BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Isadore Hall, III
Chair
2015 - 2016 Regular
Bill No: SB 692 Hearing Date: 4/14/2015
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|Author: |Vidak |
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|Version: |2/27/2015 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Felipe Lopez |
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SUBJECT: Gambling: California Gambling Control Commission
DIGEST: This bill prohibits a member of the California
Gambling Control Commission (CGCC), the executive director, the
chief, and any employee of the CGCC or Department of Justice
(DOJ) designated by regulation, for a period of 2 years after
leaving office or terminating employment, from being employed as
a consultant or key employee of a gambling establishment.
ANALYSIS:
Existing law:
1)Provides, under the Gambling Control Act (Act), for the
licensure and regulation of various legalized gambling
activities and establishments by the CGCC and the
investigation and enforcement of those activities and
establishments by DOJ.
2)Specifies qualifications for eligibility as a member of the
CGCC and provides that a person is ineligible for appointment
if, within 2 year prior to appointment, the person was
employed by, retained by, or derived substantial income from,
a gambling establishment.
3)Prohibits a member of the CGCC, the executive director, the
chief, and any employee of the CGCC or the department
designated by regulation, for a period of 3 years after
SB 692 (Vidak) Page 2 of ?
leaving office or terminating employment, for compensation,
from acting as agent or attorney for any other person before
the CGCC or the DOJ, if the appearance or communication is for
the purpose of influencing administrative actions, as
specified.
4)Defines a "key employee" as a natural person employed in the
operation of a gambling enterprise in a supervisory capacity
or empowered to make discretionary decisions that regulate
gambling operations, including, among others, pit bosses,
shift bosses, gambling operation managers and assistant
managers, or any other natural person designated as a key
employee by the DOJ for reasons consistent with the policies
of the Act.
This bill prohibits a member of the CGCC, the executive
director, the chief, and any employee of the CGCC or the DOJ
designated by regulation, for a period of 2 years after leaving
office or terminating employment, from being employed as a
consultant or key employee of a gambling establishment.
Background
Purpose of the bill: According to the author, while there are
regulations in place to stop the revolving door for past members
and employees to not directly lobby the Bureau of Gambling
Control (Bureau) and the CGCC, there is no revolving door
prohibition on members and employees who go to work as
consultants or key employees of a gambling establishment. The
author further contends that over the years, former Bureau
employees have resigned and immediately started consulting with
tribal casinos and cardrooms which has led to at least one
recent conflict of interest case currently being presented by
the Attorney General.
Attorney General's Accusation: On December 23, 2014, the
Attorney General's Office filed an accusation against Bob Lytle,
former director of the Division of Gambling Control from 2002
until his retirement in 2007. In the accusation, the state
alleges that Lytle began negotiating a new job with a cardroom
in San Jose while he was still in charge of cardroom regulation.
Lytle retired from the Division of Gambling Control on December
30, 2007 and began working as a consultant for a card room in
San Jose, on December 31 of that same year.
SB 692 (Vidak) Page 3 of ?
The accusation also alleges that Lytle began working as a
representative of the card room, and contacted both the Bureau
and the commission many times on behalf of his client.
Additionally, the accusation also states that between 2012 and
2013, Lytle asked for and obtained confidential information from
the Bureau's special agent in charge. Furthermore, the state
alleges that the two exchanged over 180 phone calls as well as
text messages and emails.
The accusation, which could result in the loss of three separate
licenses Lytle has been issued from the state, will be heard
before an administrative law judge at a hearing scheduled for
October of this year.
Gambling regulation/enforcement in California: The Gambling
Control Act created a comprehensive scheme for statewide
regulation of legal gambling under a bifurcated system of
administration involving the Bureau within the Attorney
General's Office and the five-member CGCC by the Governor. The
CGCC is authorized to establish minimum regulatory standards for
the gambling industry and to ensure that the state gambling
licenses are not issues to or held by unsuitable or unqualified
individuals.
The Bureau monitors the conduct of gaming operations to ensure
compliance with state gambling laws and conducts extensive
background investigations of applicants seeking a state gambling
license. The Bureau also conducts background checks for all key
employees and state gambling license and vendor applications.
The Bureau inspects premises where gambling is conducted,
examines gambling equipment, audits papers, books, and records
of the gambling establishment, investigates suspected violations
of gambling laws, and is ultimately responsible for enforcing
compliance with all state laws pertaining to gambling.
Prior/Related Legislation
AB 2526 (Hall), 2011-2012 Legislative Session. The bill would
have revised several definitions within the Act. Specifically
the bill revised the definition of a "key employee," added
surveillance managers and supervisors to the definition of "key
employee" for licensing purposes and deleted the term "pit boss"
and replaced the term "shift boss" to "shift manager." (Held on
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the inactive file on the Senate Floor)
SB 730 (Florez), Chapter 438, Statutes of 2007. The bill made
various changes to the licensing and regulatory processes
related to key employees for gambling establishments under the
Act.
AB 1753 (Governmental Organization Committee), Chapter 546,
Statutes of 2005. The bill deleted the residency requirement
for key employees of California card rooms and revised the
penalties for violations of California's gambling related laws.
SB 8 (Lockyer), Chapter 867, Statutes of 1997. The bill
repealed the Gaming Regulation Act, and instead enacted the Act,
which provided for DOJ to investigate and enforce controlled
gambling in the state. It also establishes the CGCC to regulate
gambling in this state and to issue, suspend, or revoke gambling
licenses.
FISCAL EFFECT: Appropriation: No Fiscal
Com.: Yes Local: Yes
SUPPORT:
Artichoke Joe's Casino
Communities for California Cardrooms
OPPOSITION:
None received
ARGUMENTS IN SUPPORT: According to Artichoke Joe's Casino,
the "cooling-off" requirements proposed under this bill are
similar to laws imposed on other key California policy-makers in
order to avoid conflicts of interest. Therefore, it seems
appropriate that the CGCC, which oversees the highly regulated
gaming industry, should have the same "cooling-off" period
imposed on its commissioners and key employees.
Communities for California Cardrooms (CCC) states that
protecting the decision making process is critical in gaming
regulation because of the broad discretionary authority given to
regulators. CCC further argues that regardless of context,
regulators should garner facts and weigh factors without
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unethical influences before exercising discretion and that
regulatory systems need to properly safeguard against
dishonesty, and self-dealing.