BILL NUMBER: SB 1485	AMENDED
	BILL TEXT

	AMENDED IN SENATE  MAY 28, 2010

INTRODUCED BY    Committee on Governmental Organization
  (   Senators Wright (Chair),
Calderon, Denham, Florez, Harman, Negrete McLeod, Oropeza, Padilla,
Price, Wyland, and Yee   )   Senator
  Wright 

                        MARCH 8, 2010

    An act to amend Section 19805 of the Business and
Professions Code, relating to gambling.   An act to add
and repeal Chapter 5.2 (commencing with Section 19990.01) of Division
8 of the Business and Professions Code, relating to Internet
gambling, and declaring the urgency thereof, to take effect
immediately. 



	LEGISLATIVE COUNSEL'S DIGEST


   SB 1485, as amended,  Committee on Governmental
Organization   Wright  . Gambling Control
Act: licenses.   Internet gambling.  
   The Gambling Control Act provides for the licensure of certain
individuals and establishments that conduct controlled games, as
defined, and for the regulation of these gambling activities by the
California Gambling Control Commission. Existing law provides for the
enforcement of those regulations by the Department of Justice. Any
violation of these provisions is punishable as a misdemeanor, as
specified.  
   This bill would establish a framework to authorize intrastate
Internet gambling, as specified. The bill would require the
department to issue a request for proposals to enter into contracts
with up to 3 hub operators, as defined, to provide lawful Internet
gambling games to registered players in California for a period of 5
years, as specified.  
   The bill would provide that it would be unlawful for any person to
play any gambling game provided over the Internet that is not
authorized by the state pursuant to this bill. By creating a new
crime, this bill would impose a state-mandated local program. 

   The bill would require a hub operator to disperse at least 20% of
its gross revenues to the Treasurer on a monthly basis.  
   The bill would also create the Internet Gambling Fund which would
be administered by the Controller subject to annual appropriation by
the Legislature, and which would not be subject to the formulas
established by statute directing expenditures from the General Fund,
for appropriation by the Legislature to state agencies for purposes
related to the bill.  
   Existing law provides that a statute that imposes a requirement
that a state agency submit a periodic report to the Legislature is
inoperative on a date 4 years after the date the first report is due.
 
   This bill would require the commission, notwithstanding that
requirement, in consultation with the department, Treasurer, and
Franchise Tax Board, to issue a report to the Legislature describing
the state's efforts to meet the policy goals articulated in this bill
within one year of the effective date of this bill and, annually,
thereafter.  
   The bill would also require the Bureau of State Audits, at least 2
years before the expiration of any hub operations contract with the
state, to issue a report to the Legislature detailing the bureau's
implementation of this bill, as specified.  
   The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.  
   This bill would provide that no reimbursement is required by this
act for a specified reason.  
   The bill would make these provisions inoperative on January 1,
2017, and repeal them on that date unless a later enacted statute,
that is enacted before January 1, 2017, deletes or extends that date.
 
   This bill would declare that it is to take effect immediately as
an urgency statute.  
   The Gambling Control Act 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. Existing law requires certain
persons employed in the operation of a gambling enterprise, known as
key employees, to apply for and obtain a key employee license.
 
   This bill would include surveillance managers or supervisors in
the definition of "key employee" and make other technical changes to
these provisions. 
   Vote:  majority   2/3  . Appropriation:
no. Fiscal committee: yes. State-mandated local program:  no
  yes  .


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

   SECTION 1.    Chapter 5.2 (commencing with Section
19990.01) is added to Division 8 of the   Business and
Professions Code   , to read: 
      CHAPTER 5.2.  THE INTERNET GAMBLING CONSUMER PROTECTION AND
PUBLIC-PRIVATE PARTNERSHIP ACT OF 2010



