BILL ANALYSIS
SB 200
Page 1
SENATE THIRD READING
SB 200 (Correa)
As Amended July 7, 2009
Majority vote
SENATE VOTE :37-0
GOVERNMENTAL ORGANIZATION 17-0
-----------------------------------------------------------------
|Ayes:|Coto, Anderson, Chesbro, | | |
| |Cook, De Leon, Evans, Hall, | | |
| |Hill, Jeffries, Lieu, | | |
| |Mendoza, Nestande, V. Manuel | | |
| |Perez, Portantino, Silva, | | |
| |Torrico, Tran | | |
|-----+------------------------------+-+--------------------------|
| | | | |
-----------------------------------------------------------------
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;
SB 200
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; and,
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.
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% 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
SB 200
Page 3
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.
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; and,
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 DOJ Web site 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 Web site an announcement
of a raffle.
SB 200
Page 4
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 Web 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
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 : 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."
Analysis Prepared by : Rod Brewer / G. O. / (916) 319-2531
FN: 0001827