BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 293|
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THIRD READING
Bill No: AB 293
Author: Mendoza (D)
Amended: 4/13/09 in Assembly
Vote: 21
SENATE GOVERNMENTAL ORG. COMMITTEE : 12-0, 6/23/09
AYES: Wright, Harman, Benoit, Denham, Florez, Negrete
McLeod, Oropeza, Padilla, Price, Wiggins, Wyland, Yee
NO VOTE RECORDED: Calderon
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 64-10, 5/11/09 - See last page for vote
SUBJECT : Gambling regulation
SOURCE : California Gaming Association
DIGEST : This bill, among other things, allows limited
liability companies (LLCs) and its officers, managers,
members, or owners to be eligible for a state gambling
license; imposes on all partnerships and LLCs the same
licensing requirements that are applicable to limited
partnerships and provides that a partnership, instead of
being formed under the laws of the state to be eligible for
a gambling license must be registered in the state and
provide specific supplemental information; and requires the
California Gambling Control Commission to develop
procedures to allow for the continuous operation of
licensed gambling establishments in cases including the
CONTINUED
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death or incapacity of a licensee.
ANALYSIS : Existing law, the Gambling Control Act (Act),
provides for the licensure and regulation of various
legalized gambling activities and establishments by the
California Gambling Control Commission (CGCC) and the
enforcement of those activities by the Department of
Justice (DOJ).
Existing law requires CGCC to ensure that licenses,
approvals, and permits are not issued to, or held by,
unqualified or disqualified persons, or by persons whose
operations are conducted in a manner that is inimical to
the public health, safety, or welfare. CGCC has the
authority to require any person to apply for a license,
permit, or approval as specified in the Act and for any
cause deemed reasonable by CGCC, deny any application for a
license or approval provided for in the Act, and limit,
condition, or restrict any license, permit, or approval, or
impose any fine upon any person licensed or approved.
Existing law requires DOJ to investigate the qualifications
of applicants before any license or other approval is
issued and, if necessary, recommends the denial or the
limitation, conditioning, or restriction of any license or
other approval. DOJ is also required to monitor the
conduct of all licensees and other persons having a
material involvement, directly or indirectly, with a
gambling operation or its holding company, for the purpose
of ensuring that licenses are not issued or held by, and
that there is no direct or indirect material involvement
with, a gambling operation or holding company by
ineligible, unqualified, disqualified, or unsuitable
persons, or persons whose operations are conducted in a
manner that is adverse to the public health, safety, or
welfare. DOJ may investigate suspected violations of the
Act and relevant provisions of the Penal Code to
investigate complaints that are lodged against licensees,
or other persons associated with a gambling operation, by
members of the public, and to initiate, where appropriate,
disciplinary actions as provided in the Act.
Existing law requires every person who, either as owner,
licensee, or employee, either solely or in conjunction with
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others operates any controlled game in this state, or who
receives any compensation or share of the money or property
played, for carrying on any controlled game in this state,
to apply for and obtain from CGCC a valid state gambling
license, key employee license, or work permit.
Existing law defines "person" for purposes of the Act's
licensing requirements as a natural person, corporation,
partnership, limited partnership, trust, joint venture,
association, or any other business organization, and
provides that an owner of a card club that is not a natural
person is not eligible for a state gambling license unless,
defined persons individually apply for and obtain a state
gambling license.
