Amended in Assembly March 26, 2015

California Legislature—2015–16 Regular Session

Assembly Bill No. 903

Introduced by Assembly Member Cristina Garcia

February 26, 2015

An act to amend Section 17539.1 of the Business and Professions Code, relating to sweepstakes.

LEGISLATIVE COUNSEL’S DIGEST

AB 903, as amended, Cristina Garcia. Unfair business practices: contests and sweepstakes.

Existing law generally regulates false advertising and specifically prohibits certain unfair acts or practices undertaken by, or omissions of, a person in the operation of a contest, including misrepresenting the odds of winning a prize or failing to award and distribute all prizes.

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Existing law, with certain exceptions, prohibits using or offering to use any method intended to be used by a person interacting with an electronic video monitor to simulate gambling or play gambling-themed games in a business establishment, as defined, that directly or indirectly implements the predetermination of sweepstakes cash, cash-equivalent prizes, or other prizes of value, or otherwise connects a sweepstakes player or participant with sweepstakes cash, cash-equivalent prizes, or other prizes of value. A violation of this provision is a misdemeanor.

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This bill would, instead, make violation of that provision punishable as a felony.

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By increasing the duties of the local prosecutor, this bill would impose a state-mandated local program.

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Existing law specifies that these provisions do not render unlawful or restrict otherwise lawful games and methods used by a gambling enterprise licensed under the Gambling Control Act or operations of the California State Lottery.

This bill would expand that exemption to include begin delete lawful, technologies, end delete begin insert lawful technologies end insert and software used by a gambling enterprise licensed under the Gambling Control Act or operations of the California State Lottery.

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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.

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

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

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

SECTION 1.  

Section 17539.1 of the Business and Professions
Code is amended to read:

17539.1.  

(a) The following unfair acts or practices undertaken
by, or omissions of, any person in the operation of any contest or
sweepstakes are prohibited:

(1) Failing to clearly and conspicuously disclose, at the time of
the initial contest solicitation, at the time of each precontest
promotional begin delete solicitation end delete begin insert solicitation, end insert and each time the payment
of money is required to become or to remain a contestant, the total
number of contestants anticipated based on prior experience and
the percentages of contestants correctly solving each puzzle used
in the three most recently completed contests conducted by the
person. If the person has not operated or promoted three contests
he or she shall disclose for each prior begin delete contest end delete begin insert contest, end insert if any, the
information required by this section.

(2) Failing to promptly send to each member of the begin delete public end delete
begin insert public, end insert upon his or her request, the actual number and percentage
of contestants correctly solving each puzzle or game in the contest
most recently completed.

(3) Misrepresenting in any manner the odds of winning any
prize.

(4) Misrepresenting in any manner, the rules, terms, or
conditions of participation in a contest.

(5) Failing to clearly and conspicuously disclose with all contest
puzzles and games and with all promotional puzzles and games
all of the following:

(A) The maximum number of puzzles or games that may be
necessary to complete the contest and determine winners.

(B) The maximum amount of money, including the maximum
cost of any postage and handling fees, that a participant may be
asked to pay to win each of the contest prizes then offered.

(C) That future puzzles or games, if any, or tie breakers, if any,
will be significantly more difficult than the initial puzzle.

(D) The date or dates on or before which the contest will
terminate and upon which all prizes will be awarded.

(E) The method of determining prizewinners if a tie remains
after the last tie breaker puzzle is completed.

(F) All rules, regulations, terms, and conditions of the contest.

(6) Failing to clearly and conspicuously disclose the exact nature
and approximate value of the prizes when offered.

(7) Failing to award and distribute all prizes of the value and
type represented.

(8) Representing directly or by implication that the number of
participants has been significantly limited, or that any particular
person has been selected to win a prize unless such is the fact.

(9) Representing directly or by implication that any particular
person has won any money, prize, thing, or other value in a contest
unless there has been a real contest in which a meaningful
percentage, which shall be at least a majority, of the participants
in such contests have failed to win a prize, money, thing, or other
value.

(10) Representing directly or by implication that any particular
person has won any money, prize, thing, or other value without
disclosing the exact nature and approximate value thereof.

(11) Using the word “lucky” to describe any number, ticket,
coupon, symbol, or other entry, or representing in any other manner
directly or by implication that any number, ticket, coupon, symbol,
or other entry confers or will confer an advantage upon the recipient
that other recipients will not have, that the recipient is more likely
to win a prize than are others, or that the number, ticket, coupon,
symbol, or other entry has some value that other entries do not
have.

(12) Using or offering for use any method intended to be used
by a person interacting with an electronic video monitor to simulate
gambling or play gambling-themed games in a business
establishment that (A) directly or indirectly implements the
predetermination of sweepstakes cash, cash-equivalent prizes, or
other prizes of value, or (B) otherwise connects a sweepstakes
player or participant with sweepstakes cash, cash-equivalent prizes,
or other prizes of value. For the purposes of this paragraph,
“business establishment” means a business that has any financial
interest in the conduct of the sweepstakes or the sale of the products
or services being promoted by the sweepstakes at its physical
location. This paragraph does not make unlawful game promotions
or sweepstakes conducted by for-profit commercial entities on a
limited and occasional basis as an advertising and marketing tool
that are incidental to substantial bona fide sales of consumer
products or services and that are not intended to provide a vehicle
for the establishment of places of ongoing gambling or gaming.
begin delete Notwithstanding Section 17534, a violation of this paragraph is
punishable as a felony. end delete

(13) Failing to obtain the express written or oral consent of
individuals before their names are used for a promotional purpose
in connection with a mailing to a third person.

(14) Using or distributing simulated checks, currency, or any
simulated item of value unless there is clearly and conspicuously
printed thereon the words: SPECIMEN--NONNEGOTIABLE.

(15) Representing, directly or by implication, orally or in
writing, that any tie breaker puzzle may be entered upon the
payment of money qualifying the contestant for an extra cash or
any other type begin insert of end insert prize or prizes unless:

(A) It is clearly and conspicuously disclosed that the payments
are optional and that contestants are not required to pay money,
except for reasonable postage and handling fees, to play for an
extra cash or any other type of prize or prizes; and

(B) Contestants are clearly and conspicuously given the
opportunity to indicate they wish to enter such phase of the contest
for free, except for reasonable postage and handling fees the
amount of which shall not exceed one dollar and fifty cents ($1.50)
plus the actual cost of postage and which shall be clearly and
conspicuously disclosed at the time of the initial contest solicitation
and each time thereafter that the payment of such fees is required.
The contestants’ opportunity to indicate they wish to enter for free
shall be in immediate conjunction with and in a like manner as the
contestants’ opportunity to indicate they wish to play for an extra
prize.

(b) For the purposes of this section, “sweepstakes” means a
procedure, activity, or event, for the distribution, donation, or sale
of anything of value by lot, chance, predetermined selection, or
random selection that is not unlawful under other provisions of
law, including, but not limited to, Chapter 9 (commencing with
Section 319) and Chapter 10 (commencing with Section 330) of
Title 9 of Part 1 of the Penal Code.

(c) This section does not apply to an advertising plan or program
that is regulated by, and complies with, the requirements of Section
17537.1.

(d) Nothing in this section shall be deemed to render lawful any
activity that is unlawful pursuant to other law, including, but not
limited to, Section 320, 330a, 330b, 330.1, or 337j of the Penal
Code.

(e) Nothing in this section shall be deemed to render unlawful
or restrict otherwise lawful games, technologies, software, and
methods used by a gambling enterprise licensed under the
Gambling Control Act or operations of the California State Lottery.

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SEC. 2.  

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.

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