BILL ANALYSIS                                                                                                                                                                                                    



                                                                     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









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          Analysis Prepared by:Kenton Stanhope / G.O. / (916)  
          319-2531