BILL ANALYSIS
Bill No: SB
200
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Roderick D. Wright, Chair
2009-2010 Regular Session
Staff Analysis
SB 200 Author: Correa
As Proposed to be Amended in Committee: April 14, 2009
Hearing Date: April 14, 2009
Consultant: Chris Lindstrom
SUBJECT
Raffles: Internet advertisement.
DESCRIPTION
SB 200 authorizes private, nonprofit, and eligible
organizations to advertise raffles over the Internet.
Specifically, the bill:
1)Deletes the prohibition on advertising raffles over the
Internet.
2)Deletes language authorizing an announcement of a raffle
on the Web site of the organization responsible for
conducting the raffle.
3)Provides that an eligible organization shall not be
deemed to operate or conduct a raffle over the Internet,
or sell raffle tickets over the Internet, if the eligible
organization advertises its raffle on the Internet or
permits others to do so.
4)Provides that information that may be conveyed on an
Internet Web site includes, but is not limited to:
a) Lists, descriptions, photographs, or videos of the
raffle(s) prizes.
b) List of the prize winners.
SB 200 (Correa) continued
Page 2
c) The rules of the raffle.
d) Frequently asked questions and their answers.
e) Raffle entry forms, including forms that may be
downloaded from the Internet Web site to be completed
manually by raffle ticket purchasers.
f) Raffle contact information, including the eligible
organization's name, address, telephone number,
facsimile number, or e-mail address.
5)Makes other technical and clarifying changes, as proposed
to be amended (see proposed author's amendments on page 4
of the analysis).
EXISTING LAW
Article IV, Section 19 (f) of the California Constitution
provides the Legislature may authorize private, nonprofit,
eligible organizations, as defined by the Legislature, to
conduct raffles as a funding mechanism to provide support
for their own or another private, nonprofit, eligible
organization's beneficial and charitable works, provided
that (1) at least 90 percent of the gross receipts from the
raffle go directly to beneficial or charitable purposes in
California, and (2) any person who receives compensation in
connection with the operation of a raffle is an employee of
the private nonprofit organization that is conducting the
raffle. The Legislature, two-thirds of the membership of
each house concurring, may amend the percentage of gross
receipts required by this subdivision to be dedicated to
beneficial or charitable purposes by means of a statute
that is signed by the Governor.
Existing law allows private, nonprofit, eligible
organizations to conduct raffles as a funding mechanism to
support charitable purposes or financially supporting
another private, nonprofit, eligible organization that
performs beneficial or charitable purposes, if at least 90
percent of the gross receipts from the raffle go directly
to beneficial or charitable purposes in California.
Existing law defines "eligible organization," for the
SB 200 (Correa) continued
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purpose of specifying who can conduct a raffle, as a
private, nonprofit organization that has been licensed to
conduct business for one year in California and is exempt
from taxation pursuant to specified provisions of the
California Revenue and Taxation Code.
Existing law prohibits the advertisement, operation, or
conduct of a raffle on the Internet, as well as, the sale,
trading, or redemption of raffle tickets on the Internet.
Allows announcements of a raffle on the Web site of the
organization responsible for conducting the raffle.
Existing law prohibits an eligible organization from
conducting a raffle unless it registers annually with the
Department of Justice (DOJ).
Existing law requires eligible organizations to annually
file a report with DOJ that includes the following: (a)
the aggregate gross receipts from the operation of raffles,
(b) the aggregate direct costs incurred by the eligible
organization from the operation of raffles, and, the
charitable or beneficial purposes for which proceeds of the
raffles were used, or to identify the eligible recipient
organization to which proceeds were directed, and the
amount of those proceeds.
BACKGROUND
Purpose of the bill. According to the author's office, "SB
200 would amend Penal Code Section 320.5 (f) to allow
non-profit organizations such as the Ocean Institute and
other non-profit organizations to announce and advertise
raffles on the Internet.
"SB 200 will not permit sales of raffle tickets over the
Internet. Raffles will not be allowed to be conducted over
the Internet. SB 200 will only clarify in code that the
raffle may be advertised on the Internet."
