BILL ANALYSIS Ó
SB 692
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Date of Hearing: July 8, 2015
ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
Adam Gray, Chair
SB
692 (Vidak) - As Amended June 16, 2015
SENATE VOTE: 36-0
SUBJECT: Gambling: California Gambling Control Commission.
SUMMARY: Prohibits a member of the California Gambling Control
Commission (CGCC or commission), the executive director, the
chief, and any employee of the commission or the Department of
Justice (DOJ), for a period of 2 years after leaving office or
terminating employment, from holding a direct or indirect
interest in, holding employment with, representing, appearing
for, or negotiating on behalf of, a gambling establishment.
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.
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2)Specifies qualifications for eligibility as a member of the
CGCC and provides that a person is ineligible for appointment
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.
5) Provides that no member of the Legislature, for a period of
one year after leaving office, shall, for compensation, act as
agent or attorney for, or otherwise represent, any other person
by making any formal or informal appearance, or by making any
oral or written communication, before the Legislature, any
committee or subcommittee thereof, any present member of the
Legislature, or any officer or employee thereof, if the
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appearance or communication is made for the purpose of
influencing legislative action.
FISCAL EFFECT: Unknown.
COMMENTS:
Purpose of the bill . According to the author's office, 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 and CGCC, there is no revolving door
prohibition against members and employees who go to work as
consultants or key employees of a gambling establishment. Over
the years, former Bureau employees have resigned and immediately
started consulting with tribal casinos and card rooms. This has
led to at least one recent conflict-of-interest case currently
being presented by the Attorney General.
This bill is offered in response to a recent case where the
former chief of the Bureau resigned from that position and the
next day went to work for gambling club. In that particular
case, the Attorney General's Office alleges that the former
chief was negotiating a new job with a card room in San Jose
while he was still employed as a regulator, investigator, and
enforcement officer with the Bureau. The accusation, which
seeks fines and licensing sanctions, will be heard before an
administrative law judge at a hearing in October.
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
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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
of the gambling establishment, investigates suspected violations
of gambling laws, and is ultimately responsible for enforcing
compliance with all state laws pertaining to gambling.
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.
Prior/Related Legislation : AB 2526 (Hall), 2011-2012
Legislative Session. Would have revised several definitions
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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 374 (Strickland), Chapter 263, Statutes of 2011. Authorized
a holder of a portable personal key employee license to obtain
employment as a "key employee" in more than one gambling
establishment at the same time.
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.
SB 289 (Vincent), Chapter 294, Statutes of 2007. Authorized the
CGCC to, on a case-by-case basis, deem an applicant suitable to
hold a state gambling license even if the applicant has a
financial interest in another business that conducts lawful
gambling in or outside of California. Assembly Floor: 64-2 (AYE:
All Republicans).
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.
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REGISTERED SUPPORT / OPPOSITION:
Support
Artichoke Joe's Casino
Communities for California Cardrooms
Opposition
None on file
Analysis Prepared by:Eric Johnson / G.O. / (916)
319-2531
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