BILL ANALYSIS Ó
SB 549
Page 1
SENATE THIRD READING
SB
549 (Hall)
As Amended August 28, 2015
2/3 vote
SENATE VOTE: 38-0
------------------------------------------------------------------
|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Governmental |18-0 |Gray, Linder, | |
|Organization | |Achadjian, Alejo, | |
| | |Bigelow, Campos, | |
| | |Cooley, Cooper, Daly, | |
| | |Eduardo Garcia, | |
| | |Jones-Sawyer, Levine, | |
| | |Mayes, Perea, Salas, | |
| | |Steinorth, Waldron, | |
| | |Wilk | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Appropriations |17-0 |Gomez, Bigelow, | |
| | |Bloom, Bonta, | |
| | |Calderon, Chang, | |
| | |Nazarian, Eggman, | |
| | |Gallagher, Eduardo | |
| | |Garcia, Holden, | |
SB 549
Page 2
| | |Jones, Quirk, Rendon, | |
| | |Wagner, Weber, Wood | |
| | | | |
| | | | |
------------------------------------------------------------------
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, 2018. 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% of the gross receipts are paid to winners,
and 50% 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.
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
SB 549
Page 3
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 (DOJ), 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,
frequently asked questions (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.
SB 549
Page 4
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
DOJ and requires the department 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 $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, $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 independent gaming-testing lab.
15)Requires DOJ to adopt regulations, on or before June 1, 2016,
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.
SB 549
Page 5
17)Requires each registered eligible organization to file an
annual report with DOJ that includes information for each of
the eligible organization' last three fiscal year; the
aggregate gross receipts from the operation of raffles; and
the aggregate direct costs incurred, and include additional
detail to reporting requirements on raffle fundraising and
charities benefitted, and team and foundation charitable
giving from activities other than raffles.
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)Specifies that DOJ shall make reports available to the public
via the online search portal of the Attorney General's
Registry of Charitable Trust.
21)Contains a December 31, 2018, sunset date.
EXISTING LAW:
1)Authorizes, under the California Constitution, to permit
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.
SB 549
Page 6
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
statute passed by a two-thirds vote of each house of the
Legislature.
FISCAL EFFECT: According to the Assembly Appropriations
Committee, 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:
Purpose of this bill. According to the author, across the
SB 549
Page 7
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, Statutes of 2000, and voter
approval of Proposition 17 (2000).
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,
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.
SB 549
Page 8
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, there have been various attempts to
change the percentage allocated for charitable purposes but the
legislation always failed passage.
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 would
create special fundraising rules for select set of sports
charities and those that choose to affiliate with those
charities. Furthermore, the bill would dilute or undermines the
value of charitable giving by shifting the focus toward
gambling. The opponents argue current law ensures the primary
purpose of charitable raffles is the benefit to the charity, and
treats all charities equally.
Prior Legislation. AB 1691 (Jones-Sawyer) of 2014, would have
authorized an eligible organization to conduct a 50/50 raffle
for the purpose of directly supporting specified beneficial or
SB 549
Page 9
charitable purposes in California, or financially supporting
another private, nonprofit, eligible organization. (Held in
Assembly Appropriations Committee)
SB 200 (Correa), Chapter 38, Statutes of 2009. Authorized
eligible organizations to advertise raffles over the Internet.
AB 1588 (Soto) of 2007. AB 1588 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) of 2003. AB 423 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
SB 549
Page 10
the purposes of providing financial support for beneficial
charitable works if, among other criteria, at least 90% of the
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.
Analysis Prepared by:
Eric Johnson / G.O. / (916) 319-2531 FN:
0001733