BILL ANALYSIS
SB 126
Page 1
Date of Hearing: July 8, 2009
ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
Joe Coto, Chair
SB 126 (Cedillo) - As Amended: April 16, 2009
SENATE VOTE : 38-1
SUBJECT : Bingo: remote caller bingo
SUMMARY : Makes technical code clean-up changes to the remote
caller bingo law that was enacted last year. Specifically, this
bill :
1) Deletes reference to school districts in the provisions
specifying the organizations that may conduct bingo games
and instead authorizes "charitable organizations affiliated
with a school district" to conduct bingo games.
2) Deletes reference to organizations "registered" to
conduct those bingo games.
3) Contains permissive model ordinance language for local
governing bodies to use.
4) Deletes requirement that the California Gambling Control
Commission establish criteria for registering manufacturers
and distributors.
5) Makes other technical and conforming changes.
6) Contains an urgency clause.
EXISTING LAW
1) The Legislature by statute may authorize cities and
counties to provide for bingo games, but only for
charitable purposes [California Constitution, Article IV,
Section 19 (c)].
2) Permits cities, counties, and cities and counties to
allow remote caller bingo games to be conducted by
specified tax exempt and nonprofit organizations for
charitable purposes, subject to provisions of law which, if
violated, constitute a crime.
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3) Authorizes specified tax-exempt and nonprofit
organizations that have been incorporated or in existence
for three years or more and that are not organized for the
primary purpose of operating bingo to conduct remote caller
bingo games no more than one day per week.
4) Defines a "remote caller bingo game" as a game of bingo
in which numbers or symbols on randomly drawn plastic balls
are announced by a person present at the site at which the
live game is conducted, and audio and video technology
links in-state facilities for the purpose of transmitting
the remote calling of a live bingo game from a single
location to multiple locations.
5) Requires remote caller bingo games to be played using
traditional paper or other tangible bingo cards and
daubers, and shall not be played by using electronic
devises, except card-minding devices.
6) Requires an authorized organization to provide the
California Gambling Control Commission (CGCC) with at least
30 days advanced written notice of its intent to conduct
remote caller bingo games, and submit specified information
about the organizations, locations, vendors, and licensees
involved in the operation of the games, as well as, a copy
of the local ordinance for the counties in which the games
will be played.
7) Allows affiliated organizations to cosponsor remote
caller bingo games or 10 unaffiliated organizations to
cosponsor remote caller bingo games provided the games do
not occur at more than 10 locations. Cosponsoring
organizations must enter into and provide CGCC with a copy
of written agreements setting forth specified information,
such as, how the expenses and proceeds of the game are to
be allocated among the participating organizations, the
bank accounts into which all receipts are to be deposited
and from which all prizes are to be paid, and how game
records are to be maintained and subjected to annual audit.
8) Limits an organization's overhead costs, as defined, to
not exceed 20 percent of gross sales, except for one-time,
nonrecurring capital acquisitions.
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9) Limits the value of prizes awarded during the conduct of
any remote caller bingo game to not exceed 37 percent of
the gross receipts for that game.
10) Requires CGCC to regulate remote caller bingo,
including, but not limited to, licensure and operations.
The CGCC shall license and register any person that
conducts remote caller bingo or any person that provides
supplies or equipment designed for the play of remote
caller bingo.
11) Requires all equipment used for remote caller bingo to
be approved in advance by CGCC.
12) Directs the CGCC to adopt appropriate emergency
regulations as soon as possible, but no later than May 1,
2009, in order to avoid delays in implementing regulations
governing remote caller bingo and to avoid disruption of
fundraising efforts by nonprofit organizations.
FISCAL EFFECT : Unknown
COMMENTS :
According to the author's office, this bill was introduced to
correct technical, non-controversial errors, clarifications,
and/or omissions in the statute created by SB 1369 (Cedillo,
Chapter 748, Statutes of 2008). On June 18, the author added
language to give local governments a template that they can use
if they choose to authorize remote caller bingo games in their
city, county, or city and county. On July 1, the author amended
this bill to delete some of the more onerous parts of that model
local ordinance language.
Remote caller bingo . SB 1369 created a new section of law
authorizing local governments to adopt ordinances for the play
of remote caller bingo. Remote caller bingo is based on the
traditional game of bingo. The major differences between remote
caller bingo and traditional bingo is that remote caller bingo
allows for the transmission of an audio and video signal of a
live bingo game from one organization (a Rotary Club, for
example) located in a local jurisdiction that has adopted a
remote caller bingo ordinance to sister or other affiliated
organizations (other Rotary Clubs) located in other local
jurisdictions across the state that have also adopted remote
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caller bingo ordinances.
