BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 213|
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THIRD READING
Bill No: SB 213
Author: Florez (D)
Amended: 6/1/09
Vote: 21
SENATE GOVERNMENTAL ORG. COMMITTEE : 7-2, 5/14/09
AYES: Harman, Calderon, Florez, Negrete McLeod, Oropeza,
Padilla, Yee
NOES: Wright, Wiggins
NO VOTE RECORDED: Benoit, Denham, Wyland
SENATE APPROPRIATIONS COMMITTEE : 8-0, 5/28/09
AYES: Kehoe, Cox, Corbett, DeSaulnier, Hancock, Leno,
Oropeza, Yee
NO VOTE RECORDED: Denham, Runner, Walters, Wolk, Wyland
SUBJECT : Gambling establishments: proposition players
SOURCE : Commerce Club
Village Club
DIGEST : This bill 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.
ANALYSIS : Existing law provides for the licensure of
certain individuals and establishments involved in various
gambling activities, and for the regulation of those
activities, by the California Gambling Control Commission
CONTINUED
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(CGCC). Existing law provides for the enforcement of those
activities by the Department of Justice (DOJ). Existing
law provides that any violation of the Gambling Control Act
for which a penalty is not provided is punishable as a
misdemeanor.
Existing law expresses the intent of the Legislature that
nothing in the Gambling Control Act shall be construed to
preclude any city, county, or city and county from
prohibiting any gambling activity, from imposing more
stringent local controls or conditions upon gambling than
are imposed by the Gambling Control Act or by CGCC.
Existing law requires the commission to establish a program
for personal portable licenses for key employees, and to
seek to implement that program on or before July 1, 2008.
Existing law prohibits CGCC, until January 1, 2015, from
issuing a gambling license for a gambling establishment
that was not licensed to operate on December 31, 1999,
unless an application to operate that establishment was on
file with DOJ prior to September 1, 2000.
Existing law prohibits a member of CGCC, the executive
director, the chief, and any employee of CGCC or DOJ
designated by regulation, for a period of three years after
leaving office or terminating employment, for compensation,
from acting as agent or attorney for, or otherwise
representing, any other person by making any formal or
informal appearance, or by making any oral or written
communication, before the commission or the department, or
any officer or employee thereof, if the appearance or
communication is for the purpose of influencing
administrative action, or influencing any action or
proceeding involving the issuance, amendment, awarding, or
revocation of a permit, license, or approval.
Existing law allows a licensed gambling establishment to
contract with a third party for the purpose of providing
proposition player services, subject to specified
conditions.
This bill:
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1. Maintains local control over the issuance of local
key employee licensing.
2. Creates a new moratorium of the issuance of gambling
licenses for new gambling establishments. Prohibits
CGCC from issuing a gambling license for a gambling
establishment that is not licensed to operate on
January 1, 2010. Provides that this moratorium on the
issuance of new gambling licenses shall remain in
effect until January 1, 2020.
3. Prohibits a member of CGCC, the executive director,
the chief, and any employee of CGCC or DOJ designated
by regulation, for a period of two years after leaving
office or terminating employment, from being employed
as a consultant or key employee of a gambling
establishment.
4. Prohibits the duration of a contract between a
gambling establishment and a third party provider of
proposition player services from exceeding two years.
Note:
Please refer to the Senate Governmental Organization
Committee
analysis for the full discussion on this subject.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11
2011-12 Fund
Regulations $15 $15 $0 Special*
Prohibition on new unknown, potentially several hundred
thousand in foregone revenue
beginning 1-1-2010 Special*
Moratorium extensionunknown, potentially several hundred
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thousand in foregone revenue
beginning in 1-1-2015 Special*
*Gambling Control Fund
SUPPORT : (Verified 6/1/09)
Commerce Club (co-source)
Village Club (co-source)
California Gaming Association
Hollywood Park Casino
Lucky Chances Casino
OPPOSITION : (Verified 6/1/09)
California Gaming Control Commission
City of San Jose
Stand Up for California
ARGUMENTS IN SUPPORT : According to the sources, this
bill "specifically seeks to broaden existing provisions in
law which preclude former executives from the Gambling
Control Commission from appearing before the Commission for
a period of three years. The proposed change in this bill
will also preclude "the revolving door" for former
employees of the Commission precluding them from
representing card clubs. Proponents note that this bill
further extends the conflict of interest provisions which
currently apply to members of the Commission and the
executive director, and applies them to those in charge of
gaming at the local level. In addition, this measure also
extends the moratorium on the expansion of gambling for an
additional five years.
