SB 549, as amended, Hall. Charitable raffles.
The California Constitution authorizes the Legislature to permit private, nonprofit, eligible organizations to conduct raffles as a funding mechanism to support beneficial and charitable works, if, among other conditions, at least 90% of the gross receipts from the raffle go directly to beneficial or charitable purposes in California. The California Constitution further authorizes the Legislature to amend the percentage of gross receipts required to be dedicated to beneficial or charitable purposes by a statute passed by a 2⁄3 vote of each house of the Legislature. Existing statutory law implements those provisions and requires the Department of Justice to administer and enforce those provisions.
This bill would authorize a
begin delete raffleend delete conducted by an eligible organization, as defined, for the purpose of directly supporting specified beneficial or charitable purposes in California, or financially supporting another private, nonprofit, eligible organization, as defined, that performs those purposes if, among other requirements, each ticket sold contains a unique and matching identifier, 50% of the gross receipts generated from the sale of raffle tickets are used to benefit or provide support for beneficial or charitable purposes, as defined, the other 50% is paid to the winner, and the winners of the prizes are determined by a manual draw, as specified. The bill would authorize an electronic device to be used to sell tickets. This bill would define an eligible
organization as a private, nonprofit organization established by, or affiliated with, a team from specified sports organizations that has been qualified to conduct business in California for at least one year begin delete prior toend delete conducting a raffle and is exempt from taxation pursuant to specified provisions of federal and California law.
The bill would require, if an eligible organization conducts a raffle for purposes of financially supporting another private, nonprofit, eligible organization, the eligible organization conducting the raffle to distribute to the other eligible organization all proceeds not paid out to the winners within 15 days of conducting the raffle. The bill would require an eligible organization to disclose to all ticket purchasers the designated private, nonprofit organization for which the raffle is being conducted.
This bill would also prohibit an eligible organization from conducting a raffle, and a manufacturer or distributor of raffle-related products or services from conducting business with an eligible organization for purposes of conducting a raffle pursuant to these provisions, without first having obtained and thereafter maintained a registration from the Department of Justice, as specified. This bill would authorize the department to issue regulations to enforce these provisions, to assess annual registration fees, as specified, to be deposited in the General Fund to cover the reasonable costs of establishing and operating this registration system, and would require the department to maintain a database of registrants and conduct specified proceedings in compliance with the Administrative Procedure Act. The bill would repeal its provisions on December 31, 2020.
Vote: 2⁄3. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.
The people of the State of California do enact as follows:
Section 320.6 is added to the Penal Code, to read:
(a) Notwithstanding Section 320.5, this section shall
3apply to an eligible organization, as defined in subdivision (c).
4(b) A raffle conducted by an eligible organization, as defined
5in subdivision (c), for the purpose of directly supporting beneficial
6or charitable purposes or financially supporting another private,
7nonprofit eligible organization, as defined in subdivision (c) of
8Section 320.5, that performs beneficial or charitable purposes may
9be conducted in accordance with this section.
10(c) For purposes of this section, “eligible organization” means
11a private, nonprofit organization established by, or affiliated with,
12a team from the Major League Baseball, National Hockey League,
13National Basketball Association, National Football League,
14Women’s National Basketball Association, or Major League
15Soccer, or a private, nonprofit organization established by the
16Professional Golfers’ Association of America, Ladies Professional
17Golf Association, or National Association for Stock Car Auto
18Racing that has been qualified to conduct business in California
19for at least one year
begin delete prior toend delete conducting a raffle, is qualified
20for an exemption under Section 501(c)(3) of the Internal Revenue
21Code, and is exempt from taxation pursuant to Section 23701a,
2223701b, 23701d, 23701e, 23701f, 23701g, 23701k, 23701l, 23701t,
23or 23701w of the Revenue and Taxation Code.
24(d) For purposes of this section, “raffle” means a scheme for
25the distribution of prizes by chance among persons who have paid
26money for paper tickets that provide the opportunity to win these
27prizes, in which all of the following are true:
28(1) Each ticket sold contains a unique and matching identifier.
29(2) (A) Winners of the prizes are determined by a manual draw
30from tickets described in paragraph (1) that have been sold for
31entry in the manual draw.
32(B) An electronic device may be used to sell tickets. The ticket
33receipt issued by the electronic device to the purchaser may include
34more than one unique and matching identifier, representative of
35and matched to the number of tickets purchased in a single
3 The prize paid to the winner is comprised of one-half or 50
4percent of the gross receipts generated from the sale of raffle tickets
5for a raffle.
6(3) The manual draw is conducted in
California under the
7supervision of a natural person who meets all of the following
9 (A) The person is 18 years of age or older.
10(B) The person is affiliated with the eligible organization
11conducting the raffle.
12(C) The person is registered with the Department of Justice
13pursuant to paragraph (4) of subdivision (o).
