California Legislature—2015–16 Regular Session

Assembly Bill No. 1573

Introduced by Assembly Member Gray

January 4, 2016

An act to add Chapter 4.6 (commencing with Section 19720) to Division 8 of the Business and Professions Code, and to amend Sections 336.9 and 337a of the Penal Code, relating to gambling, and declaring the urgency thereof, to take effect immediately.

LEGISLATIVE COUNSEL’S DIGEST

AB 1573, as introduced, Gray. Gambling: sports wagering.

The California Constitution prohibits various gaming activities within the state, including casino-style gaming, but authorizes the Governor, subject to ratification by the Legislature, to negotiate and conclude compacts for the operation of slot machines and the conduct of lottery games and banking and percentage card games by federally recognized Indian tribes on Indian lands in California in accordance with federal law. The California Constitution also authorizes the Legislature to provide for the regulation of horse racing, charitable bingo games, the California State Lottery, and charitable raffles.

Existing federal law, referred to as the Professional and Amateur Sports Protection Act, prohibits a governmental entity or a person from conducting a lottery, sweepstakes, or other betting, gambling, or wagering scheme based, directly or indirectly, on competitive games or performances in which amateur or professional athletes participate.

Existing law prohibits a person, whether or not for gain, hire, or reward, from placing a bet or wager on the result of any contest of skill, speed, or power of endurance of person, as specified, and prohibits a person from pool selling or bookmaking.

The Gambling Control Act provides for the licensure of certain individuals and establishments that conduct controlled games, as defined, and for the regulation of these gambling activities by the California Gambling Control Commission. Existing law provides for the enforcement of those regulations by the Department of Justice. Any willful violation of these provisions for which a punishment is not expressly provided, is punishable as a misdemeanor.

The Horse Racing Law provides for the licensure of every person who participates in, or has anything to do with, the racing of horses, and every employee of a parimutuel department by the California Horse Racing Board. The board is responsible for adopting rules and regulations for the protection of the public, the control of horse racing, and parimutuel wagering, as well as enforcing all laws, rules, and regulations dealing with horse racing and parimutuel wagering. The law permits the board to authorize an association licensed to conduct a racing meeting to also operate a satellite wagering facility at its racetrack inclosure, and for fairs to locate a satellite wagering facility at their fairgrounds, under specified conditions. Any violation of these provisions is punishable as a misdemeanor.

This bill would enact the California Interactive Sports Wagering Consumer Protection Act, which would authorize the owner or operator of a card room that holds a state gambling license, a racing association or racing fair with a current license, or a federally recognized California Indian tribe that operates a gaming facility pursuant to a facility license issued in accordance with a tribal gaming ordinance, to accept and facilitate wagering on a sports event, as defined, by any legal system or method of wagering, including, but not limited to, exchange wagering, parlays, over-under, moneyline, and straight bets, by applying to the Department of Justice for a license and authorization to conduct sports wagering, as defined. The bill would require sports wagering to be accepted and executed only using telephone, computer, or another method of electronic wagering communication. The bill would require the department to adopt regulations to implement these provisions, including authority to adopt regulations establishing fees in a reasonable amount necessary to recover the costs incurred by the department relating to the administration of these provisions.

This bill would require the department to, among other things, monitor the conduct of all licensed operators. The bill would prohibit a licensed operator from, among other things, accepting a wager from any person who is under 21 years of age or whose name appears on a self-exclusion list. Any willful violation of these provisions would be punishable as a misdemeanor. By creating a new crime, this bill would impose a state-mandated local program.

This bill would provide that its provisions would become operative only if the federal Professional and Amateur Sports Protection Act is amended or repealed to allow sports wagering in California and a state constitutional amendment to authorize sports wagering has been approved by the voters.

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.

This bill would declare that it is to take effect immediately as an urgency statute.

Vote: ²⁄₃. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

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

SECTION 1.  

(a) Since January 1, 1993, the federal
Professional and Amateur Sports Protection Act (28 U.S.C. Sec.
3701 et seq.), known as PASPA, has prohibited most states and
local governments from authorizing sports wagering.

(b) Under PASPA, Nevada is the only state where full-scale
sports wagering is currently legally conducted, and this activity
has resulted in great direct and indirect revenues to that state’s
economy.

