BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 692| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- 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. SB 692 Page 2 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 SB 692 Page 3 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 SB 692 Page 4 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. SB 692 Page 5 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 **** END ****