Amended in Senate July 7, 2015

California Legislature—2015–16 Regular Session

Assembly Bill No. 701

Introduced by Assembly Member Cristina Garcia

February 25, 2015

An act to amend begin delete Section end delete begin insert Sections end insert 19817 begin insert and 19858 end insert of the Business and Professions Code, relating to gaming.

LEGISLATIVE COUNSEL’S DIGEST

AB 701, as amended, Cristina Garcia. begin delete Gaming: Gaming Policy Advisory Committee. end delete begin insert Gaming. end insert

Existing law, the Gambling Control Act, provides for the licensure and regulation of various legalized gambling activities and establishments by the California Gambling Control Commission and the investigation and enforcement of those activities and establishments by the Department of Justice. Existing law requires the commission to establish a 10-member Gaming Policy Advisory Committee for the purpose of discussing matters of controlled gambling regulatory policy and other relevant gambling-related issues. The committee is composed of representatives of controlled gambling licensees and members of the general public in equal numbers.

This bill would increase the membership of the committee from 10 to 12 members, and would instead require the committee to be composed of 5 representatives of controlled gambling licensees, 5 members of the general public, and 2 representatives from the Department of Justice.

begin insert

Under the act, a person is deemed unsuitable to hold a 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.

end insert begin insert

This bill would exempt from that provision a person or entity that has held a license in good standing as an owner of a gambling establishment for at least 5 years as of January 1, 2015, has notified the California Gambling Control Commission and the Department of Justice, has received commission approval to obtain a financial interest in a business or organization within the United States that conducts lawful gambling outside of California that, if conducted within California, would be unlawful, and has paid the commission for the reasonable costs of the investigation and approval for obtaining the financial interest.

end insert

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

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

SECTION 1.  

Section 19817 of the Business and Professions
Code is amended to read:

19817.  

The commission shall establish and appoint a Gaming
Policy Advisory Committee of 12 members. The committee shall
be composed of five representatives of controlled gambling
licensees, five members of the general public, and two members
from the department. The executive director shall, from time to
time, convene the committee for the purpose of discussing matters
of controlled gambling regulatory policy and any other relevant
gambling-related issue. The recommendations concerning gambling
policy made by the committee shall be presented to the
commission, but shall be deemed advisory and not binding on the
commission in the performance of its duties or functions. The
committee may not advise the commission on Indian gaming.

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 19858 of the end insert begin insert Business and Professions Code end insert
begin insert is amended to read: end insert

19858.  

(a) Except as provided in subdivisions begin delete (b) and (c), end delete begin insert (b),
(c), and (d), end insert a person shall be deemed to be 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 any form of gambling prohibited by Section 330
of the Penal Code, whether within or without this state.

(b) Subdivision (a) begin delete shall end delete begin insert does end insert not apply to a publicly traded
racing association, a qualified racing association, or any person
who is licensed pursuant to subdivision (b) or (c) of Section 19852.

begin insert

(c) Subdivision (a) does not apply to a person or entity that
meets all of the following criteria:

end insert begin insert

(1) Holds a license in good standing as an owner of a gambling
establishment pursuant to this chapter for at least five years as of
January 1, 2015.

end insert begin insert

(2) Has notified the commission and the department and
received commission approval to obtain a financial interest in
another business or organization within the United States that
conducts lawful gambling outside of California that, if conducted
within California, would be unlawful.

end insert begin insert

(3) Has paid the commission for the reasonable costs incurred
by the commission for the investigation and approval to obtain
the financial interest described in paragraph (2).

end insert begin delete

(c)

end delete

begin insert (d) end insert  Subdivision (a) begin delete shall end delete begin insert does end insert not apply to a person who meets
all of the following criteria:

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

(2) The person has a financial interest in a business or
organization engaged in gambling prohibited by Section 330 of
the Penal Code 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.

(3) The person 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.

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

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(d)

end delete

begin insert (e) end insert  Within three years of the date the closed business or
organization reopens or becomes engaged in any form of gambling
prohibited by Section 330 of the Penal Code, a person described
in subdivision begin delete (c) end delete begin insert (d) end insert shall 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.

begin delete

(e)

end delete

begin insert (f) end insert  A person described in subdivision begin delete (c) end delete begin insert (d) end insert shall 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 gambling prohibited by Section 330 of the
Penal Code.

begin delete

(f)

end delete

begin insert (g) end insert  During the three-year divestment period described in
subdivision begin delete (d), end delete begin insert (e), end insert it is unlawful for any cross-promotion or
marketing to occur between the business or organization that is
engaged in any form of gambling prohibited by Section 330 of the
Penal Code and the gambling enterprise or gambling establishment
described in paragraph (3) of subdivision begin delete (c). end delete begin insert (d). end insert For purposes of
this subdivision, “cross-promotion or marketing” means the
offering to any customers of the gambling enterprise or gambling
establishment anything of value related to visiting or gambling at
the business or organization engaged in any form of gambling
prohibited by Section 330 of the Penal Code.

begin delete

(g)

end delete

begin insert (h) end insert  During the three-year divestment period described in
subdivision begin delete (d), end delete begin insert (e), end insert any funds used in connection with the capital
improvement of the gambling enterprise or gambling establishment
described in paragraph (3) of subdivision begin delete (c) end delete begin insert (d) end insert shall not be
provided from the gaming revenues of either the business or
organization engaged in gaming prohibited under Section 330 of
the Penal Code.

begin delete

(h)

end delete

begin insert (i) end insert  If, at the end of the three-year divestment period described
in subdivision begin delete (d), end delete begin insert (e), end insert any person described in subdivision begin delete (c) end delete begin insert (d) end insert
has not divested his or her interest in either the gambling enterprise
or gambling establishment or the business or organization engaged
in any form of gaming prohibited under Section 330 of the Penal
Code, the prohibitions of Section 19858 as it read on January 1,
2013, apply.