BILL ANALYSIS Ó SB 549 Page 1 Date of Hearing: August 19, 2015 ASSEMBLY COMMITTEE ON APPROPRIATIONS Jimmy Gomez, Chair SB 549 (Hall) - As Amended June 23, 2015 ----------------------------------------------------------------- |Policy |Governmental Organization |Vote:|18 - 0 | |Committee: | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: NoReimbursable: No SUMMARY: This bill: 1)Authorizes a private, nonprofit organization established by, or affiliated with, a professional sports club or organization to conduct a 50/50 raffle to directly support charitable purposes in California. The bill requires 50% of gross receipts from the sale of raffle tickets to be used to benefit a charitable organization or purpose and 50% of the gross receipts be paid to the prize winner, and requires the sports organizations to provide aggregate data on gross receipts, direct costs, and beneficial uses of raffle proceeds to the SB 549 Page 2 Department of Justice. 2)Allows the DOJ to impose minimum annual fees of $5,000 on each eligible sports team or organization; minimum annual fees of $5,000 on each manufacturer or distributor of raffle-related products or services; and $100 on each eligible sports team or organization for each raffle, subject to adjustment by the DOJ to ensure amounts collected fully offset actual costs. 3)Includes a December 31, 2020 sunset provision. Because SB 549 amends the percentage of gross receipts from a raffle required to be dedicated to beneficial or charitable purposes, the California Constitution requires a 2/3 vote of each house of the Legislature. FISCAL EFFECT: Ongoing General Fund costs to the DOJ's Bureau of Gambling Control for administration and enforcement of approximately $575,000 per year. Over time, those costs may be recovered, in whole or in part, through annual and per-raffle registration fees. COMMENTS: 1)Purpose. According to the author, there are more than 100 professional sports franchises operating 50/50 charitable raffles at sporting events throughout the United States and Canada. SB 549 is intended to make charitable raffles more attractive to participants, raising additional contribution money for charitable causes compared with the current 90/10 restriction. SB 549 Page 3 2)Existing 90/10 Raffles. The California Constitution permits charitable organizations to conduct raffles to raise contribution money if at least 90% of the gross receipts from the raffle go directly to the beneficial or charitable purposes in California. The Constitution permits the Legislature to amend the percentage of gross receipts required by statute only if enacted with a 2/3 vote of each house. 3)50/50 Raffles. Gross receipts for 50/50 charitable raffles at major and minor league sports teams in the United States and Canada range from as low as $1,000 for minor league games to more than $100,000 for certain major league games. Half of those proceeds are distributed to raffle winners, and half are distributed to charities. The growth in 50/50 charitable raffles at sporting events coincides with advances in raffle technology that permit secure, real-time transactions and auditing. The technology has proven popular in several other states and has facilitated considerable growth in professional sports charitable raffles of the type proposed in this bill. California has 18 major league professional sports clubs, 23 minor league professional sports clubs, and several regular golf and racing events that could host raffles under this bill, resulting in as many as 1,600 raffles in the state per year. 4)Nonprofit Opposition. While this bill enjoys support from a number of diverse charitable organizations, the bill is opposed by CalNonprofits, an alliance of approximately 10,000 organizations. The nonprofits have raised two primary objections to SB 549: (1) it creates special fundraising rules for select set of sports charities and those that choose to affiliate with those charities; and (2) it dilutes or undermines the value of charitable giving by shifting the focus toward gambling. The opponents argue current law SB 549 Page 4 ensures the primary purpose of charitable raffles is the benefit to the charity, and treats all charities equally. 5)Prior Legislation. AB 1691 (Jones-Sawyer) of 2014 was substantially similar to this bill and would have created a 50/50 charitable raffles exemption for professional sports teams and their affiliates. AB 1691 was held on the Suspense File of this committee. Analysis Prepared by:Joel Tashjian / APPR. / (916) 319-2081