BILL ANALYSIS                                                                                                                                                                                                    




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          |SENATE RULES COMMITTEE            |                        SB 777|
          |Office of Senate Floor Analyses   |                              |
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                                      CONSENT 


          Bill No:  SB 777
          Author:   Lara (D)
          Amended:  4/6/15  
          Vote:     21  

           SENATE GOVERNMENTAL ORG. COMMITTEE:  9-0, 5/12/15
           AYES:  Hall, Berryhill, Galgiani, Hernandez, Hill, Hueso, Lara,  
            McGuire, Vidak
           NO VOTE RECORDED:  Block, Gaines

           SUBJECT:   Gambling Control Act: corporations


          SOURCE:    Author
          
          DIGEST:    This bill makes various changes to laws regarding  
          corporate ownership of a gambling establishment.  Specifically,  
          the bill specifies that in order to be eligible to receive a  
          gambling license as the owner of a gambling enterprise, a  
          corporation shall supply information with the initial  
          application to the Department of Justice (DOJ) on bonuses paid  
          as compensation for services to all officers, directors, and  
          underwriters; requires that applicants must report the amount of  
          remuneration to persons other than directors and officers in  
          excess of $95,000 per year; and requires that information  
          provided by a corporation to include a copy of the corporation's  
          annual federal income tax return, within 30 business days after  
          that return is filed with the Internal Revenue Service.

          ANALYSIS:
          
          Existing law:
          
          1)Provides, under the Gambling Control Act, for the licensure  
            and regulation of various legalized gambling activities and  








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            establishments by the California Gambling Control Commission  
            (CGCC) and the investigation and enforcement of those  
            activities and establishments by DOJ.

          2)Requires a corporation to comply with specified requirements  
            in order to obtain a gambling license, including a requirement  
            that the corporation register as a corporation with DOJ and  
            supply specified supplemental information to DOJ with the  
            initial application and upon request of DOJ, such as  
            remuneration as compensation for services to specified  
            individuals and the amount of remuneration to persons other  
            than directors and officers in excess of $100,000. 

          3)Requires that information provided by a corporation to include  
            a copy of the corporation's annual federal income tax return,  
            within 30 calendar days after that return is filed with the  
            Internal Revenue Service.

          This bill:

          1)Specifies that, in order to be eligible to receive a gambling  
            license as the owner of a gambling enterprise, a corporation  
            shall supply information with the initial application to DOJ  
            on bonuses paid as compensation for services to all officers,  
            directors, and underwriters.

          2)Requires that applicants must report the amount of  
            remuneration to persons other than directors and officers in  
            excess of $95,000 per year. 

          3)Requires the corporation to supply a copy of its annual  
            federal income tax return within 30 business days after that  
            return is filed.

          Background

          Purpose of the bill.  According to the author, this bill makes  
          small technical changes to ensure that corporations supply  
          accurate information when requested by DOJ.  In addition, the  
          author argues that this bill would permit annual profit-and-loss  
          statements, annual balance sheets, and copies of annual federal  
          income tax returns to be filed within 30 business days, rather  








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          than calendar days, after the federal income tax return is filed  
          with the Internal Revenue Service.  This bill provides  
          corporations with more work days to prepare financial statements  
          and documents to ensure accuracy.

          Finally, the author argues that by requiring information of  
          those that earn more than $95,000 and those that get paid  
          bonuses to be included in the initial application and thereafter  
          by request, we are ensuring that DOJ has additional important  
          financial documentation to ensure that corporations are suitable  
          to hold a gambling license. 

          The Gambling Control Act.  The Gambling Control Act, established  
          in 1998, created a comprehensive scheme for statewide regulation  
          of legal gambling under a bifurcated system of administration  
          involving the Bureau of Gambling Control (Bureau) within the  
          Attorney General's Office and the five-member CGCC appointed 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  
          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 293 (Mendoza, Chapter 233, Statutes of 2009) allowed limited  
          liability companies and its officers, managers, members, or  
          owners to be eligible for a state gambling license. 

          SB 289 (Vincent, Chapter 294, Statutes of 2007) authorized the  
          CGCC to deem a person suitable to hold a state gambling license  








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          even if the person has a specified financial interest in a  
          business that conducts gambling activities outside the state  
          that would violate California law if conducted within the state.  
           

          FISCAL EFFECT:                 Appropriation:  No    Fiscal  
          Com.:             No           Local:          No


          SUPPORT:  (Verified 5/12/15)

          None received

          OPPOSITION: (Verified 5/12/15)

          None received



           Prepared by:Felipe Lopez / G.O. / (916) 651-1530
          5/13/15 15:56:07


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