BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     SB 549


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          Date of Hearing:  July 8, 2015


                   ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION


                                  Adam Gray, Chair


          SB  
          549 (Hall) - As Amended June 23, 2015


          SENATE VOTE:  38-0


          SUBJECT:  Charitable raffles.


          SUMMARY:  Authorizes an eligible organization, as defined, to  
          conduct a 50/50 raffle for the purpose of directly supporting a  
          specified beneficial or charitable purpose in California, or  
          financially supporting another private, nonprofit, eligible  
          organization until December 31, 2020.  Specifically, this bill:   



          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 of America, Ladies Professional Golf 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.









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          2)  Provides that tickets sales may be conducted by the use of  
          an electronic device, but prohibits any sales over the Internet.  
           


          3)  Provides a random number generator is not used for the  
          manual draw or to sell tickets.


          4)  Requires each ticket sold to contain a unique and matching  
          identifier, and declares that winners must be determined by a  
          manual draw.


          5)  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.


          6)  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.


          7)  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.


          8)  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,  








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          FAQs, and entry forms that may be downloaded and printed but not  
          submitted online.


          9) Limits the number of raffles held to one at each major league  
          home game.


          10)  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. 


          11)  Requires the distribution of proceeds to the nonprofit  
          organization within 15 days of conducting the raffle.


          12) 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.


          13)  States DOJ may require an eligible organization to pay a  
          minimum annual registration fee of   five thousand dollars  
          ($5,000) to cover the reasonable costs of the department to  
          administer and offset cots.  An eligible organization shall pay,  
          in addition to the annual registration application fee, one  
          hundred dollars ($100) for every individual raffle conducted at  
          an eligible location to cover the reasonable costs of DOJ  for  
          administration and enforcement.   This fee shall be submitted in  
          conjunction with the annual registration form.


          14)  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  








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          independent gaming-testing lab. 


          15)  Requires DOJ to adopt regulations pursuant to this 50/50  
          raffle authorization.


          16)  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.


          17)  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.


          18)  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.


          19)  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.


          20)  Contains a December 31, 2020 sunset date.


          EXISTING LAW:   


          1)Authorizes, under the California Constitution, to permit  








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          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.





          2)Prohibits any raffle to be conducted by means of, or otherwise  
          utilize any gaming machine, apparatus, or device, whether or not  
          that machine, apparatus, or device meets the definition of a  
          slot machine as currently defined in California law. 





          3)Defines a "raffle" 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.





          4)Defines an "eligible organization" as a private, nonprofit  
          organization that has been qualified to conduct business in  
          California for at least one year prior to conducting a raffle  
          and is exempt from taxation by the Internal Revenue Service.





          5)Authorizes, under the California Constitution, for the  
          Legislature to amend the percentage of gross receipts required  
          to be dedicated to beneficial or charitable purposes by a  








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          statute passed by a 2/3 vote of each house of the Legislature.


          FISCAL EFFECT:  Unknown


          COMMENTS:  


           Purpose of the bill  .  According to the author, 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.





          The author further argues that results of 50/50 charitable  
          raffles in other states have been stellar, and are now being  
          held in more than 29 states and 10 Canadian provinces.  This  
          bill provides an opportunity for fans who attend professional  
          sporting events to voluntarily participate in a raffle directly  
          benefiting charities in their local communities. 





           Background  .  Charitable raffles have been legal in the State of  
          California since July 1, 2001, with the successful passage of SB  
          639 (McPherson, Chapter 778) in the 1999-2000 legislative  
          session and voter approval of Proposition 17.  










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          Despite their previous illegality, raffles had long been a  
          popular fundraising tool used by various nonprofit  
          organizations.  Thus in 2000, local law enforcement authorities  
          and members of the nonprofit community decided to sponsor  
          legislation to legalize some raffles and bring the then illegal  
          raffles out of the shadows and provide for regulation to these  
          types of raffles. 





          Because a constitutional amendment was needed, Proposition 17 in  
          2000 was approved by California voters with 59% of the vote to  
          exempt charitable raffles from the prohibition against lotteries  
          provided that the Legislature established reasonable statutory  
          regulations and that 90% of the gross receipts from raffles go  
          directly to beneficial or charitable purposes.  





          The breakdown of 90/10 would ensure that these charitable  
          raffles were conducted for the sole purpose of charitable  
          giving.  Proposition 17 also authorized the Legislature to  
          change the percentages of gross receipts that must go directly  
          to charitable purposes with a two-thirds vote of the Legislature  
          and approval by the Governor.  Since the passage of both  
          Proposition 17 and SB 639 (McPherson), there have been various  
          attempts to change the percentage allocated for charitable  
          purposes but the legislation always failed passage.












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           In support  .  According to supporters of this bill, currently  
          more than 100 professional sports franchises operate 50/50  
          charitable raffles at sporting events in order to maximize  
          donations to community philanthropic causes.  Supporters argue  
          that the results have been overwhelmingly successful for teams,  
          fans and charities alike.  Using cutting-edge, transparent and  
          secure in-game technologies, sports franchises across the  
          country have documented a significant and immediate increase in  
          philanthropic contributions to charitable foundations.   
          Supporters argue that due to a restriction in law passed before  
          these technologies existed; California teams face an uneven  
          playing field when it comes to charitable raffles. 