(c) It has been reported that more than 30 million people visit
Nevada every year and place a sports bet. Betting on sporting
events rose 7.7 percent to $3.9 billion in 2014, and revenue hit a
record, jumping 11.8 percent to $227 million, according to the
Nevada Gaming Control Board.

(d) There is no solid data on the volume of illegal sports betting
activity occurring in the United States, but some estimate that
nearly $400 billion is illegally wagered on sports each year.

(e) In January 2015, the American Gaming Association
estimated that Americans were expected to make $3.8 billion worth
of illegal bets on the 2015 Super Bowl between the New England
Patriots and the Seattle Seahawks. That figure stands in stark
contrast to the approximately $100 million bet legally on the Super
Bowl each year. In fact, the illegal market is 38 times greater than
the legal market for sports wagering.

(f) If the federal sports wagering ban is changed to allow sports
wagering across the country, state gaming enforcement agencies
would be required to properly regulate and enforce this activity.

(g) If the federal sports wagering ban is ever lifted, it is in the
best interests of this State that legalized sports wagering be
authorized to be conducted by licensed card rooms, licensed horse
racing associations, and federally recognized Indian tribes, under
regulation and control by the Department of Justice.

SEC. 2.  

Chapter 4.6 (commencing with Section 19720) is added
to Division 8 of the Business and Professions Code, to read:

 

Chapter  4.6. California Interactive Sports Wagering
Consumer Protection Act

 

19720.  

This chapter shall be known, and may be cited, as the
California Interactive Sports Wagering Consumer Protection Act.

19721.  

(a) Subject to a state constitutional amendment that
has been approved by the voters and a change in federal law, the
following entities may be licensed by the department to accept and
facilitate wagering on sports events as authorized pursuant to this
chapter:

(1) A card room that operates pursuant to Chapter 5
(commencing with Section 19800) whose owner or owners have
been authorized, subject to oversight by, and are in good standing
with, the applicable state regulatory authorities.

(2) A racing association or racing fair, with a current license
issued by the California Horse Racing Board pursuant to Chapter
4 (commencing with Section 19400). A licensed racing association
or licensed racing fair may conduct sports wagering only if it has
an agreement in place with the organization recognized by the
board that is responsible for negotiating purse agreements, satellite
wagering agreements, and all other business agreements on behalf
of horsemen and horsewomen participating in a racing meeting.

(3) A federally recognized California Indian tribe that operates
a gaming facility pursuant to a facility license issued in accordance
with a tribal gaming ordinance approved by the Chair of the
National Indian Gaming Commission.

(b) The entities listed in subdivision (a) that are eligible for
licensure pursuant to this chapter may form a partnership, joint
venture, or any other affiliation in order to further the purposes of
this chapter.

19722.  

As used in this chapter, the following definitions shall
apply:

(a) “Board” means the California Horse Racing Board.

(b) “Card room” means a gambling enterprise, as defined in
subdivision (m) of Section 19805.

(c) “Department” means the Department of Justice.

(d) “Licensed operator” means any of the entities listed in
subdivision (a) of Section 19721 that are authorized pursuant to
this chapter to conduct sports wagering.

(e) “Prohibited sports event” means any collegiate sport or
athletic event that takes place in California, or a sports event in
which any California college team participates, regardless of where
the event takes place.

(f) “Sports event” shall include any professional sports or
athletic event, and any collegiate sports or athletic event, except
a prohibited sports event.

(g) “Sports wagering” means the business of accepting wagers
on a sports event by any legal system or method of wagering,
including, but not limited to, exchange wagering, parlays,
over-under, moneyline, and straight bets.

(h) “Internet” means the international computer network of both
federal and nonfederal interoperable packet-switched data
networks.

(i) “Licensed service provider” means a person who is licensed
pursuant to this chapter to provide goods or services to a licensed
operator for use in the operation of an authorized sports wagering
Internet Web site.

19723.  

(a) An entity listed in subdivision (a) of Section 19721
that is seeking to conduct sports wagering shall apply to the
department for authorization to conduct sports wagering.

(b) (1) The department shall hear and decide, and in reasonable
order, all applications to conduct sports wagering from licensed
card rooms, licensed racing associations or racing fairs, federally
recognized Indian tribes, and service providers.

(2) Authorization to conduct sports wagering shall not be
unreasonably withheld from any applicant that is in good standing
and has a current license issued pursuant to Chapter 4 (commencing
with Section 19400) or Chapter 5 (commencing with Section
19800).

