BILL ANALYSIS Ó
SB 777
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Date of Hearing: July 8, 2015
ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
Adam Gray, Chair
SB
777 (Lara) - As Amended April 6, 2015
SENATE VOTE: 36-0
SUBJECT: Gambling Control Act: corporations.
SUMMARY: This bill makes various changes to laws regarding
corporate ownership of a gambling establishment. Specifically,
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.
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3)Requires the corporation to supply a copy of its annual
federal income tax return within 30 business days after that
return is filed.
EXISTING LAW:
1)Provides, under the Gambling Control Act, for the licensure
and regulation of various legalized gambling activities and
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.
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FISCAL EFFECT: Unknown
COMMENTS:
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
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.
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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.
Support : The supporters state, SB 777 would include "bonus"
compensation among the information to be supplied by corporate
licensees to the Department of Justice and which further allows
the filing of corporate financial information within 30
"business" days rather than "calendar" days following the filing
of a corporation's annual income tax return with the Internal
Revenue Service. This bill provides the Department of Justice
with the ability to request important information and allows
corporations an adequate time period within which to file
necessary documents with the Department of Justice.
Prior/Related Legislation : AB 293 (Mendoza, Chapter 233,
Statutes of 2009) allowed limited liability companies and its
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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
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.
REGISTERED SUPPORT / OPPOSITION:
Support
Commerce Casino
Hawaiian Gardens Casino
Bicycle Hotel & Casino
Opposition
None on file
SB 777
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Analysis Prepared by:Kenton Stanhope / G.O. / (916)
319-2531