Amended in Senate August 11, 2016

California Legislature—2015–16 Regular Session

Assembly Bill No. 2218

Introduced by Assembly Member Burke

February 18, 2016

An act to amend begin delete Section end delete begin insert Sections end insert 19855 begin insert and 19858 end insert of the Business and Professions Code, relating to gambling.

LEGISLATIVE COUNSEL’S DIGEST

AB 2218, as amended, Burke. Gambling: licenses.

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. begin insert A willful violation of the act is a misdemeanor. end insert Existing law requires every person who is required to hold a state license to obtain the license prior to engaging in the activity or occupying the position with respect to which the license is required, except as specified. Existing law also requires every person who, by order of the commission, is required to apply for a gambling license or a finding of suitability to file an application within 45 calendar days after receipt of the order.

This bill would instead require the application described above to be filed within 60 calendar days after receipt of an order of the commission.

begin insert

Existing law makes it a misdemeanor for a person who deals, plays, or carries on, opens, or causes to be opened, or who conducts, either as owner or employer, whether for hire or not, any of a list of specified gambling games, or any banking or percentage game played with cards, dice, or any device, for money, checks, credit, or any representative of value.

end insert begin insert

Existing law generally requires a person to be deemed unsuitable to hold a state gambling license under the California Gambling Control Act to own a gambling establishment if the person, or any partner, officer, director, or shareholder of that person, has any financial interest in any business or organization that is engaged in any form of gambling prohibited under the provision described above, whether within or without this state. Existing law exempts from these provisions a person who meets specified criteria, including a person who is licensed or had an application to be licensed on file with the commission on or before February 1, 2013. Existing law requires a person exempt under this provision, within 3 years of the date the closed business or organization reopens or becomes engaged in any form of gambling prohibited under the provision described above, to 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.

end insert begin insert

During this 3-year divestment period, existing law makes it unlawful for any cross-promotion or marketing, as defined, to occur between the business or organization that is engaged in any form of gambling prohibited under the provision described above, and a gambling enterprise or gambling establishment.

end insert begin insert

This bill would instead require an exempt person, within 6 years of the date the closed business or organization reopens or becomes engaged in any form of gambling prohibited under the provision described above, to 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. The bill would also make conforming changes. By expanding the scope of an existing crime, the bill would impose a state-mandated local program.

end insert begin insert

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.

end insert begin insert

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

end insert

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

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

SECTION 1.  

Section 19855 of the Business and Professions
Code is amended to read:

19855.  

Except as otherwise provided by statute or regulation,
every person who, by statute or regulation, is required to hold a
state license shall obtain the license prior to engaging in the activity
or occupying the position with respect to which the license is
required. Every person who, by order of the commission, is
required to apply for a gambling license or a finding of suitability
shall file the application within 60 calendar days after receipt of
the order.

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 (b) and (c), 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) shall 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) shall 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” begin delete is defined
as end delete begin insert means end insert 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.

(d) Within begin delete three end delete begin insert six end insert 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 (c) 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.

(e) A person described in subdivision (c) 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.

(f) During the begin delete three-year end delete begin insert six-year end insert divestment period described
in subdivision (d), 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 (c). 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.

(g) During the begin delete three-year end delete begin insert six-year end insert divestment period described
in subdivision (d), any funds used in connection with the capital
improvement of the gambling enterprise or gambling establishment
described in paragraph (3) of subdivision (c) 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.

(h) If, at the end of the begin delete three-year end delete begin insert six-year end insert divestment period
described in subdivision (d), any person described in subdivision
(c) 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.

begin insert

begin insert SEC. 3. end insert   

end insert begin insert

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.

end insert