(c) Each licensed operator shall pay an annual fee of _____
($_____) to the State Department of Public Health for deposit in
the Gambling Addiction Program Fund.

(d) In consideration of the substantial value of each license,
each licensed operator shall remit to the Treasurer on a quarterly
basis for deposit in the _______ Fund an amount equal to _____
from the total win amount from the facilitation of a sports event
wager.

19724.  

Within 270 days after the operative date of this chapter,
the department shall adopt regulations for the administration of
this chapter and may adopt regulations establishing fees in a
reasonable amount necessary to recover the costs incurred by the
department relating to the administration of this chapter.

19725.  

The regulations adopted by the department shall do
both of the following:

(a) Provide for the approval of wagering rules and equipment
by the department to ensure fairness to the public and compliance
with state law, including, but not limited to, all of the following:

(1) Acceptance of wagers on a series of sports events.

(2) Types of wagering tickets that may be used.

(3) The method of issuing tickets.

(b) Govern all of the following:

(1) The extension of credit.

(2) The cashing, deposit, and redemption of checks or other
negotiable instruments.

(3) The amount of cash reserves to be maintained by licensed
operators to cover winning wagers.

(4) The provision of reliable records, accounts, and reports of
transactions, operations, and events, the method of accounting to
be used by licensed operators, and the types of records required
to be maintained.

19726.  

The sports wagering authorized pursuant to this chapter
shall be accepted and executed only using telephone, computer,
or another method of electronic wagering communication.

19727.  

A licensed operator shall not do any of the following:

(a) Accept a wager from a person who is under 21 years of age.

(b) Accept a sports wager unless the transmission of a wager is
initiated from within the State of California.

(c) Accept a wager from any person whose name appears on
any self-exclusion list.

19728.  

Each licensed operator’s sports wagering Internet Web
site shall contain information relating to problem gambling,
including a telephone number that an individual may call to seek
information and assistance for a potential gambling addiction.

19729.  

A licensed operator shall establish the odds it will pay
on wagers placed on sports events.

19730.  

(a) A licensed operator shall not conduct any sports
wagering in violation of this chapter, any regulation adopted
pursuant to this chapter, or any governing local ordinance.

(b) Any person who willfully violates this chapter is guilty of
a misdemeanor.

19731.  

(a) The department shall have all of the following
responsibilities:

(1) To monitor the conduct of all licensed operators and other
persons having a material involvement, directly or indirectly, with
a sports wagering operation.

(2) To investigate suspected violations of this chapter.

(3) To investigate complaints that are lodged against licensed
operators, or other persons associated with a sports wagering
operation, by members of the public.

(4) To initiate, when appropriate, disciplinary actions. In
connection with any disciplinary action pursuant to this chapter,
the department may seek restriction, limitation, suspension, or
revocation of any license, permit, authorization, or approval
pursuant to this chapter, Chapter 4 (commencing with Section
19400), or Chapter 5 (commencing with Section 19800), or the
imposition of a fine upon a person licensed, permitted, authorized,
or approved pursuant to those chapters.

(5) To adopt regulations related to its functions and duties as
specified in this chapter.

(6) To adopt regulations establishing fees in a reasonable amount
necessary to recover the costs incurred by the department relating
to the enforcement of this chapter.

(b) The department has all powers necessary and proper to
enable it to carry out fully and effectually its duties and
responsibilities as specified in this chapter.

19732.  

(a) The department shall make appropriate
investigations as follows:

(1) To determine whether there has been any violation of this
chapter or of any regulation adopted under this chapter.

(2) To determine any facts, conditions, practices, or matters that
it may deem necessary or proper to aid in the enforcement of this
chapter or of any regulation adopted under this chapter.

(3) To aid in adopting regulations.

(b) If, after any investigation pursuant to this chapter, the
department is satisfied that a license, permit, authorization, or
approval issued pursuant to this chapter, Chapter 4 (commencing
with Section 19400), or Chapter 5 (commencing with Section
19800) should be suspended or revoked, it shall file an accusation
in accordance with Chapter 5 (commencing with Section 11500)
of Part 1 of Division 3 of Title 2 of the Government Code.