"California has had a longstanding policy against the
proliferation of gambling establishments. Since 1995,
California has discouraged and precluded additional cities
and counties from adopting ordinances providing for
expansion of gambling. The Governor has adopted an
executive order discouraging casinos in the urban area.
This measure will continue this longstanding public policy
and preclude an expansion of gambling in California until
after 2020.
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"This language is intended to have the prior employment
restrictions apply to a director of Gambling Control in a
city or county as it applies to the state. An individual
should not go directly from working for the gambling
industry to being a regulator. From a public perception
stand point, it is better for the individual who is in
charge of overseeing gambling to be someone from outside
the industry.
"This provision extends the revolving door provisions in
the Fair Political Practices Act to the Gambling Control
Commission so that an individual cannot go directly from
working for the Commission to working for a gambling
establishment.
"Regulations adopted by the Commission require a gambling
establishment and a third party provider of proposition
player services to submit any contract for renewal four
months prior to the expiration of the current contract.
Thus, approximately seven months into the contracts parties
begin working on the contract renewal. Often times the
renewed contracts is identical to the previous contract,
yet the contract still must be submitted four months prior
to the expiration. Proponents argue that this creates a
lot of busy work on the part of the parties to the contract
and additional work load for the Bureau."
ARGUMENTS IN OPPOSITION : The California Gaming Control
Commission states in opposition, "There is no rationale for
extending the cardroom moratorium from 2015 to 2020. The
moratorium simply preserves the existing monopoly that
benefits large cardrooms. The authors suggests that the
cardroom moratorium and the 1999 Tribal-State Gaming
Compacts should have the same end date of 2020, so that
decisions on Tribal and cardroom gaming could be addressed
on an equal playing field. We note that many of these 1999
Compacts have already been renegotiated and have terms
beyond 2020, so this is not a valid reason to extend the
moratorium date. Furthermore, capping the number of
licenses that can be issued by the Commission to those
cardrooms in operation as of January 1, 2010, would nullify
the Commission's pending regulations that will determine
the license status of 48 closed cardrooms. These
regulations are not expected to be effective until after
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January 1, 2010. Therefore, the Commission's regulations
regarding the status of the 48 'dormant' licenses would be
circumvented by the bill and would be precluded from
reopening.
"SB 213 would add post-employment restrictions of the
Commission and pre-employment restrictions on local
jurisdictions that regulate and enforce gambling. There is
no basis for these employment restrictions. To ensure the
integrity in decision-making, the Commission has already
gone the extra mile to adopt regulations for
post-employment restrictions on all staff that have had
access to privileged information or have had duties and
responsibilities that generally involve making
recommendations or decisions as it relates to the
Commission's administrative actions or proceedings. These
regulations preclude those staff from representing any
client before the Commission, for compensation, for a
period of three years after leaving the Commission. This
three-year restriction also applies to the Commissioners
and the Executive Director pursuant to the Gambling Control
Act. The Commission's post-employment restriction goes
beyond the standard one-year 'revolving door' provision in
the Political Reform Act that applies to other State and
local agencies and the Legislature.
"The additional post-employment restriction in SB 213
treats Commission employees differently than other
employees within the State, local government and the
Legislature. We also note that the post-employment
restrictions may not be legally enforceable. In addition,
the bill would require the Commission to promulgate new
regulations related to post-employment restrictions. We
estimate that we would incur costs of approximately $30,000
to the Gambling Control Fund for new workload to promulgate
these regulations.
"SB 213 also adds a new provision to Section 19984 of the
Business and Professions Code to specify that the duration
of an agreement, contract, or arrangement between a
gambling establishment and a third-party provider of
proposition player services shall not exceed three years.
We believe that this provision is unnecessary. Issues
related to 'third party' contracts have been addressed via
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the regulatory process and the Commission is amending these
regulations to provide for two-year contracts."
TSM:nl 6/1/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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