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