(c) In addition to any action that it may take against a license,
permit, finding of suitability, or approval, the department may also
require the payment of fines or penalties. However, any fine
imposed shall not exceed twenty thousand dollars ($20,000) for
each separate violation of this chapter or of any regulation adopted
under this chapter.

19733.  

The department shall have the authority to regulate
sports wagering to the same extent that the department currently
regulates other legal gambling in this state, including the ability
to audit the books and records of a licensed operator.

19734.  

(a) This chapter shall become operative only if both
of the following occur:

(1) The federal Professional and Amateur Sports Protection Act
(28 U.S.C. Sec. 3701 et seq.) is amended or repealed to allow
sports wagering in California.

(2) A state constitutional amendment to authorize sports
wagering has been approved by the voters.

(b) This chapter shall become operative on the date that the
Attorney General executes a declaration, which shall be retained
by the Attorney General, stating that both of the events described
in subdivision (a) have occurred.

(c) In addition to the requirements specified in subdivision (b),
the Attorney General shall post the declaration on the department’s
Internet Web site and the Attorney General shall send the
declaration to the appropriate policy committees of the Legislature
and to the Legislative Counsel.

SEC. 3.  

Section 336.9 of the Penal Code is amended to read:

336.9.  

(a) Notwithstanding Section 337a, and except as
provided in subdivision (b), any person who, not for gain, hire, or
reward other than that at stake under conditions available to every
participant, knowingly participates in any of the ways specified in
paragraph (2), (3), (4), (5), or (6) of subdivision (a) of Section
337a in any bet, bets, wager, wagers, or betting pool or pools made
between the person and any other person or group of persons who
are not acting for gain, hire, or reward, other than that at stake
under conditions available to every participant, upon the result of
any lawful trial, or purported trial, or contest, or purported contest,
of skill, speed, or power of endurance of person or animal, or
between persons, animals, or mechanical apparatus, is guilty of
an infraction, punishable by a fine not to exceed two hundred fifty
dollars ($250).

(b) Subdivision (a) does not apply to begin delete either end delete begin insert any end insert of the following
situations:

(1) Any bet, bets, wager, wagers, or betting pool or pools made
online.

(2) Betting pools with more than two thousand five hundred
dollars ($2,500) at stake.

begin insert

(3) Any sports wagering authorized pursuant to Chapter 4.6
(commencing with Section 19720) of Division 8 of the Business
and Professions Code.

end insert

SEC. 4.  

Section 337a of the Penal Code is amended to read:

337a.  

(a) Except as provided in Section 336.9, begin insert and as
authorized pursuant to Chapter 4.6 (commencing with Section
19720) of Division 8 of the Business and Professions Code, end insert every
person who engages in one of the following begin delete offenses, end delete begin insert offenses end insert
shall be punished for a first offense by imprisonment in a county
jail for a period of not more than one year or in the state prison,
or by a fine not to exceed five thousand dollars ($5,000), or by
both imprisonment and fine:

(1) Pool selling or bookmaking, with or without writing, at any
time or place.

(2) Whether for gain, hire, reward, or gratuitously, or otherwise,
keeps or occupies, for any period of time whatsoever, any room,
shed, tenement, tent, booth, building, float, vessel, place, stand or
enclosure, of any kind, or any part thereof, with a book or books,
paper or papers, apparatus, device or paraphernalia, for the purpose
of recording or registering any bet or bets, any purported bet or
bets, wager or wagers, any purported wager or wagers, selling
pools, or purported pools, upon the result, or purported result, of
any trial, purported trial, contest, or purported contest, of skill,
begin delete speed end delete begin insert speed, end insert or power of endurance of person or animal, or between
persons, animals, or mechanical apparatus, or upon the result, or
purported result, of any lot, chance, casualty, begin insert or end insert unknown or
contingent event whatsoever.

(3) Whether for gain, hire, reward, or gratuitously, or otherwise,
receives, holds, or forwards, or purports or pretends to receive,
hold, or forward, in any manner whatsoever, any money, thing or
consideration of value, or the equivalent or memorandum thereof,
staked, pledged, bet or wagered, or to be staked, pledged, bet or
wagered, or offered for the purpose of being staked, pledged, bet
or wagered, upon the result, or purported result, of any trial, or
purported trial, or contest, or purported contest, of skill, begin delete speed end delete
begin insert speed, end insert or power of endurance of person or animal, or between
persons, animals, or mechanical apparatus, or upon the result, or
purported result, of any lot, chance, casualty, begin insert or end insert unknown or
contingent event whatsoever.