Technical and clarifying changes . This bill makes a number of
technical and clarifying changes to the remote caller bingo law
enacted last year. As CGCC began to develop the regulations to
govern remote caller bingo, a number of minor drafting errors
were discovered in the law. This bill is intended to correct
those drafting errors to alleviate ambiguity in the law as CGCC
moves forward to adopt regulations prior to May 1, 2009.
The most significant technical changes are as follows:
1) Charitable organizations affiliated with a school district.
The Penal Code authorizes remote caller bingo to be operated, in
part, by "charitable organizations affiliated with a school
district" and it also authorizes traditional bingo to be
conducted, in part, by "school districts". Both of the changes
to the Penal Code were enacted by SB 1369. When the initial
language relating to bingo was amended into SB 1369, the
language would have allowed school districts to operate remote
caller and traditional bingo games. This was not the intent of
the author. The author wanted to allow "charitable
organizations affiliated with a school district" to operate
remote caller or traditional bingo games, not the school
districts themselves. Subsequent amendments, however, did not
make the corresponding changes to both references in the bill.
This bill would make the correction as intended by the author to
allow charitable organizations affiliated with a school district
to operate remote caller or traditional bingo games
2) Organizations registered to conduct remote caller bingo.
There is ambiguity with regard to the term "registered" as set
forth in the remote caller bingo law. The term "registered" is
a vestige of an initial draft of the bingo language amended into
the enabling legislation, SB 1369. The initial draft bingo
language was modeled after another law that set up a
registration program for nonprofits that wanted to conduct poker
night fundraisers. Later versions of SB 1369 established more
rigorous standards for remote caller bingo - a licensing program
instead of a registration program. The licensing program
requires specified persons involved in the operation of remote
caller bingo games to undergo background investigations to
determine if they are suitable for licensure. In addition,
CGCC's draft emergency regulations require the applicant
charitable organizations to submit specified documents
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demonstrating are a qualified tax-exempt or nonprofit
organization that has been in existence for three or more years
and are not organized for the primary purpose of operating
charitable bingo.
Status of Emergency Regulations . On April 7, 2009, CGCC sent
out notice of intent to adopt emergency regulations that will
establish the processes for: (1) recognizing organizations
authorized to conduct remote caller bingo, (2) issuing interim
remote caller bingo licenses and work permits for individuals
engaged in the conduct of remote caller bingo, and, (3) issuing
interim licenses for manufacturers and distributors of remote
caller bingo equipment, supplies and bingo card-minding devices.
CGCC expects that the emergency regulations will be filed with
the Office of Administrative Law (OAL) by April 14, 2009. CGCC
anticipates that the proposed emergency regulations may become
effective as early as April 24, 2009, upon approval by OAL. The
emergency regulations are now in effect.
However, the CGCC is facing a larger issue of having charitable
nonprofit organizations participating in the program. To date,
according to the CGCC, one organization has applied to conduct
remote caller bingo. Follow-up letters were sent to eligible
nonprofit organizations to apply for the remote caller bingo
program. If the numbers of applicants do not improve, then the
CGCC will have to put the remote caller bingo program in
abeyance until demand and revenues to cover program costs
increase.
The debate over electronic bingo machines/devices . According
to past Department of Justice opinions and a 2006 California
Research Bureau report titled "Gambling in the Golden State-1998
Forward," bingo in California is a significant and cash
intensive business enterprise. The revenues generated by
not-for-profit and charitable bingo at locations across the
state are in the millions of dollars a year. The actual amount
of revenues generated and the amounts expended on prizes, rent,
expenses and overhead, and given to charities is unclear because
there is no statewide reporting requirements in current law. In
Sacramento County, it has been reported that hundreds of bingo
devices are in use helping bingo operators generate over $50
million in gross revenue. Bingo operators and the charities
that they support maintain that electronic bingo devices are
popular with the public and are needed to better compete with
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tribal casinos.
Various tribes throughout California have stated that the use of
electronic bingo devices by nonprofit organizations violate
their exclusive right to operate slot machines and their
obligation to make revenue sharing payments to the state. The
new and amended compacts negotiated by the Schwarzenegger
Administration, contain exclusivity clauses that allow tribes to
suspend payments to the state if anyone other than another
federally recognized tribe is allowed to operate gaming devices
in specified areas of the state.
