BILL ANALYSIS
SB 200
Page 1
Date of Hearing: June 24, 2009
ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
Joe Coto, Chairman
SB 200 (Correa) - As Amended: April 16, 2009
SENATE VOTE : 37-0
SUBJECT : Raffles: Internet advertisement
SUMMARY : Authorizes private, nonprofit, and eligible
organizations, as specified, to advertise raffles over the
Internet. Specifically, this 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 prizes.
B) Lists of the prize winners.
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
SB 200
Page 2
number, facsimile number, or E-mail address.
5) Makes other technical and clarifying changes.
EXISTING LAW :
1) Prohibits the Legislature from authorizing lotteries,
but, allows the Legislature to authorize private,
nonprofit, and eligible organizations 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:
A) At least, 90 percent of the gross receipts
from the raffle go directly to beneficial purposes in
California. and;
B) 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 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, if two-thirds of the membership of each
house concurs on that measure [California Constitution,
Article IV, Section 19 (f)].
2) Regulates raffles conducted by eligible organizations
for beneficial or charitable purposes.
3) Prohibits a raffle from being advertised over 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.
4) Defines "eligible organization" for the 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 Revenue
and Taxation Code.
SB 200
Page 3
5) Prohibits an eligible organization from conducting a
raffle unless it registers annually with the California
Department of Justice (DOJ).
6) Requires eligible organizations to annually file a
report with DOJ that includes:
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.
FISCAL EFFECT : This bill is keyed non-fiscal.
COMMENTS : According to this bill's sponsor, the Ocean
Institute, this bill is intended to clarify a gray area in the
law, while at the same time, strengthen the prohibition
regarding the sale of raffle tickets over the Internet.
Under existing state law, only eligible private, tax-exempt
nonprofit groups qualified to conduct business in California,
for at least a year prior to conducting the raffle, may conduct
raffles to raise funds for charitable or beneficial purposes in
California. Information listed on the California Department of
Justice's (DOJ) website indicates that groups are prohibited
from awarding raffle prizes by use of a gaming machine,
apparatus, or device such as a slot machine. In addition, a
raffle may not be advertised, operated, or conducted over the
Internet. However, the organization conducting the raffle may
place on its website an announcement of a raffle.
Last year, DOJ 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
Internet site to stop advertising raffles. In the letter the
Attorney General notified the organizations that violating state
law may result in the suspension or revocation of their
registration.
This bill's anticipated effect would be to reduce the number of
DOJ referrals to county district attorneys for violations of the
SB 200
Page 4
Internet advertising ban. Removing the prohibition, as
prescribed under this bill, would most likely increase the
number of charity raffles advertising on the Internet. This
change could provide more out-of-state players of California
charity raffles, which could raise speculation on the propriety
under federal law of using United States mail for raffle
payments and tickets.
In Support . In support, the Ocean Institute says they believe
this bill "will help clarify what is now a gray area in the law
while also strengthening the prohibition of selling raffle
tickets over the Internet."
The American Legion, Department of California supports this bill
because they say that many of their Posts use the raffles to
raise funds for programs that help provide services for veterans
and their dependents. The American Legion goes further by
saying that many of their "raffles are for big ticket items,
such as homes and cars, we want to be able to get the
information out to as many potential ticket buyers as possible."
REGISTERED SUPPORT / OPPOSITION :
Support
American Legion, Department of California
Bonnie M. Dumanis, District Attorney of San Diego County
California Association of Nonprofits
California Outdoor Heritage Alliance
City of Dana Point
City of San Clemente
City of San Juan Capistrano
Community Action Partnership of Orange County
Dana Point Chamber of Commerce
DesertArc
Huntington Beach Chamber of Commerce
Irvine Chamber of Commerce
Irvine Public Schools Foundation
Laguna Niguel Chamber of Commerce
Maritime Museum of San Diego
Ocean Institute
Palos Verdes Art Center
Patricia C. Bates, Orange County Board of Supervisors
Ronald McDonald House Charities Northern California
Ronald McDonald House Charities of San Diego
SB 200
Page 5
Yerba Buena Center for the Arts
Opposition
None on file
Analysis Prepared by : Rod Brewer / G. O. / (916) 319-2531