Amended in Assembly August 5, 2013

Amended in Assembly June 27, 2013

Senate BillNo. 472


Introduced by Senator Hill

February 21, 2013


An act to amendbegin delete Sectionend deletebegin insert Sectionsend insert 19852.2, 19855, and 19858 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. Thebegin insert act makes any person who willfully violates any of the provisions of the act for which a penalty is not expressly provided guilty of a misdemeanor.end insert

begin insertTheend insert 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.

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.

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 Boardbegin delete oneend deletebegin insert onend insert or before January 1, 2012, that is owned by a limited partnership that also owns or owned the racetrack.

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.

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 begin deletehorserace end deletebegin inserthorse race end insertmeetings 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 ofbegin delete obtaining a financial interest in aend deletebegin insert the date the closedend insert business or organizationbegin delete that isend deletebegin insert reopens and becomesend insert 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 orbegin delete hasend deletebegin insert hadend insert 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.begin insert The bill would also makeend insertbegin insert it unlawful, during the 3-year divestment period,end insertbegin insert for any cross-promotion or marketing, as defined, to occur between the business or organization that is engaged in any form of prohibited gambling, as specified, and a gambling enterprise or gambling establishment, as described. By creating a new crime, the bill would impose a state-mandated local program.end insert

begin insert

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.

end insert
begin insert

This bill would provide that no reimbursement is required by this act for a specified reason.

end insert

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

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

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SECTION 1.  

Section 19852.2 of the Business and Professions
2Code
is amended to read:

3

19852.2.  

(a) Notwithstanding Section 19852 or any other
4provision of law, and solely for the purpose of the licensure of a
5card club located on any portion of, or contiguous to, the grounds
6upon which a racetrack is or had been previously located and
7horserace meetings were authorized to be conducted by the
8Californiabegin insert Horseend insert Racing Board on or before January 1, 2012, that
9is owned by a limited partnership that also owns or owned the
10racetrack, the commission may, at its discretion, exempt all of the
11following from the licensing requirements of this chapter:

12(1) The limited partners in a limited partnership that holds
13interest in a holding company if all of the following criteria are
14met:

15(A) The limited partners of the limited partnership in the
16aggregate directly hold at least 95 percent of the interest in the
17holding company.

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

19(i) An “institutional investor” as defined in subdivision (w) of
20Section 19805.

21(ii) An “employee benefit plan” as defined in Section 1002(3)
22of Title 29 of the United States Code.

P4    1(iii) An investment company that manages a state university
2endowment.

3(2) Other limited partners in a limited partnership described in
4paragraph (1), if the partners do not number more than five and
5each partner indirectly owns 1 percent or less of the shares of the
6interest in the holding company.

7(3) A limited partner in a limited partnership that holds in the
8aggregate less than 5 percent of the interest in a holding company.

9(b) Nothing in this section shall be construed to limit the
10licensure requirements for a general partner of a limited partnership
11or a limited partner that is not specifically described in this section.

12

SEC. 2.  

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

14

19855.  

Except as otherwise provided by statute or regulation,
15every person who, by statute or regulation, is required to hold a
16state license shall obtain the license prior to engaging in the activity
17or occupying the position with respect to which the license is
18required. Every person who, by order of the commission, is
19required to apply for a gambling license or a finding of suitability
20shall file the application within 45 calendar days after receipt of
21the order.

22

SEC. 3.  

Section 19858 of the Business and Professions Code
23 is amended to read:

24

19858.  

(a) Except as provided inbegin delete subdivisionend deletebegin insert subdivisionsend insert (b)
25and (c),a person shall be deemed to be unsuitable to hold a state
26gambling license to own a gambling establishment if the person,
27or any partner, officer, director, or shareholder of the person, has
28any financial interest in any business or organization that is
29engaged in any form of gambling prohibited by Section 330 of the
30Penal Code, whether within or without this state.

31(b) Subdivision (a) shall not apply to a publicly traded racing
32association, a qualified racing association, or any person who is
33licensed pursuant to subdivision (b) or (c) of Section 19852.

34(c) Subdivision (a) shall not apply to a person who meets all of
35the following criteria:

36(1) The person is licensed or had an application to be licensed
37on file with the commission on or before February 1, 2013.

38(2) The person has a financial interest in a business or
39organization engaged in gambling prohibited by Section 330 of
40the Penal Code that was closed and was not engaged in prohibited
P5    1gambling at the time the person was either licensed or had filed
2an application to be licensed with the commission.

3(3) The person has a financial interest in a gambling
4establishment that is located on any portion of, or contiguous to,
5the grounds on which a racetrack is or had been previously located
6and horserace meetings were authorized to be conducted by the
7California Horse Racing Board on or before January 1, 2012.

8(4) The grounds upon which the gambling establishment
9described in paragraph (3) is located are directly or indirectly
10owned by a racetrack limited partnership owner. For purposes of
11this paragraph, a “racetrack limited partnership owner” is defined
12as a limited partnership, or a number of related limited partnerships,
13that is or are at least 80 percent capitalized by limited partners that
14are an “institutional investor” as defined in subdivision (w) of
15Section 19805, an “employee benefit plan” as defined in Section
161002(3) of Title 29 of the United States Code, or an investment
17company that manages a state university endowment.

18(d) Within three years ofbegin delete obtaining a financial interest in aend deletebegin insert the
19date the closed end insert
business or organizationbegin delete that isend deletebegin insert reopens or becomesend insert
20 engaged in any form of gambling prohibited by Section 330 of the
21Penal Code, a person described in subdivision (c) shall either divest
22that person’s interest in the business or organization, or divest that
23person’s interest in the gambling enterprise or gambling
24establishment for which the person is licensed or has applied to
25be licensed by the commission.

26(e) A person described in subdivision (c) shall inform the
27commission within 30 days of the date on which a business or
28organization in which the person has a financial interest begins to
29engage in any form of gambling prohibited by Section 330 of the
30Penal Code.

begin insert

31(f) During the three-year divestment period described in
32subdivision (d), it is unlawful for any cross-promotion or marketing
33to occur between the business or organization that is engaged in
34any form of gambling prohibited by Section 330 of the Penal Code
35and the gambling enterprise or gambling establishment described
36in paragraph (3) of subdivision (c). For purposes of this
37subdivision, “cross-promotion or marketing” means the offering
38to any customers of the gambling enterprise or gambling
39establishment anything of value related to visiting or gambling at
P6    1the business or organization engaged in any form of gambling
2prohibited by Section 330 of the Penal Code.

end insert
begin insert
3

begin insertSEC. 4.end insert  

No reimbursement is required by this act pursuant to
4Section 6 of Article XIII B of the California Constitution because
5the only costs that may be incurred by a local agency or school
6district will be incurred because this act creates a new crime or
7infraction, eliminates a crime or infraction, or changes the penalty
8for a crime or infraction, within the meaning of Section 17556 of
9the Government Code, or changes the definition of a crime within
10the meaning of Section 6 of Article XIII B of the California
11Constitution.

end insert


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