(4) Whether for gain, hire, reward, or gratuitously, or otherwise,
at any time or place, records, or registers any bet or bets, wager
or wagers, upon the result, or purported result, of any trial, or
purported trial, or contest, or purported contest, of skill, begin delete speed end delete
begin insert speed, end insert or power of endurance of person or animal, or between
persons, animals, or mechanical apparatus, or upon the result, or
purported result, of any lot, chance, casualty, begin insert or end insert unknown or
contingent event whatsoever.

(5) Being the owner, lessee or occupant of any room, shed,
tenement, tent, booth, building, float, vessel, place, stand, enclosure
or grounds, or any part thereof, whether for gain, hire, reward, or
gratuitously, or otherwise, permits that space to be used or occupied
for any purpose, or in any manner prohibited by paragraph (1),
(2), (3), or (4).

(6) Lays, makes, offers or accepts any bet or bets, or wager or
wagers, upon the result, or purported result, of any trial, or
purported trial, or contest, or purported contest, of skill, speed or
power of endurance of person or animal, or between persons,
animals, or mechanical apparatus.

(b) In any accusatory pleading charging a violation of this
section, if the defendant has been once previously convicted of a
violation of any subdivision of this section, the previous conviction
shall be charged in the accusatory pleading, and, if the previous
conviction is found to be true by the jury, upon a jury trial, or by
the court, upon a court trial, or is admitted by the defendant, the
defendant shall, if he or she is not imprisoned in the state prison,
be imprisoned in the county jail for a period of not more than one
year and pay a fine of not less than one thousand dollars ($1,000)
and not to exceed ten thousand dollars ($10,000). Nothing in this
paragraph shall prohibit a court from placing a person subject to
this subdivision on probation. However, that person shall be
required to pay a fine of not less than one thousand dollars ($1,000)
nor more than ten thousand dollars ($10,000) or be imprisoned in
the county jail for a period of not more than one year, as a condition
thereof. In no event does the court have the power to absolve a
person convicted pursuant to this subdivision from either being
imprisoned or from paying a fine of not less than one thousand
dollars ($1,000) and not more than ten thousand dollars ($10,000).

(c) In any accusatory pleading charging a violation of this
section, if the defendant has been previously convicted two or
more times of a violation of any subdivision of this section, each
previous conviction shall be charged in the accusatory pleadings.
If two or more of the previous convictions are found to be true by
the jury, upon a jury trial, or by the court, upon a court trial, or are
admitted by the defendant, the defendant shall, if he or she is not
imprisoned in the state prison, be imprisoned in begin delete the end delete begin insert a end insert county jail
for a period of not more than one year or pay a fine of not less than
one thousand dollars ($1,000) nor more than fifteen thousand
dollars ($15,000), or be punished by both imprisonment and fine.
Nothing in this paragraph shall prohibit a court from placing a
person subject to this subdivision on probation. However, that
person shall be required to pay a fine of not less than one thousand
dollars ($1,000) nor more than fifteen thousand dollars ($15,000),
or be imprisoned in begin delete the end delete begin insert a end insert county jail for a period of not more than
one year as a condition thereof. In no event does the court have
the power to absolve a person convicted and subject to this
subdivision from either being imprisoned or from paying a fine of
not more than fifteen thousand dollars ($15,000).

(d) Except where the existence of a previous conviction of any
subdivision of this section was not admitted or not found to be true
pursuant to this section, or the court finds that a prior conviction
was invalid, the court shall not strike or dismiss any prior
convictions alleged in the information or indictment.

(e) This section applies not only to persons who commit any of
the acts designated in paragraphs (1) to (6), inclusive, of
subdivision (a), as a business or occupation, but also applies to
every person who in a single instance engages in any one of the
acts specified in paragraphs (1) to (6), inclusive, of subdivision
(a).

SEC. 5.  

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.

SEC. 6.  

This act is an urgency statute necessary for the
immediate preservation of the public peace, health, or safety within
the meaning of Article IV of the Constitution and shall go into
immediate effect. The facts constituting the necessity are:

In order to give California, at the earliest possible time, a
competitive advantage to license and regulate sports betting if the
federal law is changed to allow it, it is necessary that this bill take
effect immediately.