14(4) (A) Fifty percent of the gross receipts generated from the
15sale of raffle tickets for any given manual draw are used by the
16eligible organization conducting the raffle to benefit or provide
17support for beneficial or charitable purposes, or used to benefit
18another private, nonprofit organization, provided that an
19organization receiving these funds is itself an eligible organization
20as defined in subdivision (c) of Section 320.5. As used in this
21section, “beneficial purposes” excludes purposes that are intended
22to benefit officers, directors, or members, as defined by Section
235056 of the Corporations Code, of the eligible organization. Funds
24raised by raffles conducted pursuant to this section shall not be
25used to fund any beneficial, charitable, or other purpose outside
26of California. This section does not preclude an eligible
27organization from using funds from sources other than the sale of
28raffle tickets to pay for the administration or other costs of
29conducting a raffle.
30(B) An employee of an eligible organization who is a direct
31seller of raffle tickets shall not be treated as an employee for
32purposes of workers’ compensation under Section 3351 of the
33Labor Code if the following conditions are satisfied:
all of the remuneration, whether or not paid in
35cash, for the performance of the service of selling raffle tickets is
36directly related to sales rather than to the number of hours worked.
37(ii) The services performed by the person are performed pursuant
38to a written contract between the seller and the eligible organization
39and the contract provides that the person will not be treated as an
P5 1employee with respect to the selling of raffle tickets for workers’
3(C) For purposes of this section, an employee selling raffle
4tickets shall be deemed to be a direct seller as described in Section
5650 of the Unemployment Insurance Code as long as he or she
6meets the requirements of that section.
7(e) A person who
receives compensation in connection with the
8operation of the raffle shall be an employee of the eligible
9organization that is conducting the raffle, and in no event may
10compensation be paid from revenues required to be dedicated to
11beneficial or charitable purposes.
12(f) A raffle ticket shall not be sold in exchange for Bitcoin or
13any other cryptocurrency.
14(g) A raffle otherwise permitted under this section shall not be
15conducted by means of, or otherwise utilize, any gaming machine
16that meets the definition of slot machine contained in Section 330a,
17330b, or 330.1.
18(h) (1) A raffle otherwise permitted under this section shall not
19be conducted, nor may tickets for a raffle be sold, within an
20operating satellite wagering facility or racetrack inclosure licensed
21pursuant to the Horse Racing Law (Chapter 4 (commencing with
22Section 19400) of Division 8 of the Business and Professions Code)
23or within a gambling establishment licensed pursuant to the
24Gambling Control Act (Chapter 5 (commencing with Section
2519800) of Division 8 of the Business and Professions Code).
26(2) A raffle shall not be operated or conducted in any manner
27over the Internet, nor may raffle tickets be sold, traded, or redeemed
28over the Internet. For purposes of this paragraph, an eligible
29organization shall not be deemed to operate or conduct a raffle
30over the Internet, or sell raffle tickets over the Internet, if the
31eligible organization advertises its raffle on the Internet or permits
32others to do so. Information that may be conveyed on an Internet
33Web site pursuant to this paragraph includes, but is not limited to,
34all of the following:
35(A) Lists, descriptions, photographs, or videos of the raffle
37(B) Lists of the prize winners.
38(C) The rules of the raffle.
39(D) Frequently asked questions and their answers.
P6 1(E) Raffle entry forms, which may be downloaded from the
2Internet Web site for manual completion by raffle ticket purchasers,
3but shall not be submitted to the eligible organization through the
5(F) Raffle contact information, including the eligible
6organization’s name, address, telephone number, facsimile number,
7or email address.
8(i) An individual, corporation, partnership, or other legal entity
9shall not hold a financial interest in the conduct of a raffle, except
10the eligible organization that is itself authorized to conduct that
11raffle, and any private, nonprofit, eligible organizations receiving
12financial support from that charitable organization pursuant to
13subdivisions (b) and (d).
17 An eligible organization shall not conduct more than one
18major league sports raffle per home game.
19(k) An employee shall not sell raffle tickets in any seating area
20designated as a family section.
21(l) An eligible organization shall disclose to all ticket purchasers
22the designated private, nonprofit, eligible organization for which
23the raffle is being conducted.
24(m) An eligible organization that conducts a raffle to financially
25support another private, nonprofit eligible organization, as defined
26in subdivision (c) of Section 320.5, shall distribute all proceeds
27not paid out to the winners of the prizes to the private, nonprofit
28organization within 15 days of conducting the raffle, in accordance
29with this section.
30(n) Any raffle prize remaining unclaimed by a winner at the end
31of the season for a team with an affiliated eligible organization
32that conducted a raffle to financially support another private,
33nonprofit eligible organization, as defined in subdivision (c) of
34Section 320.5, shall be donated within 30 days from the end of the
35season by the eligible organization to the designated private,
36nonprofit organization for which the raffle was conducted.