      Article 1.  Title, Legislative Declarations, and Statement of
Legislative Intent


   19990.01.  This act shall be known and may be cited as the
Internet Gambling Consumer Protection and Public-Private Partnership
Act of 2010.
   19990.02.  The Legislature hereby finds and declares all of the
following:
   (a) Over 1.5 million Californians participate in illegal online
gambling on more than 600 unregulated gambling Internet Web sites
every week. These gambling Web sites are operated by offshore
operators that are not regulated by United States authorities. As
such, neither federal nor California laws provide any consumer
protections for California players. California players assume all
risks, any negative social or financial impacts are borne by the
citizens of California, and the revenues generated from online poker
are being realized by offshore operators and not providing any
benefits to the citizens of California.
   (b) The presence, operation, and expansion of offshore,
unlicensed, and unregulated gambling Web sites available to
Californians endangers Californians because the current gambling Web
sites operate illegally and without regulation as demonstrated by
criminal prosecutions of some Internet gambling purveyors, and
questions often arise about the honesty and the fairness of the games
played on these gambling Web sites as well as about the true purpose
for, and use of, proceeds generated by these unregulated gambling
Web sites.
   (c) In October 2006, Congress passed the SAFE Port Act, to
increase the security of United States ports. Embedded within the
language of that bill was a section called the Unlawful Internet
Gambling Enforcement Act of 2006 (UIGEA), which prohibits the use of
banking instruments, including credit cards, checks, or fund
transfers, for interstate Internet gambling, essentially prohibiting
the play of online real-money poker by United States citizens. UIGEA
permits individual states to create a regulatory framework to enable
intrastate Internet play of games of real-money poker.
   (d) State regulation of Internet gambling consistent with federal
law provides California with the means to protect its citizens and
consumers under certain conditions by providing a framework to ensure
that, among other things, minors are prevented from gambling,
citizens participating in gambling activities are protected, and the
state is not deprived of income tax revenues to which it would
otherwise be entitled.
   (e) The state currently maintains and implements substantial
regulatory and law enforcement efforts to protect thousands of
Californians who play real-money poker in licensed California
cardrooms and tribal government casinos, yet the state provides no
licensing requirements, regulatory structure, or law enforcement
tools to protect millions of Californians who play the same games
daily for money on the Internet.
   (f) In order to protect the millions of Californians who gamble
online, allow state law enforcement to ensure consumer protection,
and to keep the revenues generated from Internet poker in California,
it is in the best interest of the state and its citizens to
authorize, implement, and create a legal system for intrastate
Internet gambling.
   (g) The state's interests are best met by a private-public
partnership between the state and up to three hub operators, the
terms of which would facilitate meeting the important consumer
protection interests of the state while ensuring, through the success
of the hub operators, that the state receives the benefits of the
contract as well as tax revenues that it would otherwise not receive.

   (h) The state's interests are best met by encouraging competition
among qualified hub operators with the technical expertise and
systems that comply with federal law, protect registered players, and
ensure that the state collects consideration under its contract with
the hub operators, personal income taxes owed by registered players,
and corporate taxes from the earnings of hub operators.
   (i) The Department of Justice, in conjunction with other state
agencies and private partners, has the expertise to evaluate the
qualifications of applicants and responses to a request for proposal
for intrastate Internet gambling services, including those that a hub
operator will provide, and to enter into a contract with the best
qualified and most responsive applicants to meet the needs of the
state and its citizens.
   (j) The authorization of intrastate Internet gambling pursuant to
these provisions does not violate the California Constitution or
interfere with any right under any compact between the state and any
federally recognized Indian tribe. Moreover, the authorization and
regulation of intrastate Internet gambling pursuant to these
provisions do not violate the exclusivity provisions of any compact
between the state and any federally recognized Indian tribe. Internet
gambling will take place throughout California on both tribal and
nontribal lands. Moreover, the facilities used in the provision of
Internet gambling are not slot machines or gaming devices as defined
in any of those compacts. While the Indian Gaming Regulatory Act
balanced the interests of three sovereigns, the state, the tribes,
and the federal government, UIGEA was designed to balance the federal
interest in secure financial transactions with the state power to
determine how online gambling should take place within the states.
Finally, application of UIGEA in California does not violate federal
Indian law by impinging upon protected tribal sovereignty.
   (k) Nothing in this chapter prohibits federally recognized Indian
tribes within California from participating in intrastate Internet
gambling pursuant to these provisions subject to the jurisdiction of
the state.
   19990.03.  It is the intent of the Legislature to create a
contractual framework to:
   (a) Ensure that authorized games are only offered for play in a
manner that is consistent with federal and state law.
   (b) Authorize the Department of Justice, pursuant to a request for
proposal (RFP) seeking hub applicants issued consistent with the
terms and conditions in this chapter, to enter into a five-year
contract with up to three hub operators that meet the background
requirements and demonstrate the technical expertise to ensure that
wagering authorized by this chapter is only offered to registered
players who are physically present within the borders of California
at the time of play and who are 21 years of age or older.
   (c) Authorize the Department of Justice, at the conclusion of the
five-year term and subject to any amendments to this chapter, to do
the following:
   (1) Offer an extension of five years or more to any hub operator
offering authorized games to registered players pursuant to this
chapter.
   (2) Issue an RFP consistent with this chapter seeking additional
hub applicants should the Legislature determine to increase the
number of hub operators.
   (d) Include all of the provisions in this chapter as terms of the
contract between the state and a hub operator subject to the
enforcement provisions delineated in this chapter.
   (e) Ensure that a hub operator complies with federal and state
laws and regulations.
   (f) Grant power to the state agencies authorized in this chapter
to oversee the operations of any hub operator and to enforce the
terms of the contract to ensure that the interests of the state and
registered players are protected.
   (g) Establish a process that includes a background check and
requires that every employee of any hub operator or subcontractor
receives an Internet hub employee work permit from the state prior to
gaining access to hub facilities.
   (h) Ensure that the state is able to collect income tax revenues
from registered players.
   (i) Set contractual consideration to be paid by a hub operator to
the state without creating a tax.
   (j) Distribute contractual consideration collected by the state
from all hub operators to the Internet Gambling Fund, which shall be
administered by the Controller subject to annual appropriation by the
Legislature, and which shall not be subject to the formulas
established by law directing expenditures from the General Fund, for
the following:
   (1) The actual costs of contractual oversight, consumer
protection, state regulation, and problem gaming programs.
   (2) Other purposes related to this chapter as the Legislature may
decide.
   (k) Create systems to protect each registered player's private
information and prevent fraud and identity theft.
   (l) Ensure that registered players are able to have their
financial transactions processed in a secure and transparent fashion.

