BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 2218|
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THIRD READING
Bill No: AB 2218
Author: Burke (D)
Amended: 8/19/16 in Senate
Vote: 21
SENATE GOVERNMENTAL ORG. COMMITTEE: 13-0, 6/28/16
AYES: Hall, Berryhill, Bates, Block, Gaines, Galgiani, Glazer,
Hernandez, Hill, Hueso, Lara, McGuire, Vidak
SENATE GOVERNMENTAL ORG. COMMITTEE: 11-0, 8/18/16 (pursuant to
Senate Rule 29.10)
AYES: Hall, Berryhill, Bates, Block, Gaines, Glazer,
Hernandez, Hill, Lara, McGuire, Vidak
NO VOTE RECORDED: Galgiani, Hueso
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
ASSEMBLY FLOOR: 75-0, 4/14/16 - See last page for vote
SUBJECT: Gambling: licenses
SOURCE: Author
DIGEST: This bill extends the provision in existing law
allowing the owners of the Hollywood Park Casino three
additional years to divest of its interest in the card club or
the Nevada casino, known as the SLS Hotel and Casino in Las
Vegas. In addition, this bill extends from 45 to 60 days the
time after receipt of an order by the California Gambling
Control Commission (CGCC) within which a person must apply for a
gambling license or a finding of suitability.
Senate Floor Amendments of 8/19/16 require the City of
Inglewood, by July 1, 2018, to prepare and submit a report to
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the Legislature and appropriate policy committees of the
Legislature on the progress of the construction of the City of
Champions Revitalization Project and its impact on the
divestment requirement.
ANALYSIS:
Existing law:
1)Provides, under the Gambling Control Act (Act), for the
licensure of certain individuals and establishments involved
in various gambling activities, and for the regulation of
those activities by the CGCC.
2)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.
3)Requires every person who, by order of the CGCC, 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.
4)Requires a person to be deemed unsuitable to hold a state
gambling license under the 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 that is engaged in any form of gambling that is a
prohibited form of gambling, whether within or out of this
state.
5)Exempts from the provision above, a person who meets specified
criteria, including a person who is licensed or had an
application to be licensed on file with CGCC on or before
February 1, 2013. A person exempt under this provision is
required to either 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 CGCC,
within three years of the date that the closed business
reopens.
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6)Specifies that during this three-year divestment period, it is
unlawful for any cross-promotion or marketing, as defined, to
occur between the business or organization that is engaged in
any form of prohibited gambling.
This bill:
1)Extends the provision in existing law allowing the owners of
the Hollywood Park Casino three additional years to divest of
its interest in the card club or the Nevada casino, known as
the SLS Hotel and Casino in Las Vegas.
2)Requires the City of Inglewood, by July 1, 2018, to prepare
and submit a report to the Legislature and appropriate policy
committees of the Legislature on the progress of the
construction of the City of Champions Revitalization Project
and its impact on the divestment requirement.
3)Extends from 45 to 60 days the time after receipt of an order
by the CGCC within which a person must apply for a gambling
license or a finding of suitability.
Background
Purpose of the bill. According to the author, "this bill simply
extends the current three year divestment period in current law
by an additional three years. This change would allow the
public pension plans to retain their interest in the card club
during the massive construction period required for the new
project and avoid the public pension plans from having to divest
of the card club during the major stadium/venue construction
period. AB 2218 would retain all of the existing conditions of
the current law exemption, while simply extending it for an
additional three years while the massive construction activities
occur at the site"
In addition the author argues that, "depending on an
individual's various financial holdings, as well as other
background, the documents required to be provided for a gaming
license can be very significant and require much time and effort
to provide. The purpose of this bill is to expand the timeframe
that individuals have to file the application, to facilitate the
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most comprehensive supply of documents to the CGCC."
Previous exemption. The Hollywood Park Casino is owned by a
group of public pension plan investors known as the Stockbridge
Capital Partners, LLC, which also owns a share of the recently
reopened SLS Hotel and Casino in Las Vegas.
The original purchase of the SLS Hotel and Casino, then known as
Sahara Hotel, by Stockbridge was made under the assumption that
leasing out the gaming casino at both the card club at Hollywood
Park and the Sahara Hotel would avoid the prohibition that
prevents an entity owning a card club in California from also
owning an interest in a gambling facility that operates gaming
which is prohibited in California. This assumption was found to
be incorrect.
In 2012, AB 1290 (Hill) was introduced to address which
individuals would need to be licensed at the card club and an
exemption for ownership of the Sahara Hotel. The bill was not
enacted. As a result, the managers of Stockbridge agreed to be
licensed by the CGCC.
However, because of the prohibition against owning out of state
interest in a gambling establishment that operates gaming which
is prohibited in California, the Legislature passed and the
Governor signed SB 472 (Hill, Chapter 760, Statutes of 2013)
which granted a three-year licensing exemption that gave
Stockbridge a three year period after the SLS Casino and Hotel
reopened to either divest their interest in the Hollywood Park
Casino or the SLS Casino and Hotel.
In addition, the bill prohibited co-promotion activities between
the Hollywood Park Casino and the SLS Hotel and Casino. The SLS
Hotel and Casino reopened in late August of 2014 after going
through massive remodeling. Thus, the current three year
exemption would expire in late August of 2017.
Since the passage of SB 472, the St. Louis Rams reached a deal
to return back to Los Angeles. The site that was selected to be
the home of the Los Angeles Rams, including Cal quarterback and
number one draft pick, Jared Goff, was the former Hollywood Park
Racetrack where an 80,000 seat stadium, entertainment center,
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and retail and office complex is being built. As a result, the
Hollywood card club is in the process of being moved about 100
yards from its current location. Hollywood Park has stated that
the move and the construction in the area have resulted in a
downturn in their business.
