BILL ANALYSIS
SB 1369
Page 1
Date of Hearing: August 22, 2008
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mark Leno, Chair
SB 1369 (Cedillo) - As Amended: August 20, 2008
Policy Committee: Governmental
Organization Vote: 13 - 0
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill authorizes remote caller bingo as a game in which
specific tax-exempt organizations may use audio or video
technology to link designated in-state facilities for the
purpose of playing bingo, and prohibits the use of electronic or
video technology in connection with bingo, except in limited
circumstances. Specifically, this bill:
1)Prohibits the use of electronics or video in connection with
the game of bingo, except for the use of electronic card
minders and the video technology necessary for remote caller
bingo.
2)Authorizes local governments to adopt ordinances allowing
remote caller bingo and requires that it be played only with
traditional paper or other tangible bingo cards and daubers.
3)Requires the Gambling Control Commission (GCC) to regulate
remote caller bingo, test and certify card-minding devices
used in bingo, and license individuals conducting remote
caller bingo. Requires the GCC to submit a report to the
Legislature before January 1, 2012, on the fundraising
effectiveness and the regulation of remote caller bingo.
4)Requires the Department of Justice (DOJ) to conduct background
investigations for licensing purposes and conduct field
enforcement as it relates to remote caller bingo.
5)Requires the GCC to adopt emergency regulations concerning
remote caller bingo and card-minding devices by May 1, 2009.
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6)Limits an organization to conducting no more than one
remote-caller bingo game per week.
7)Specifies prizes for remote caller bingo cannot exceed 37% of
the gross receipts of the game and limits overhead to 20%, as
defined.
8)Creates the "California Bingo Fund" in the State Treasury and
requires that any fees and penalties associated with the
licensing of bingo be placed in that fund to be used
exclusively to support the GCC and the DOJ in carrying out the
duties of this legislation.
FISCAL EFFECT
1)One-time GF costs of approximately $500,000 for GCC to develop
regulations and purchase equipment necessary to test and
monitor electronic card-minding devices.
2)GCC estimates that they will need $2.5 million per year for 25
additional staff they believe will be necessary to oversee and
regulate charitable bingo in the state. These costs should be
fully offset by licensing fees.
3)On-going costs in excess of $3 million for DOJ to oversee and
enforce charitable bingo regulations. Approximately one-half
will be for licensing activities, which would be covered by
licensing fee revenue. The remaining cost of $1.5 million
will be General Fund.
COMMENTS
1)Rationale . According to the author, this bill is intended to
provide non-profit organizations an opportunity to increase
their fundraising ability by authorizing remote caller bingo,
which will allow charities across the state to combine their
games and offer larger prizes than allowed under current law.
The author states, "The demand for services from California
charities is increasing due to the economy, unemployment and
our state budget cuts. At the same time, charitable donations
are down and charities are faced with turning away people for
whom it is their mission to serve. Charities desperately need
new tools to increase their ability to raise funds to keep up
with the demand for their services. SB 1369 does just that by
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building upon and clarifying the charity bingo statute that
was created by the Legislature many years ago."
In addition, this bill is intended to clarify current law by
clearly prohibiting electronic bingo. The author contends that
electronic bingo is illegal in the state and that it violates
the exclusivity agreements contained in the tribal gaming
compacts between the state and various Indian tribes
throughout California. Several tribes have notified the
governor that they believe the existence of electronic bingo
parlors violates their exclusive right to operate gaming
devices. Should this matter not be settled in this legislative
session, the author argues that hundreds of millions of
dollars in state revenue will be lost because the tribes will
no longer be required to make payments to the state.
Finally, unlike current electronic bingo, which provides less
than 10% of the games' gross revenues to the nonprofits, the
author wants to assure that revenue generated by charitable
bingo games is used for charitable purposes. Toward that end,
this bill requires that a minimum of 43% of the gross revenue
be used for charitable purposes.
2)Remote Caller Bingo . The major differences between remote
caller bingo and traditional bingo are that remote caller
bingo allows for the transmission of an audio and video signal
of a live bingo game from one organization (a YMCA, for
example) located in a local jurisdiction that has adopted a
remote caller bingo ordinance to either an affiliated or
unaffiliated organization (another YMCA or a Boys' and Girls'
Club, for example) located in other jurisdictions across the
state that have also adopted remote caller bingo ordinances.
3)Electronic Bingo . Identical in appearance to slot machines,
electronic bingo machines are interconnected and allow
everyone in a bingo parlor to play against each other for a
cash prize, rather than traditional slot machines where
individuals play against the house for jackpots of various
sizes. California is home to several large-scale bingo parlors
using electronic bingo machines.
The AG's office has a 20-year legal history of determining
that various forms of electronic bingo are illegal in this
state. In 1987, the AG issued a published opinion that an
electronic system of bingo that substituted a hand computer
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with stored bingo card "matrices" for the traditional paper or
cardboard bingo cards did not qualify as bingo within the
meaning of Penal Code Section 326.5. Most recently, in May of
this year, Attorney General Jerry Brown's office sent
cease-and-desist orders to more than a dozen bingo parlors
around the state.
