BILL ANALYSIS                                                                                                                                                                                                    Ó




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          |SENATE RULES COMMITTEE            |                        SB 692|
          |Office of Senate Floor Analyses   |                              |
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                                UNFINISHED BUSINESS 


          Bill No:  SB 692
          Author:   Vidak (R) 
          Amended:  6/29/16  
          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

           SENATE FLOOR:  36-0, 5/11/15
           AYES:  Allen, Bates, Beall, Berryhill, Block, Cannella, Fuller,  
            Gaines, Galgiani, Hall, Hancock, Hernandez, Hertzberg, Hill,  
            Hueso, Huff, Jackson, Lara, Leno, Leyva, McGuire, Mendoza,  
            Mitchell, Monning, Moorlach, Morrell, Nguyen, Nielsen, Pan,  
            Pavley, Roth, Runner, Stone, Vidak, Wieckowski, Wolk
           NO VOTE RECORDED:  Anderson, De León, Liu

           ASSEMBLY FLOOR:  78-0, 8/11/16 (Consent) - See last page for  
            vote

           SUBJECT:   Gambling:  California Gambling Control Commission


          SOURCE:    Lucky Chances Casino


          DIGEST:  This bill prohibits a member of the California Gambling  
          Control Commission (CGCC), the executive director, chief, and  
          any employee of the CGCC or the Department of Justice (DOJ) from  
          holding an interest in, holding employment with, representing,  
          appearing for, or negotiating on behalf of a gambling  
          establishment, gambling enterprise, registrant, or licensee for  
          a period of two years after leaving office or employment. 








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          Assembly Amendments clarify that a member of the CGCC, the  
          executive director, chief, and any employee of the CGCC or DOJ  
          is prohibited from holding employment with, representing,  
          appearing for, or negotiating on behalf of a gambling  
          establishment, gambling enterprise, registrant, or licensee for  
          a period of two years after leaving office or employment. 


          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 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  








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            of the Act. 

          This bill prohibits a member of the CGCC, the executive  
          director, chief, and any employee of the CGCC or the DOJ from  
          holding a direct or indirect interest in, holding employment  
          with, representing, appearing for, or negotiating on behalf of a  
          gambling establishment, gambling enterprise, registrant, or  
          licensee for a period of two years after leaving office or  
          employment.

          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 for 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.

          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  
          alleged 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 alleged 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 stated that between 2012 and 2013, Lytle  
          asked for and obtained confidential information from the  
          Bureau's special agent in charge.  Furthermore, the state  
          alleged that the two exchanged over 180 phone calls as well as  
          text messages and emails. 

          In May 2016, Lytle and state prosecutors reached a settlement  
          agreement where Lytle agreed to surrender his card room licenses  








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          and pay a fine to resolve the allegations that he had abused his  
          connections to benefit a consulting client.

          Related/Prior 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.  

          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   Yes    


          According to the Assembly Appropriations Committee,  
          insignificant fiscal impact to CGCC and DOJ.  


          SUPPORT:   (Verified8/11/16)


          Lucky Chances Casino (source)
          Artichoke Joe's Casino


          OPPOSITION:   (Verified8/11/16)


          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. 








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          ASSEMBLY FLOOR:  78-0, 8/11/16
          AYES:  Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker,  
          Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon,  
          Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper,  
          Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines,  
          Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson,  
          Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Holden,  
          Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez,  
          Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin,  
          Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Quirk,  
          Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark  
          Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams,  
          Wood, Rendon
          NO VOTE RECORDED:  Roger Hernández, Low

          Prepared by:Felipe Lopez / G.O. / (916) 651-1530
          8/12/16 13:23:56


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