   (m) Ensure that all applicable state agencies will have unfettered
access to the premises and records of any hub operator to ensure
strict compliance with state regulations concerning credit
authorization, account access, and other security provisions.
   (n) Require that each hub operator provide registered players with
accessible customer service.
   (o) Require that each hub operator's Internet Web site contain
information relating to problem gambling, including a telephone
number that an individual may call to seek information and assistance
for a potential gambling addiction.
   (p) Require that any hub operator and its subcontractors be
organized in California and locate the hub and its facilities
entirely within the state, without precluding foreign entities from
creating California subsidiaries for the purposes of applying to
become a California hub operator.
   (q) Ensure that all Internet hub employees are physically present
in the state when working on or in hub facilities or when in contact
with registered players.
   (r) Create an express exemption from disclosure, pursuant to the
Public Records Act under subdivision (b) of Section 6253 of the
Government Code, that exempts from public disclosure proprietary
information of a hub applicant or a hub operator that will permit
disclosure of confidential information to state agencies while
achieving the public policy goals of deploying secure systems that
protect the interests of the state and registered players.
   (s) Preserve the authority of the Legislature to opt out of, or
opt into, any federal framework for Internet gambling, or to enter
into any compact with other states to provide Internet gambling.
   (t) As a matter of statewide concern, preempt any city, county, or
city and county from passing any law or ordinance regulating or
taxing any matter covered in this chapter.

      Article 2.  Definitions


   19990.05.  For the purpose of this chapter the following words
have the following meanings:
   (a) "Accepted proposal" means a response by the state to an RFP
submitted by a hub applicant selecting that hub applicant to become a
hub operator.
   (b) "Affiliate" means any person or entity with more than a 5
percent ownership interest in a hub operator, a hub applicant, or a
subcontractor, or in which a hub operator, a hub applicant, or a
subcontractor owns more than a 5 percent interest.
   (c) "Authorized game" means a game played using a hub pursuant to
the explicit authority of the state or offered by a hub operator
without objection by the state.
   (d) "Background check" means a criminal history record check and
the electronic submission of fingerprints to the Department of
Justice and to the Federal Bureau of Investigation for national
processing.
   (e) "Bet" means the placement of a wager in a game.
   (f) "Commission" means the California Gambling Control Commission.