Need for the bill. Last year, the Attorney General (AG)
sent letters to approximately 20 nonprofit organizations
ordering them to cease and desist from conducting any
raffle activities until they have revised the
organization's Web site to stop advertising raffles. The
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AG notified the organizations that a violation of Penal
Code section 320 may result in the suspension or revocation
of the organization's registration. After lengthy
discussions between the AG's office and the organization's
involved, the AG transferred these matters to the county
district attorneys where the matters now rest.
SB 200 is intended to clarify what the sponsor argues is a
gray area in the law, while at the same time, strengthen
the prohibition in the law regarding the sale of raffle
tickets over the Internet.
Arguments in support. According to the sponsor, many
nonprofit organizations that hold charitable raffles were
unaware of the law that bans the use of the Internet to
advertise raffles. In this new age of technology and with
so may people getting all of their information
electronically, having the ability to advertise charitable
raffles online is a must. Patrons can get the information
on what they need to do to purchase raffle tickets. The
sponsor supports keeping the prohibition on selling raffle
tickets over the Internet. The sponsor believes
prohibiting tickets sales on the Internet will help prevent
fraudulent activities that would reflect poorly on
legitimate charitable organizations.
Other supporters of the bill argue that many organizations
utilize raffles to raise funds for programs which help
children and families in need. Because many of the raffles
are for big ticket items, such as homes or cars, the
organizations need to be able to get the information out to
as large a pool of potential ticket buyers as possible.
Many of the raffles are advertised in newspapers,
magazines, or newsletters which tell the reader to go to a
Web site for more information on the raffle. So many
people depend on the Internet for information. Charitable
organizations need to be able to use this medium to
advertise and provide information as to how to buy raffle
tickets. Additionally, the proponents support the
tightening up of language prohibiting the actual sale of
raffle tickets online. Allowing online sales via credit
card could encourage fraudulent online raffles to pop up.
By prohibiting online sales, legitimate nonprofits are
protected from being tainted by scammers.
Arguments in opposition. The Morongo Band of Mission
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Indians has an "oppose, unless amended" position on SB 200.
The Tribe would like to see paragraph (G) of subsection
320.5 (a) deleted from the bill. Paragraph G (page 4,
lines 12 - 13 of the bill) would have permitted photographs
or videos, which maybe taped or live, of the raffle's draw.
The author has agreed to take author's amendments to
delete that language from the bill.
Author's amendments. The author would like to take the
following amendments to the bill in committee:
1)Add Senators Harman and Walters, and Assemblymember
Harkey, as co-authors.
2)On page 4, line 1, replace "raffles" with "raffle".
3)On page 4, strike lines 12 - 13, inclusive.
4)On page 6, line 12, replace "4.5 and 5" with "3.5".
5)On page 6, line 31, replace "distributing" with
"distribution".
PRIOR/RELATED LEGISLATION
SB 639 (McPherson), Chapter 778, Statutes of 2000 .
Enabling legislation for SCA 4. Added section 320.5 to the
Penal Code to permit private, nonprofit, eligible
organizations to conduct raffles for the purpose of
providing financial support for beneficial or charitable
purposes.
SCA 4 (McPherson), Resolution Chapter 123, Statutes of
1999 . Placed Proposition 17 on the March 2000 ballot,
which was approved by the voters to authorize charitable
raffles in California.
AB 555 (Speier), 1989-1990 Legislative Session . Enabling
legislation for ACA 20. Held in Senate Governmental
Organization Committee.
ACA 20 (Speier), 1989-2000 Legislative Session . Would have
authorized charitable raffles with voter approval. Failed
passage in Senate Governmental Organization Committee.
AB 3688 (McClintock), 1988 Session . Enabling legislation
SB 200 (Correa) continued
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for ACA 52. Held in Senate Governmental Organization
Committee.
ACA 52 (McClintock), 1988 Session . Would have authorized
charitable raffles with voter approval. Held in Senate
Governmental Organization Committee.
SUPPORT: As of April 10, 2009:
American Legion
California Association of Nonprofits
City of Dana Point
DesertArc
Huntington Beach Chamber of Commerce
Irvine Chamber of Commerce
Irvine Public Schools Foundation
Ocean Institute (sponsor)
Orange County Department of Education
Ronald McDonald House Charities of San Diego, Inc.
Ronald McDonald House Charities Northern California
Yerba Buena Center for the Arts
OPPOSE: As of April 10, 2009:
Morongo Band of Mission Indian
FISCAL COMMITTEE: No.
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