Opponents to this legislation disagree with the AG's findings
citing a recent federal court injunction which temporarily
prohibits the AG from seizing the electronic bingo machines
until their legal status is determined by the courts.
4)Exclusivity Clauses in Tribal Gaming Compacts . Most of the
compacts have some form of exclusivity agreement. The
agreements vary, but in general, in the event the state
authorizes any entity other than an Indian tribe with a
federally approved Class III gaming compact to conduct certain
types of gambling, including banked card games or slot
machines, within a tribe's core geographic market, that tribe
has the right to either reduce or eliminate their required
payments to the state. Beginning in 2008-09, gaming tribes
each year will pay in excess of $200 million to the state
through state General Fund contributions, Indian Gaming
Special Distribution Fund contributions, and Revenue Sharing
Trust Fund contributions. Should the state violate the
exclusivity provisions in the compacts, the tribes would no
longer be obligated to pay those revenues to the state.
As an example, the four recent compacts for the San Manuel,
Agua Caliente, Morongo & Pechanga tribes all have an exclusive
right to operate gaming divices. Under the exclusivity
clauses, they can cease making payments to the state if the
state authorizes anyone (other than an Indian tribe) to engage
in gaming activities, defined as the operation of gaming
devices or banking or percentage card games, within their
defined market areas. For Agua Caliente, the market area is
Riverside, Los Angeles, San Bernardino and San Diego counties.
For the other three, it is within 100 miles of their casinos.
5)Support . The California Association of Non-profits argues that
authorizing remote caller bingo will make bingo a more viable
fundraising option for more of California's nonprofits. They
note that ensuring that 43% of the proceeds from the game go
the charity will provide California charities with the highest
percentage return for bingo in the nation.
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Also in support, several tribal organizations, including the
California Tribal Business Alliance (CTBA), note that SB 1369
allows charities to "dramatically boost their ability to raise
money" through remote bingo, while clarifying existing law as
to what constitutes bingo in California by clearly stating
that electronic devices are prohibited except in very narrow
circumstances.
6)Opponents contend that this bill will devastate many small
charities throughout the state that have come to rely on
funding from electronic bingo. As an example, they note that
approximately $5 million in funding for Sacramento area
charities will be lost by this legislation. In opposition to
the bill, the California Charity Bingo Association states,
"Since 1974, charities have been authorized, subject to local
control, to offer bingo for charitable purposes. Countless
community-based programs have become heavily dependent on
contributions from charitable bingo. In order to keep up with
the demands placed on charities, new technology has evolved to
increase revenues available for charitable purposes. SB 1369
will cut off those streams of revenue and place all programs
dependent on charitable bingo revenues in jeopardy."
The opposition further maintains, "SB 1369 also eliminates
charitable bingo's ability to take advantage of modern
technology and provide reasonable accommodations for ADA
qualified patrons. This bill prohibits the use of electronic
aids to bingo and, instead authorizes a bingo minder of the
type in use 20 or more years ago."
Finally, as noted above, the opposition disagrees with the
authors' assertion that electronic bingo games are illegal in
the state, nor do they believe that they violate the
exclusivity language contained in the gaming compacts.
7)Related Legislation . Earlier this year, SB 1328 (Cedillo)
would have authorized remote caller bingo but did not prohibit
electronic bingo. The language for that bill has been
incorporated into this legislation.
During this session, SB 864 (Battin) defined "bingo" to permit
games in which players use paper bingo cards that can combine
the use of an electronic aid that notifies the player of a
winning card and prohibited the use of electronic systems that
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store bingo cards on computers in lieu of paper cards. The
language for SB 864 has been incorporated into SB 1369.
Also in the 2007-08 legislative session, SB 1626 (Steinberg)
would have allowed bingo to be played on an electronic replica
of a bingo card, so long as it is not a slot machine. That
bill was never heard by the Senate Governmental Organization
Committee.
AB 1924 (Jeffries), in this session, would have increased,
from $2,000 to $3,000 per month, the amount of bingo proceeds
that may be used to pay for the rental of property and for
overhead, including the purchase of bingo equipment,
administrative expenses, security equipment, and security
personnel. This bill would have applied to the Lake Elsinore
Elks Lodge only. The language for AB 1924 has been
incorporated into SB 1369.
8)Proposed Compromise Amendments for Discussion . The opponents
have suggested that they be allowed 18 months to phase out the
use of electronic bingo and to adjust their budgets to
compensate for the loss in funding. Tribal organizations
appear to be open to a six month delay. The committee may
wish to consider allowing a 12-month moratorium to allow
non-profit organizations to phase out the use of electronic
bingo and adjust their fundraising strategies.
Analysis Prepared by : Julie Salley-Gray / APPR. / (916)
319-2081