BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
213 (Florez)
Hearing Date: 5/28/2009 Amended: 5/18/2009
Consultant: Maureen Ortiz Policy Vote: GO 7-2
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BILL SUMMARY: SB 213 extends the moratorium on the issuance of
new gambling establishments from January 1, 2015 to January 1,
2020, and makes other related changes regarding the regulation
of gambling.
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Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11 2011-12 Fund
Regulations $15
$15 $0 Special*
Prohibition on new licenses -----unknown, potentially several
hundred
thousand in foregone revenue
beginning 1-1-2010----- Special*
Moratorium extension ---unknown, potentially several
hundred
thousand in foregone revenue
beginning in 1-1-2015----- Special*
*Gambling Control Fund
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STAFF COMMENTS: SUSPENSE FILE.
Extending the moratorium on new gambling establishments could
result in significant foregone revenues to the Gambling Control
Fund to the extent that new cardrooms are precluded from being
established. Also, by prohibiting existing "dormant" licenses
from being reactivated after January 1, 2010, SB 213 will result
in additional foregone revenue to the state. There are
currently 48 licenses that are inactive, and capping the number
of licenses that can be issued by the Commission to those
cardrooms in operation as of January 1, 2010, will nullify the
Commission's pending regulation that will determine the status
of those 48 closed cardrooms. According to the California
Gambling Control Commission, each card club currently provides
revenue on average of approximately $147,000 annually to the
state, although the actual revenue depends on the number of
tables within the card club, and the amount of wagers generated.
The $30,000 over a two year period represents costs to the
Commission to promulgate new regulations related to
post-employment restrictions. These costs would not be offset
by fee revenue. There will also be potential loss of millions of
dollars of fee revenue to cities and counties.
Current law prevents the Commission from issuing a gambling
license for a gambling establishment that was not licensed to
operate on December 31, 1999. This moratorium will end on
January 1, 2015. In addition to extending that moratorium to
January 1, 2020, SB 213 does the following:
Page 2
SB 213 (Florez)
1) Prohibits a local jurisdiction that issues gambling licenses,
key employee licenses, or work permits from appointing a person
to manage or oversee the issuance of those licenses or permits
who, within two years prior to that appointment, was employed or
retained by, or derived substantial income from, a gambling
establishment.
2) Prohibits a member of the California Gambling Control
Commission (CGCC), the executive director, the chief, and any
employee of CGCC or the Department of Justice designated by
regulation, from being employed as a consultant or key employee
of a gambling establishment for a period of two years after
leaving office. Current law precludes former executives of the
CGCC from appearing before the Commission for a period of three
years.
3) Allows the duration of a contract between a gambling
establishment and a third party provider of proposition player
services for up to two years, rather than the current cap of one
year. The commission requires a renewal application four months
prior to the expiration of the current contract, and often times
the renewal contract is exactly the same as the previous
contract.
In 1997 the Legislature created the Gambling Control Act to
provide a comprehensive scheme for statewide regulation of legal
gambling. Among other provisions, the Act provided that no new
gambling establishment may be opened in a city, county, or city
and county, in which a gambling establishment was not operating
on and before January 1, 1984, except upon the affirmative vote
of the electors of that local jurisdiction. Local jurisdictions
may adopt a gambling ordinance governing items such as the hours
of operation of gambling at those premises, patron security,
location of premises, wagering limits and the number of tables
permitted in those premises and in the jurisdiction as a whole.
There are currently two statutory moratoriums that restrict the
growth of controlled gambling in California. One moratorium
prohibits the state from issuing licenses for new gambling
establishments. The other limits the amount that controlled
gambling can expand in local jurisdictions to no more than 24.99
percent compared to the amount that was authorized on January 1,
1999. This second moratorium also sunsets January 1, 2015, but
it is not extended by this bill. Most local jurisdictions have
modified their gambling ordinances to realize the maximum amount
of growth authorized by law.
"Dormant" licenses are those that have been surrendered,
withdrawn, or were temporary and have not been renewed.
However, those licenses are still eligible to be reactivated
pending regulations by the Gambling Control Commission.