This bill:
1. Provides that, except for preliminary injunctions, no
order may be effective for more than 15 calendar days,
and no preliminary order may be effective for more than
45 days, except by stipulation of DOJ or CGCC. [Section
19804(b) of the Business and Professions Code (BPC)]
2. Defines the term "gambling enterprise" to mean any
person that owns a gambling operation and makes
conforming changes throughout the Act. [BPC Section
19805(m)]
3. Authorizes CGCC to condition, restrict, discipline, or
take action against the license of an individual owner
endorsed on the license certificate of the gambling
enterprise whether or not the commission takes action
against the license of the gambling enterprise. [BPC
Section 19824(b)]
4. Deletes the requirement that CGCC adopt regulations to
require copies of all dishonored or uncollectible checks
shall be sent to DOJ. [BPC Section 19841(q)]
5. Requires CGCC to adopt regulations by December 31, 2011,
to provide procedures, criteria, and timelines for the
processing and approval of applications for the
licensing, temporary or interim licensing, or findings
of suitability for receivers, trustees, beneficiaries,
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executors, administrators, conservators, successors in
interest, or security interest holders for a gambling
enterprise so that gambling enterprises may operate
continuously in cases including, but not limited to, the
death, insolvency, foreclosure, receivership, or
incapacity of a licensee. [BPC Section 19841(s)]
6. Clarifies the definition of a state gambling license by
specifying that the owner of a gambling establishment
shall be known as the owner-licensee and making other
technical and conforming changes. [BPC Section 19851]
7. Authorizes LLCs and its officers, managers, members, or
owners to be eligible for a state gambling license to
operate a controlled gambling operation. [BPC Sections
19852 (f) and (g)]
8. Requires the chief of the Bureau of Gambling Control
(BOGC) within DOJ to file with CGCC the reasons for
his/her recommendation if he/she recommends approval of
the license with restrictions or conditions. Requires
the chief, prior to filing his/her recommendation, and
not less than 10 business days prior to CGCC's meeting
at which the application is to be considered, to inform
the applicant in writing generally of the basis for any
proposed recommendation, including the legal and factual
grounds on which the recommendation is based. Does not
require DOJ to divulge any confidential information.
[BPC Section 19868(c)]
9. Requires a corporation, in order to obtain a gambling
license, to supply specified supplemental forms and
information with the initial application, and thereafter
only on request, to DOJ. [BPC Section 19880(d)]
10.Requires CGCC, if at any time it denies or revokes a
license of an individual owner of any security issued by
a corporation that applies for or holds an owner
license, to immediately notify the individual and the
corporation of that fact. Requires the owner of the
security to sell the security for an amount not greater
than fair market value within 60 days, or upon a showing
of due diligence, CGCC may extend the time for selling
the security. Provides that upon the date when DOJ
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serves notice of the denial to the corporation, it is
unlawful for the denied security owner to receive any
dividend, income, or interest upon any security, except
dividends equal to the good faith estimate of the
owner's personal share of any income tax due on the
ownership interest until the date of the sale, as
determined in writing by an independent certified public
accountant, or as may be necessary to protect the
election of the gambling enterprise to be treated as an
"S corporation". [BPC Sections 19882(a) and
19882(b)(1)]
11.Imposes on all partnerships the requirements for
obtaining a gambling license that are applicable to
limited partnerships, and requires a partnership to be
registered as may be required under the laws of this
state, instead of being formed under the laws of this
state. Requires partnerships to supply specified
supplemental forms and information with the initial
application, and thereafter only on request, to DOJ.
Requires LLCs to comply with specified parallel
requirements in order to obtain a gambling license.
[BPC Sections 19890 and 19890.5]
12.Imposes on all partnerships and LLCs that hold a
gambling license the same requirements applicable to
limited partnerships that hold gambling licenses that
the purported sale, assignment, transfer, pledge, or
other disposition of any interest in a partnership or
LLC that holds a gambling license, or the grant of an
option to purchase the interest, is void unless approved
in advance by the commission. [BPC Section 19892(a)]
13.Requires CGCC, if at any time it denies a license to, or
revokes the license of, an individual owner of any
security issued by a partnership or LLC that applies for
or holds an owner license, to immediately notify the
individual and the partnership or LLC of that fact.
