BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 549 (Hall) - Charitable raffles
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|Version: April 28, 2015 |Policy Vote: G.O. 10 - 0 |
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|Urgency: No |Mandate: No |
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|Hearing Date: May 28, 2015 |Consultant: Maureen Ortiz |
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SUSPENSE FILE. AS AMENDED.
Bill
Summary: SB 549 authorizes an eligible organization, as
defined, to conduct a 50/50 raffle for the purpose of directly
supporting a specified beneficial or charitable purpose, or
financially supporting another private, nonprofit, eligible
corporation until December 31, 2020.
Fiscal Impact (As approved on May 28,
2015):
Annual costs of approximately $2.9 million for investigations
and enforcement to the Department of Justice (General Fund)
The Department of Justice (DOJ) indicates the need for 21 new
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positions as follows: 5 Special Agents, 8 field
Representatives, 6 Staff Management Auditors, and 2 Program
Technicians. Additionally, the first year costs would include
approximately $576,000 for software changes to accommodate the
new license type, and for configuration and testing of existing
software changes. These costs will be partially offset by fee
revenue. Licensees will be required to pay an annual fee of
$2,500 would result in revenue of $150,000 if sixty
organizations register with the DOJ. There will be additional
minor revenue from the registration of individuals associated
with the draw of $10 each.
Background:1) The California Constitution authorizes private, nonprofit,
eligible organizations to conduct raffles as a funding mechanism
to support beneficial and charitable works if at least 90% of
the gross receipts from the raffle go directly to beneficial or
charitable purposes in California. A "raffle" is defined as a
scheme for the distribution of prizes by chance among persons
who have paid money for paper tickets that provide the
opportunity to win these prizes and where specified conditions
are met.
The Legislature is authorized 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.
SB 639 (McPherson, Chapter 778, Statutes of 2000), and the voter
approval of Proposition 17 in 2000 required DOJ to report to the
Legislature on the impact of charitable raffles in California by
December 31, 2003. The report found that from the first to
second year of the program, the number of organizations
registered with DOJ increased substantially from 762
organizations registered in the first year, to 1,016 in the
second year.
In that first year 324 of the organizations filed reports with
DOJ, indicating that 656 raffles were conducted. The reports
indicate $4,049,792 in gross receipts from ticket sales for all
raffles reported. The amount of money raised by each raffle
varied widely, ranging from a low of five dollars to a high of
$398,929. The average amount of money per raffle raised from
ticket sales was $6,173. The amount to charity in the first
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year was $3,560,901.
In the second year, 379 of the registered organizations filed
reports indicating that 652 raffles were conducted. The reports
indicated $5,936,054 in gross receipts from ticket sales for all
raffles reported. The amount of money raised by each raffle
varied widely, ranging from a low of eight dollars to a high of
$2,392,861. The average amount of money raised per raffle from
ticket sales was $9,104. It is important to note that this
average was highly elevated by one raffle which brought in well
over 2 million dollars in ticket sales. The amount to charity
in the second year was $5,455,803.
Across the United States more than 100 professional sports
franchises are successfully operating 50/50 charitable raffles
at sporting events in order to maximize donations to local
charities. These types of charitable raffles are raffles in
which 50% of the proceeds go to the winner, and 50% of the
proceeds go to the local charities designated by the
professional sports team for that particular event.
Proposed Law:
SB 549 does the following:
1) Authorizes a private, nonprofit organization established by,
or affiliated with, a team from the Major League Baseball,
National Hockey League, National Basketball Association,
National Football League, Women's National Basketball
Association, or Major League Soccer, or a private, nonprofit
organization established by the Professional Golfers
Association, Ladies Professional Golfers Association, or
National Association for Stock Car Auto Racing to conduct a
raffle where 50 percent of the gross receipts are paid to
winners, and 50 percent are used to benefit a charity
organization or private, nonprofit organization.
2) Provides that tickets sales may be conducted by the use of
an electronic device, but prohibits any sales over the Internet.
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3) Requires each ticket sold to contain a unique and matching
identifier, and declares that winners must be determined by a
manual draw.
4) Provides that a person who receives compensation in
connection with the operation of the raffle shall be an employee
of the eligible organization that is conducting the raffle, and
in no event may compensation be paid from revenues required to
be dedicated to beneficial or charitable purposes.
5) Provides that the manual draw must be conducted under the
supervision of a natural person who is at least 18 years of age,
is affiliated with the organization conducting the raffle, and
is annually registered with the Department of Justice, paying a
minimum fee of $10.
6) Prohibits the use of Bitcoin or other crypto currency in the
sales of raffle tickets; prohibits the use of any gaming machine
that meets the definition of slot machine; and prohibits the
sale of raffle tickets within an operating satellite wagering
facility or racetrack inclosure.
7) Provides that an eligible organization may post specified
items on the Internet Web site such as descriptions of prizes,
lists of winners, rules of the raffle, contact information,
FAQs, and entry forms which may be downloaded and printed but
not submitted online.
8) Limits the number of raffles held to one at each major league
home game.
9) Prohibits the sale of raffle tickets in any seating area
designated as a family section, and requires the disclosure of
the designated private, nonprofit, eligible organization to all
ticket purchasers.
10) Requires the distribution of proceeds to the nonprofit
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organization within 15 days of conducting the raffle.
11) Requires each eligible organization to register annually
with the Department of Justice (DOJ) and requires DOJ to furnish
a registration form via the Internet or upon request from an
eligible organization.
12) Authorizes DOJ to collect a minimum annual registration fee
of $2,500 from each eligible organization for administration and
enforcement costs, but also authorizes the department to adjust
the fee as needed to ensure that revenue offsets all costs.
13) Requires a manufacturer or distributor of raffle-related
products or services to pay a minimum annual registration fee of
$5,000 to cover the reasonable administrative and enforcement
costs. All equipment must be registered and tested by an
independent gaming testing lab.
14) Requires DOJ to adopt regulations pursuant to this 50/50
raffle authorization.
15) Requires DOJ to maintain an automated database of all
registrants, and for local law enforcement agencies to notify
the department of any arrests or investigation that may result
in an administrative or criminal action against a registrant.
16) Requires each registered eligible organization to file an
annual report with DOJ that includes the aggregate gross
receipts from the operation of raffles, the aggregate direct
costs incurred, and the charitable or beneficial purposes for
which proceeds of the raffles were used.
17) Authorizes DOJ to investigate all suspected violations, and
to audit records to ensure compliance. The department may
charge a registrant the direct costs associated with an audit.
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18) Authorizes the DOJ to seek civil remedies against a
registrant for violations of this 50/50 authority or
regulations, as specified, and authorizes the department to seek
recovery of the costs incurred in investigating or prosecuting
an action against a registrant.
Staff
Comments: SB 549 is intended to encourage more raffles at
sporting events which will generate money for charitable
purposes. Many major league sports organizations have provided
local benefits to their community such as youth organizations
and conducting 50/50 raffles will undoubtedly expand on this
community charity giving.
The provisions of SB 549 will sunset December 31, 2020.
Amendments (as adopted May 28, 2015): Increases the annual
license fee to $5,000 per eligible organization, and requires a
$100 fee per raffle game.
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