity
4or occupying the position with respect to which the license is
5required. Every person who, by order of the commission, is
6required to apply for a gambling license or a finding of suitability
7shall file the application within 45 calendar days after receipt of
8the order.

9begin insert

begin insertSEC. 3.end insert  

end insert

begin insertSection 19858 of the end insertbegin insertBusiness and Professions Codeend insert
10begin insert is amended to read:end insert

11

19858.  

(a) Except as provided in subdivisionbegin delete (b),end deletebegin insert (b) and (c),end insert
12 a person shall be deemed to be unsuitable to hold a state gambling
13license to own a gambling establishment if the person, or any
14partner, officer, director, or shareholder of the person, has any
15financial interest in any business or organization that is engaged
16in any form of gambling prohibited by Section 330 of the Penal
17Code, whether within or without this state.

18(b) Subdivision (a)begin delete doesend deletebegin insert shallend insert not apply to a publicly traded
19racing association, a qualified racing association, or any person
20who is licensed pursuant to subdivision (b) or (c) of Section 19852.

begin insert

21(c) Subdivision (a) shall not apply to a person who meets all of
22the following criteria:

end insert
begin insert

23(1) The person is licensed or had an application to be licensed
24on file with the commission on or before February 1, 2013.

end insert
begin insert

25(2) The person has a financial interest in a business or
26organization engaged in gambling prohibited by Section 330 of
27the Penal Code that was closed and was not engaged in prohibited
28gambling at the time the person was either licensed or had filed
29an application to be licensed with the commission.

end insert
begin insert

30(3) The person has a financial interest in a gambling
31establishment that is located on any portion of, or contiguous to,
32the grounds on which a racetrack is or had been previously located
33and horse race meetings were authorized to be conducted by the
34California Horse Racing Board on or before January 1, 2012.

end insert
begin insert

35(4) The grounds upon which the gambling establishment
36described in paragraph (3) is located are directly or indirectly
37owned by a racetrack limited partnership owner. For purposes of
38this paragraph, a “racetrack limited partnership owner” is defined
39as a limited partnership, or a number of related limited
40partnerships, that is or are at least 80 percent capitalized by limited
P5    1partners that are an “institutional investor” as defined in
2subdivision (w) of Section 19805, an “employee benefit plan” as
3defined in Section 1002(3) of Title 29 of the United States Code,
4or an investment company that manages a state university
5endowment.

end insert
begin insert

6(d) Within three years of obtaining a financial interest in a
7business or organization that is engaged in any form of gambling
8prohibited by Section 330 of the Penal Code, a person described
9in subdivision (c) shall either divest that person’s interest in the
10business or organization, or divest that person’s interest in the
11gambling enterprise or gambling establishment for which the
12person is licensed or has applied to be licensed by the commission.

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begin insert

13(e) A person described in subdivision (c) shall inform the
14commission within 30 days of the date on which a business or
15organization in which the person has a financial interest begins
16to engage in any form of gambling prohibited by Section 330 of
17the Penal Code.

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