           In opposition  .  According to CalNonprofits, this bill creates a  
          carve-out with special rules for an exclusive set of nonprofit  
          organizations affiliated with major league sports teams while  
          all other charities - the overwhelming majority of the 72,000  
          nonprofit organizations in California - would be required to  
          follow the 90/10 rules.  CalNonprofits further argues that  
          current law ensures that the primary purpose of any charitable  
          raffle is to benefit a charity and that raffles with the 50/50  
          split move away from that intent, and may inadvertently put more  
          focus on gambling to win a cash prize.


           Prior Legislation  .  AB 1691 (Jones-Sawyer), 2013-2014  
          Legislative Session.  Would have authorized an eligible  
          organization to conduct a 50/50 raffle for the purpose of  
          directly supporting specified beneficial or charitable purposes  
          in California, or financially supporting another private,  
          nonprofit, eligible organization.  (Held in Assembly  
          Appropriations Committee)










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          SB 200 (Correa), Chapter 38, Statutes of 2009.  Authorized  
          eligible organizations to advertise raffles over the Internet.


          AB 1588 (Soto), 2007-2008 Legislative Session.  The bill would  
          have decreased the percentage of gross receipts from the sale of  
          raffle tickets required to go to beneficial or charitable  
          purposes from 90% to 50% for a 50/50 raffle and from 90% to 60%  
          for a dream home raffle, as defined. (Never heard in Assembly  
          Governmental Organization Committee)


          SB 1369 (Cedillo), Chapter 748, Statutes of 2008.  Authorized  
          remote caller bingo as a game in which specific tax-exempt  
          organizations, as defined, may use audio or video technology to  
          link designated in-state facilities for playing bingo pursuant  
          to a local ordinance and state regulation and oversight. The  
          bill provided that remote caller bingo could only be played  
          using traditional paper or other tangible bingo cards and  
          daubers, and shall not be played using electronic devices.  In  
          addition, the bill provided that prizes for remote caller bingo  
          could not exceed 37% of the gross receipts of the game and  
          overhead may not exceed 20%, as defined.


          AB 423 (Longville) 2003-2005 Legislative Session.  The bill  
          would have decreased the percentage of gross receipts from the  
          sale of raffle tickets required to go to beneficial or  
          charitable purposes from 90% to 50% for a 50/50 cash raffle.  
          (Never heard in Assembly Governmental Organization Committee)


          SB 639 (McPherson), Chapter 778, Statutes of 2000.  Permitted  
          raffles to be conducted by private, nonprofit organizations, for  
          the purposes of providing financial support for beneficial  
          charitable works if, among other criteria, at least 90% of the  








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          gross receipts from the sale of raffle tickets are used to  
          benefit or provide support for the charitable or beneficial  
          purposes of the conducting nonprofit. 


          SCA 4 (McPherson), Resolution Chapter 123, Statutes of 1999.   
          Placed Proposition 17 on the March 2000 ballot, which was  
          approved by the voters to authorize charitable raffles in  
          California, provided that at least 90% of the Gross receipts  
          from the raffle go directly to beneficial or charitable  
          purposes, as defined. 


          REGISTERED SUPPORT / OPPOSITION:




          Support


          AEG


          American Legion-Department of California


          AMVETS- Department of California


          Anaheim Duck Hockey Club/ Anaheim Ducks Foundation


          Anaheim Ducks Learn to Play program


          Anaheim Ducks S.C.O.R.E program










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          Auto Club Speedway


          California State Commanders Veterans Council


          CHOC at Mission


          CHOC Children's Hospital


          Donor Network West


          Girls Incorporated of Orange County


          Junior Blind


          LA Galaxy/LA Galaxy Foundation


          LA Kings/ Kings Care Foundation


          Los Angeles Angels of Anaheim/ Angels Baseball Foundation


          Los Angeles Clippers/Clippers Foundation


          Michael Ottolini AMVETS Post 40 of Sonoma County


          Military Officers Association of America, Alta Chapter










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          Military Officers Association of America, California Council of  
          Chapters


          Military Officers Association of America, Solano County Chapter


          Orangewood Children's Foundation


          Pacific Club IMPACT Foundation


          Rancho Cordova Police Activities League


          Sacramento Kings/Sacramento Kings Foundation


          Sacramento Republic Football Club


          San Diego Padres/Padres Foundation


          San Francisco Giants/ San Francisco Giants Community Fund


          San Jose Sharks/ Sharks Foundation


          South County Outreach


          The Los Angeles Dodgers/Los Angeles Dodgers Foundation


          United Way California Capitol Region









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          University of Southern California


          Veteran Tickets Foundation


          Veterans of Foreign Wars of California 1st District


          Veterans of Foreign Wars Post 2275, El Cajon


          Veterans of Foreign Wars, Department of California


          VFW Post 3787, Mission Valley San Diego


          VFW Post 5431


          VFW-Department of California


          Vietnam Veterans of America - California State Council


          Vietnam Veterans of America, Chapter #223







          Opposition










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          California Society of Association Executives


          CalNonprofits




          Analysis Prepared by:Eric Johnson / G.O. / (916)  
          319-2531