Requires the owner of the security to sell the security
for an amount not greater than fair market value within
60 days, or upon a showing of due diligence, CGCC may
extend the time for selling the security. Provides that
upon the date when DOJ serves notice of the denial to
the partnership or LLC, it is unlawful for the denied
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security owner to receive any dividend, income, or
interest upon any security, except dividends equal to
the good faith estimate of the owner's personal share of
any income tax due on the ownership interest until the
date of the sale, as determined in writing by an
independent certified public accountant. [BPC Sections
19892(b), 19892(c), and 19892(d)]
14.Requires general partners, limited partners, lenders,
members, managers, holders of evidence of indebtedness,
underwriters, agents, or employees of a partnership or
LLC that holds or applies for a license to own a
gambling enterprise to be licensed individually.
Provides that a person who is required to be licensed by
this section as a partner, manager, or member shall not
hold that position until he or she secures the required
approval of, or a temporary license issued by, CGCC.
Requires a person who is required to be licensed to
apply for a license within 30 days after CGCC requests
him/her to do so. [BPC Section 19893]
15.Prohibits the enforcement of a security interest with
prior approval of CGCC, except as provided by
regulations adopted by CGCC instead of DOJ. Requires
CGCC instead of DOJ to adopt said regulations. [BPC
Section 19900]
16.Permits the passage of a person under 21 years of age
through the gaming floor by way of a designated pathway
if accompanied by a person over 21 years of age or an
employee of the gambling establishment, and, deletes the
requirement for a separate entrance. Prohibits anyone
under 21 years of age from loitering in a gaming area.
[BPC Section 19921(a)(4)]
17.Authorizes, if a gambling establishment is located in an
unincorporated area annexed by a city without a local
election other than the election to approve the
annexation, the city acquiring jurisdiction to adopt an
ordinance permitting and regulating controlled gaming in
the existing gambling establishment, providing hours of
operation, the games to be played, wagering limits, and
the maximum number of gambling establishments and tables
permitted in each gambling establishment, the same as
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those limits in any ordinance or resolutions that
formerly applied to the gambling establishment. [BPC
Section 19966]
18.Makes other technical and conforming changes to the Act.
Comments
According to the material provided by the author and
supporters of the bill, the Gambling Control Act, the basic
law governing licensed card clubs, was enacted in 1997 and
has not undergone any comprehensive update since then.
This bill improves a number of procedural issues relating
to licenses and licensees where shortcomings in the law
have become evident during the intervening years. This
bill, however, does not make any significant changes to
gaming policy. This bill was developed with input from the
CGCC, the Bureau of Gambling Control, and attorneys
representing licensed card clubs.
NOTE: Please refer to the Senate Governmental
Organization Committee analysis for a point-by-point
breakdown on the bill.
Prior/related legislation . AB 2627 (Mendoza), 2007-08
Session, is similar to this bill. The bill passed the
Senate Floor with a vote of 31-5 on August 14, 2008, but
was vetoed by the Governor due to the budget delay.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 7/6/09)
California Gaming Association (source)
ASSEMBLY FLOOR :
AYES: Ammiano, Arambula, Beall, Bill Berryhill, Blakeslee,
Block, Blumenfield, Brownley, Buchanan, Caballero,
Charles Calderon, Carter, Chesbro, Conway, Cook, Coto,
Davis, De La Torre, De Leon, Duvall, Emmerson, Eng,
Evans, Feuer, Fletcher, Fong, Fuentes, Furutani,
Galgiani, Hagman, Hall, Harkey, Hayashi, Hernandez, Hill,
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Huber, Huffman, Jeffries, Jones, Krekorian, Lieu, Bonnie
Lowenthal, Ma, Mendoza, Monning, Nava, Niello, John A.
Perez, V. Manuel Perez, Portantino, Price, Salas,
Saldana, Silva, Skinner, Smyth, Solorio, Audra
Strickland, Swanson, Torlakson, Torres, Torrico, Tran,
Bass
NOES: Anderson, Tom Berryhill, DeVore, Fuller, Gaines,
Gilmore, Knight, Logue, Miller, Nielsen
NO VOTE RECORDED: Adams, Garrick, Nestande, Ruskin,
Villines, Yamada
TSM:mw 7/6/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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