37(o) (1) (A) An eligible organization shall not conduct a raffle
38authorized under this section, unless it has a valid registration
39issued by the Department of Justice. The department shall furnish
40a registration form via the Internet or upon request to eligible
P7 1nonprofit organizations. The department shall, by regulation, collect
2only the information necessary to carry out the provisions of this
3section on this form. This information shall include, but is not
4limited to, the following:
5(i) The name and address of the eligible organization.
6(ii) The federal tax identification number, the corporate number
7issued by the Secretary of State, the organization number issued
8by the Franchise Tax Board, or the California charitable trust
9identification number of the eligible organization.
10(iii) The name and title of a responsible fiduciary of the
12(B) (i) The department may require an eligible organization to
13pay a minimum annual registration fee of five thousand dollars
14($5,000) to cover the reasonable costs of the department to
15administer and enforce this section.
16(ii) An eligible organization shall pay, in addition to the annual
17registration application fee, one hundred dollars ($100) for every
18individual raffle conducted at an eligible location to cover the
19reasonable costs of the department to administer and enforce this
20section. This fee shall be submitted in conjunction with the annual
22(2) (A) A manufacturer or distributor of raffle-related products
23or services shall not conduct business with an eligible organization
24for purposes of conducting a raffle pursuant to this section unless
25the manufacturer or distributor has a valid annual registration
26issued by the department.
27(B) The department may require a manufacturer or distributor
28of raffle-related products or services to pay a minimum annual
29registration fee of five thousand dollars ($5,000) to cover the
30reasonable costs of the department to administer and enforce this
32(3) An eligible organization shall register the equipment used
33in the sale and distribution of raffle tickets, and shall have the
34equipment tested by an independent gaming testing lab.
35(4) (A) A person affiliated with an eligible organization who
36conducts the manual draw shall annually register with the
38(B) The department may require a person affiliated with an
39eligible organization who conducts the manual draw to pay a
40minimum annual registration fee of ten dollars ($10) to cover the
P8 1reasonable costs of the department to administer and enforce this
3(5) The department may, by regulation, adjust the annual
4registration fees described in this section as needed to ensure that
5revenues will fully offset, but not exceed, the reasonable costs
6incurred by the department pursuant to this section. The fees shall
7be deposited by the department into the General Fund.
8(6) The department shall receive moneys for the costs incurred
9pursuant to this section subject to an appropriation by the
11(7) The department shall adopt regulations necessary to
12effectuate this section, including emergency regulations, pursuant
13to the Administrative Procedure Act (Chapter 3.5 (commencing
14with Section 11340) of Part 1 of Division 3 of Title 2 of the
16(8) The department shall maintain an automated database of all
18(9) A local law enforcement agency shall notify the department
19of any arrests or investigation that may result in an administrative
20or criminal action against a registrant.
21(10) The department may investigate all suspected violations
22of this section or any regulation adopted pursuant to this section,
23or any activity that the registrant has engaged in that is not in the
24best interests of the public’s health, safety, or general welfare as
25it pertains to charitable raffles.
26 (11) The department may audit the records and other documents
27of a registrant to ensure compliance with this section, and may
28charge a registrant the direct costs associated with an audit
29 conducted pursuant to this paragraph.
30(12) (A) Once registered, an eligible organization shall file
31annually thereafter with the department a report that includes the
33(i) The aggregate gross receipts from the operation of raffles.
34(ii) The aggregate direct costs incurred by the eligible
35 organization from the operation of raffles.
36(iii) The charitable or beneficial purposes for which proceeds
37of the raffles were used, or
begin delete identifyend delete the
38recipient organization to which proceeds were directed, and the
39amount of those proceeds.
P9 1(B) Failure to submit the annual report to the department as
2required in this paragraph shall be grounds for denial of an annual
4(13) The department shall annually furnish to registrants a form
5to collect this information.
6(p) The department may take legal action against a registrant if
7it determines that the registrant has violated this section or a
8regulation adopted pursuant to this section, or that the registrant
9has engaged in any conduct that is not in the best interests of the
10public’s health, safety, or general welfare. An action taken pursuant
11to this subdivision does not prohibit the commencement of an
12administrative or criminal action by the Attorney General, a district
13attorney, city attorney, or county counsel.
14(q) An action and hearing conducted to deny, revoke, or suspend
15a registry, or other administrative action taken against a registrant,
16shall be conducted pursuant to the Administrative Procedure Act
17(Chapters 4.5 (commencing with Section 11400) and 5
18(commencing with Section 11500) of Part 1 of Division 3 of Title
192 of the Government Code). The department may seek civil
20remedies, including imposing fines, for violations of this section,
21and may seek recovery of the costs incurred in investigating or
22prosecuting an action against a registrant or applicant in accordance
23with those procedures specified in Section 125.3 of the Business
24and Professions Code. A proceeding conducted under this
25subdivision is subject to judicial review pursuant to Section 1094.5
26of the Code of Civil Procedure. A violation of this section shall
27not constitute a crime.
28(r) This section shall remain in effect only until December 31,
292020, and as of that date is repealed, unless a later enacted statute,
30that is enacted before December 31, 2020, deletes or extends that