Supporters argue that an additional three years would allow
Stockbridge sufficient time to develop a reasonable divestment
plan based on the current circumstances that were unknown of
when the original exemption was granted.
Gambling Control Act. The Act provides the CGCC with
jurisdiction over the operation of gambling establishments in
California. The Act requires every owner, lessee, or employee of
a gambling establishment to obtain and maintain a valid state
gambling license. The Act assigns the CGCC the responsibility
of assuring that gambling licenses are not issued to, or held
by, unqualified or disqualified persons, or by persons whose
operations are conducted in a manner that is harmful to the
public health, safety, or welfare.
The Act directs the CGCC to issue licenses only to those persons
of good character, honesty and integrity, whose prior
activities, criminal record, if any, reputation, habits and
associations do not pose a threat to the public interest of this
state. The Department of Justice conducts background and field
investigations and enforces the provisions of the Act in this
regard.
Prior Legislation
SB 356 (Yee, 2013) would have removed, under certain
circumstances, the prohibition against obtaining a gambling
license in California if the person, partner, officer, director,
or shareholder has a financial interest in an organization
engaged in a prohibited form of gambling either in or out of the
state. (Held in the Assembly Appropriations Committee Suspense
File)
SB 472 (Hill, Chapter 760, Statues of 2013) created a three-year
licensing exemption for the owners of the Hollywood Park by
authorizing CGCC to exempt specified limited partners in limited
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partnerships from specified licensing requirements.
AB 1290 (Hill, 2012) would have repealed existing laws regarding
an exemption from licensing requirements for Hollywood Park.
AB 2526 (Hall, 2012) would have revised several definitions
within the Act. Specifically the bill revised the definition of
a "key employee," added surveillance managers and supervisors to
the definition of "key employee" for licensing purposes and
deleted the term "pit boss" and replaced the term "shift boss"
to "shift manager." (Held on the inactive file on the Senate
Floor)
AB 777 (Hall, 2011) would have required every person who is
required to hold a state license to obtain the license before
engaging in the activity or occupying the position with respect
to which the license is requires, except as specified. (Never
Heard in the Assembly Governmental Organization Committee)
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: Yes
SUPPORT: (Verified8/22/16)
California State Association of Electrical Workers
California State Pipe Trades Council
California Teamsters Public Affairs Council
Clear Global, LLC
International Union of Elevator Workers
Los Angeles County Federation of Labor
Lucky Chances Casino
Painters and Allied Trades, District Council 36
Seven Mile Casino
State Building and Construction Trades Council of California
Unite-Here, AFL-CIO
Western States Council of Sheet Metal Workers
OPPOSITION: (Verified8/22/16)
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Bicycle Hotel & Casino
California Nations Indian Gaming Association
Commerce Casino
Hawaiian Gardens Casino
Hustler Casino
Lucky Lady Casino
Morongo Band of Mission Indians
Rincon Band of Luiseńo Indians
San Manuel Band of Mission Indians
Santa Ynez Band of Chumash Indians
United Auburn Indian Community
ARGUMENTS IN SUPPORT: According to the State Building and
Construction Trades Council of California, "the Hollywood Park
site in Inglewood has been chosen for construction of a new,
state of the art, NFL stadium. This addition, along with a
7,000 seat music venue will make this project a world class
location in Southern California. Just as important, it will
provide an estimated 30,000 new jobs, many of which will be good
paying jobs in the construction industry, which our members are
very excited about. We also understand that a construction
project of this magnitude, while a tremendous economic driver
for the region, will have a temporary impact on the business of
the card club located directly adjacent to the overall project.
This bill simply extends the current divestment period for an
additional three years while the massive construction efforts
are underway."
ARGUMENTS IN OPPOSITION: According to the United Auburn Indian
Community, "we did not oppose the first exemption in the spirit
of allowing the pension fund investors time to sort out the
conflicting ownerships. But they have had ample time to divest
themselves from one or the other operation. To allow an
additional exemption would undermine the purpose and intent of
the underlying California law."
Opponents of this bill also argue that, "the special interest
exception represented by AB 2218 is unnecessary as there is
still adequate time under the existing exception for Stockbridge
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and Hollywood Park Casino Company (HPCC) to determine whether to
divest themselves of either Hollywood Park Casino or the SLS Las
Vegas. Hollywood Park Casino has announced that it will
momentarily be opening its new casino facility. The fact that
there is construction occurring elsewhere on the larger site has
no impact on the divestiture decision. This requested special
exemption serves no purpose other than granting Stockbridge and
HPCC much more time to determine which property is more
valuable. We submit that maximizing Stockbridge's and HPCC's
profits is not the job of the Legislature and most certainly
does not provide a sound basis upon which to continue to alter a
fundamental public policy."
ASSEMBLY FLOOR: 75-0, 4/14/16
AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker,
Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke,
Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley,
Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth
Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto,
Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper,
Roger Hernández, Holden, Jones, Jones-Sawyer, Kim, Lackey,
Linder, Lopez, Low, Maienschein, Mathis, Mayes, Medina,
Mullin, Obernolte, O'Donnell, Olsen, Patterson, Quirk,
Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark
Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams,
Wood, Rendon
NO VOTE RECORDED: Irwin, Levine, McCarty, Melendez, Nazarian
Prepared by:Felipe Lopez / G.O. / (916) 651-1530
8/24/16 18:31:50
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