BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 692|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
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THIRD READING
Bill No: SB 692
Author: Vidak (R)
Introduced:2/27/15
Vote: 21
SENATE GOVERNMENTAL ORG. COMMITTEE: 11-0, 4/14/15
AYES: Hall, Berryhill, Block, Gaines, Galgiani, Hernandez,
Hill, Hueso, Lara, McGuire, Vidak
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
SUBJECT: Gambling: California Gambling Control Commission
SOURCE: Author
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 two 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
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if, within two years 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 three years after
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 two 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.
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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 cardroom in
San Jose, on December 31 of that same year.
The accusation also alleges that Lytle began working as a
representative of the cardroom, and contacted both the Bureau
and the CGCC 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 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 issued 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
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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, 2012) 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,
deleted the term "pit boss," and replaced the term "shift boss"
to "shift manager." (Held on the Senate Inactive File)
SB 730 (Florez, Chapter 438, Statutes of 2007) 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) deleted the residency requirement for key
employees of California cardrooms and revised the penalties for
violations of California's gambling related laws.
SB 8 (Lockyer, Chapter 867, Statutes of 1997) 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 established 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: (Verified 4/28/15)
Artichoke Joe's Casino
Communities for California Cardrooms
OPPOSITION: (Verified 4/28/15)
None received
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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
unethical influences before exercising discretion and that
regulatory systems need to properly safeguard against
dishonesty, and self-dealing.
Prepared by:Felipe Lopez / G.O. / (916) 651-1530
4/29/15 16:07:34
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