BILL ANALYSIS Ó
AB 1395
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Date of Hearing: January 21, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
AB
1395 (Salas) - As Amended January 4, 2016
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Urgency: No State Mandated Local Program: YesReimbursable:
No
SUMMARY:
This bill adds misdemeanor gambling to the list of crimes for
which a person can be prosecuted for money laundering.
AB 1395
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FISCAL EFFECT:
Moderate costs to the California Department of Corrections and
Rehabilitation (CDCR) of less than $150,000 (GF), if less than 5
persons are sentenced to prison per a year, instead of county
jail. According to CDCR, the annual contracted bed rate is
$27,000 per inmate.
Moderate nonreimbursable local costs for incarceration, offset
to a degree by fee revenue.
COMMENTS:
1)Background. Under current law, a person convicted of money
laundering may be punished by imprisonment in county jail for
either a misdemeanor with a maximum of one year or a felony
and by a fine of not more than $250,000 or twice the value of
the property transacted, whichever is greater. Current law
also provides various penalty enhancements for subsequent
convictions or if the dollar amount is greater.
Current law defines "criminal activity" for purposes of money
laundering to mean a criminal offense punishable under the
laws of this state by death, imprisonment in the state prison,
or imprisonment for a county-jail eligible felony or from a
criminal offense committed in another jurisdiction punishable
under the laws of that jurisdiction by death or imprisonment
for a term exceeding one year.
Current law prohibits lotteries, with the exception of the
California State Lottery and bingo or raffles by qualified
charitable organizations, and violation of this crime is
AB 1395
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punishable as misdemeanor. Current law also prohibits any
person from 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, except as specified.
2)Purpose. According to the author, "In 2014, I authored
Assembly Bill (AB) 1439 to clarify that gambling at
sweepstakes cafes is illegal. Specifically, the bill made
internet gambling sweepstakes at these cafes an unfair
business practice and gave the Attorney General, district
attorneys, and city attorneys the authority to bring civil
suit to subject operators to civil penalties for violations.
"On June 25, 2015 the California Supreme Court ruled in People
ex rel. v. Grewal that computerized sweepstakes found at
internet cafes are illegal under state gambling laws. In a
unanimous ruling, the court rejected arguments that the
sweepstakes are different from slot machines because they have
predetermined outcomes.
"Despite AB 1439 and the Grewal decision, new examples of
illegal gambling establishments have emerged. These operators
claim they are not offering gambling or sweepstakes, but
rather 'social gaming and mining.' While the business model
may have changed, the underlying nature of the games these
cafes are offering has not.
AB 1395
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"AB 1395 would provide law enforcement with the ability to use
criminal remedies when combatting egregious cases of
organized, illegal gambling. Specifically, the bill
incorporates violations of the gambling laws into organized
crime and money laundering statutes. This approach has been
used successfully in other states and will give law
enforcement the right tools to go after illegal gambling."
If the District Attorney prosecutes the "criminal activity
wobbler" as a felony, and prevails, and the individual
convicted is subject to state prison due to a prior qualifying
violent felony conviction, the incarceration will be served in
state prison instead of the county jail.
3)Argument in Support. According to the sponsor, the Kern
County District Attorney's Office, "As it stands now, a large,
organized criminal enterprise engaged in operating illegal
slots machines or lotteries can only be charged under the
gambling statutes with misdemeanors. We strongly support the
passage of AB 1395 because it would enable prosecutors to
pursue money laundering violations in limited, severe cases of
illegal gambling when the proceeds of the gambling operations
exceed $5,000 within a seven-day period or $25,000 within a
thirty-day period. We believe that without this proposed
legislative change, the industry responsible for developing
and promoting this form of gambling may very well continue to
move forward with their operations with the understanding that
it is 'worth the risk.'
4)Prior Legislation: AB 1439 (Salas), Chapter 592, Statutes of
AB 1395
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2014, prohibited any person, when conducting a contest or
sweepstakes, from using an electronic video monitor to
simulate gambling or play gambling-themed games that offers
the opportunity to win sweepstakes cash, cash equivalent
prizes, or other prizes of value
Analysis Prepared by:Pedro R. Reyes / APPR. / (916)
319-2081