BILL NUMBER: AB 701 AMENDED
BILL TEXT
AMENDED IN SENATE SEPTEMBER 4, 2015
AMENDED IN SENATE JULY 7, 2015
INTRODUCED BY Assembly Member Cristina Garcia
FEBRUARY 25, 2015
An act to amend Sections 19817 and 19858 of the Business and
Professions Code, relating to gaming.
LEGISLATIVE COUNSEL'S DIGEST
AB 701, as amended, Cristina Garcia. Gaming.
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. A willful violation of any
provision of the act for which a penalty is not expressly provided,
is punishable as a misdemeanor. 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.
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.
This bill would exempt from that provision a person or entity that
has (1) held a license in good standing as an owner of a
gambling establishment for at least 5 years as of January 1, 2015,
(2) has notified the California Gambling Control
Commission and the Department of Justice, has received commission
approval approval, after completion of a
background check conducted by the department, 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, (3) and
has paid the commission and the department for the
reasonable costs of the investigation and approval for obtaining the
financial interest. The bill would require the commission to
adopt necessary regulations addressing, at a minimum, mandatory
periodic reporting to the department by a licensee regarding the
ownership and operations of a business or organization within the
United States that conducts lawful gambling outside of California
that, if conducted in California, would be unlawful.
The bill would make it unlawful for any cross-promotion or
marketing, as defined, to occur between the business or organization
within the United States that conducts lawful gambling outside of
California that, if conducted within California, would be unlawful,
and the gambling establishment, as described. The bill would
prohibit, among other things, a licensee, in connection with a
business or organization that conducts lawful gambling outside of
California that, if conducted within California, would be unlawful,
from knowingly engaging in an activity or entering into an
association that is unsuitable for the licensee because that activity
or association poses an unreasonable threat to the control of
gambling in this state. By creating a new crime, this bill would
impose a state-mandated local program.
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.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no yes .
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.
SEC. 2. Section 19858 of the Business and Professions Code is
amended to read:
19858. (a) Except as provided in subdivisions (b), (c), and
(d), (g), 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) does 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.
(c) Subdivision (a) does not apply to a person or entity that
meets all of the following criteria:
(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. For purposes of this subdivision, "good
standing" means that the owner's state gambling license is not the
subject of outstanding allegations by the department for any
violation of the Gambling Control Act.
(2) Has notified the commission and the department and received
commission approval approval, after
completion of a background check conducted by the department,
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.
A licensee shall provide the department with any information
pertaining to the licensee's proposed participation in that business
or organization as the department may request. The commission shall
not grant a temporary approval under this section.
(3) Has paid the commission and the department for the
reasonable costs incurred by the commission and the department
for the investigation and approval to obtain the financial
interest described in paragraph (2).
(d) It is unlawful for any cross-promotion or marketing to occur
between the business or organization described in paragraph (2) of
subdivision (c) and the gambling establishment described in paragraph
(1) of subdivision (c). For purposes of this subdivision,
"cross-promotion or marketing" means the offering to any customers of
the gambling establishment anything of value related to visiting or
gambling at the business or organization described in paragraph (2)
of subdivision (c).
(e) A licensee shall not, in connection with a business or
organization described in paragraph (2) of subdivision (c), knowingly
do any of the following:
(1) Violate a foreign, federal, tribal, state, county, city, or
township law, regulation, ordinance, or rule, or any equivalent
thereof, concerning the conduct of gambling.
(2) Fail to conduct the operation in accordance with the standards
of honesty and integrity required for gambling in this state.
(3) Engage in an activity or enter into an association that is
unsuitable for a licensee because that activity or association does
any of the following:
(A) Poses an unreasonable threat to the control of gambling in
this state.
(B) Reflects or tends to reflect discredit or disrepute upon this
state or gaming in this state.
(C) Is contrary to the public policy of this state concerning
gaming.
(4) Engage in an activity or enter into an association that
interferes with the ability of this state to collect all license fees
imposed by this chapter.
(5) Employ, contract with, or associate with, a person whom the
commission has found guilty of cheating or to whom the commission has
denied a gambling license, or finding of suitability, on the ground
of unsuitability.
(f) The commission shall adopt necessary regulations addressing,
at a minimum, mandatory periodic reporting to the department by a
licensee regarding the ownership and operations of a business or
organization described in paragraph (2) of subdivision (c).
(d)
(g) Subdivision (a) does 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.
(e)
(h) 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 (d) (g) 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.
(f)
(i) A person described in subdivision (d)
(g) 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.
(g)
(j) During the three-year divestment period described
in subdivision (e), (h), 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
(d). (g). 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.
(h)
(k) During the three-year divestment period described
in subdivision (e), (h), any funds used
in connection with the capital improvement of the gambling
enterprise or gambling establishment described in paragraph (3) of
subdivision (d) (g) 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.
(i)
(l) If, at the end of the three-year divestment period
described in subdivision (e), (h), any
person described in subdivision (d) (g)
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.
SEC. 3. 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.