Recent litigation . Video Gaming Technologies, et. al. v. Bureau
of Gambling Control, et. al. In the Eastern District of
California, Video Gaming Technologies, a manufacturer of
electronic bingo devices, together with two charitable
organizations and two disabled persons filed a complaint on June
4, 2008, under the Americans with Disabilities Act, seeking
injunctive and declaratory relief against enforcement of Penal
Code prohibitions on slot machines or devices by the Department
of Justice's Bureau of Gambling Control, alleging that
enforcement denies reasonable accommodation to the disabled for
convenient play of bingo. It appears the substantive legal
question is whether the ADA requires a state, in order to comply
with its accommodation requirements, to refrain from the
enforcement of its criminal laws and permit the use by disabled
individuals of devices that are prohibited by those same
criminal laws. Upon the filing in Sacramento, a motion for
temporary restraining order was held on June 5, 2008 and it was
granted with an order to show cause regarding preliminary
injunction., to be heard on June 25, 2008.
On June 25, 2008, United States District Court Judge John A.
Mendez granted a preliminary injunction that allowed charitable
bingo operators to continue using the electronic bingo devices.
However, on March 10, 2009, the United States Ninth Circuit
Court of Appeals heard arguments in Video Gaming Technologies v.
Bureau of Gambling Control and on March 27, 2009, they found
that Senate Bill 1369 "unambiguously" banned electronic bingo
devices. The ruling also mentions that the electronic bingo
devices being used goes beyond "reasonable modifications" that
would allow them protection under the ADA. This ruling,
effectively, overturned Judge Mendez' preliminary injunction
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that allowed charity bingo operators to continue operations with
their machines.
New Vision Entertainment, LLC v. Sacramento County Board of
Supervisors . In 2007, New Vision Entertainment challenged
certain provisions of a Sacramento County (County) ordinance
authorizing the play of bingo without a paper "card". In making
the ruling, Sacramento Superior Court Judge Patrick Marlette
reviewed the applicable statute, the challenged provisions of
the bingo ordinance, and the various administrative and
legislative materials summarized above, and found that Penal
Code Section 326.5 (o) was not intended to, and does not
authorize, the County to permit electronic bingo, i.e., the
playing of bingo without the use of a physical, paper or
cardboard card. Specifically, Judge Marlette ruled that the
provisions of the County bingo ordinance that purport to
authorize "paperless" electronic bingo games are declared to be
invalid as contrary to Penal Code Section 326.5 (o).
However, Judge Marlette also applied a different analysis to the
provisions of the County ordinance governing electronic bingo
aids. Provisions of the County bingo ordinance also provide
that "players must have at their disposal paper cards that
electronic cards represent such that a winning bingo
could be verified on the paper or cardboard card itself." The
requirement that players have paper cards means that the game,
when played with electronic bingo aids, is not a "paperless"
game. These provisions of the County bingo ordinance that
require the electronic bingo machines to produce paper
results therefore are not invalid under Penal Code Section 326.5
(o).
Model local ordinance language . This bill includes language for
local governing bodies to use if they desire to adopt an
ordinance to bring remote caller bingo in their city, county, or
city and county. According to the author, the model local
ordinance language is intended to aid both charitable nonprofit
organizations and local governing bodies in authorizing and
encouraging other charitable nonprofit organizations to
participate in, and possibly organize, remote caller bingo games
in California.
Related legislation . AB 1036 (Niello), 2009-2010 Legislative
Session . Would allow a maximum of 100 unaffiliated
organizations to enter into an agreement to cosponsor a remote
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caller bingo game if the game does not have more than 100
locations. Pending in Assembly Governmental Organization
Committee.
Prior legislation . SB 1369 (Cedillo), Chapter 748, Statutes of
2008 . Authorizes nonprofit organizations, mobile-home park
associations, senior citizens organizations, and organizations
affiliated with school districts that have been incorporated or
in existence for three years or more to conduct "remote caller
bingo".
SB 1328 (Cedillo), 2007-2008 Legislative Session . Would have
permitted local jurisdictions to adopt an ordinance to allow
specified not for profit organizations to play remote caller
bingo, as defined. Held in Senate Governmental Organization
Committee.
REGISTERED SUPPORT / OPPOSITION :
Support
California Association of Nonprofits
Charity First for California
Opposition
None on file
Analysis Prepared by : Rod Brewer / G. O. / (916) 319-2531