   (g) "Contract" means the agreement entered into between a hub
operator and the State of California pursuant to which a hub operator
provides authorized games for consideration to the state.
   (h) "Department" means the Department of Justice.
   (i) "Division" means the Division of Gambling Control of the
Department of Justice.
   (j) "Finding of suitability" means a finding by the commission
that a person meets the qualification criteria described in Section
19990.23, and that the person would not be disqualified from being a
hub operator on any of the grounds specified in Section 19990.23.
   (k) "Gambling" means to deal, operate, carry on, conduct,
maintain, or expose for play any game.
   (l) "Game" means any gambling game.
   (m) "Gaming system" means the technology, including hardware and
software, used by a hub operator to facilitate the offering of
authorized games to registered plays.
   (n) "Gross revenues" means the total amount of money received by a
hub operator from registered players for participation in authorized
games.
   (o) "Hub" means all facilities and software used to facilitate
activities delineated in this chapter.
   (p) "Hub applicant" means any person or entity which has submitted
a proposal to enter into a contract with the state to become a hub
operator.
   (q) "Hub facility" means any physical area used by a hub operator.

   (r) "Hub operator" means an entity that has a contract with the
state pursuant to which that entity offers authorized games to
registered players on the Internet.
   (s) "Internet Gambling Fund" means the fund established pursuant
to this chapter for annual allocation by the Legislature.
   (t) "Internet hub employee" means any natural person employed in
the operation of a hub by a hub operator or a subcontractor.
   (u) "Internet hub employee work permit" means a permit issued to
an Internet hub employee by the commission after a background check
by the division.
   (v) "Intrastate authorized games" means the playing of authorized
games over the Internet by registered players who must be physically
present within the borders of California at the time of play.
   (w) "Land-based gaming entity" means a card club operated pursuant
to Chapter 5 (commencing with Section 19800) or a casino operated by
a federally recognized Indian tribe on Indian land in California
which provides any game for players on its premises that is offered
on a hub.
   (x) "Online self-exclusion form" means a form on which an
individual notifies a hub operator that she or he must be excluded
from participation in authorized games for a stated period of time.
   (y) "Per hand charge" means the amount charged by the hub operator
for registered players to play in a per hand game.
   (z) "Per hand game" means an authorized game for which the hub
operator charges the player for each hand.
   (aa) "Play settings" means the options and default parameters made
available by a hub operator to a registered player in the play of
authorized games.
   (ab) "Proposal" means any and all submissions by a hub applicant
to the state prior to entering into a contract with the state.
   (ac) "Proprietary information" means and includes all information
that, whether or not patentable or registerable under patent,
copyright, trademark, or similar statutes, (1) can be protected as a
trade secret under California law or any other applicable state law,
federal law, or foreign law, or (2) derives independent economic
value, actual or potential, from not being generally known to the
public or to other persons who can obtain economic value from its
disclosure or use. "Proprietary information" includes, but is not
limited to, computer programs, databases, data, algorithms, formulae,
expertise, improvements, discoveries, concepts, inventions,
developments, methods, designs, analyses, drawings, techniques,
strategies, new products, reports, unpublished financial statements,
budgets, projections, billing practices, pricing data, contacts,
client and supplier lists, and business and marketing records,
working papers, files, systems, plans and data, and all registrations
and applications related thereto.
   (ad) "Registered player" means a player who has registered with a
hub operator to play authorized games.
   (ae) "Registration information" means the information provided by
a person to a hub operator in order to become a registered player.
   (af) "RFP" means a request for proposal issued by the state.
   (ag) "Robotic play" means the use of a machine by a registered
player to take the next action at any point in a game.
   (ah) "State" means the State of California.
   (ai) "Subcontractor" means any person or entity providing goods or
services to a hub operator in connection with the operation of
authorized games.
   (aj) "Table" means a physical table at which games are legally
played at land-based gaming entities licensed in the state.
   (ak) "Terms of Use Registered Player's Agreement" means the
agreement offered by a hub operator and accepted by a registered
player delineating, among other things, permissible and impermissible
activities on a hub and the consequences of engaging in
impermissible activities.
   (al  ) "Tournament" means a competition in which registered
players play a series of authorized games to decide the winner.
   (am) "Tournament charge" means the amount charged by the hub
operator for registered players to play in a tournament.
   (an) "Tournament winnings" means the amount of any prize awarded
to a registered player in a tournament.
   (ao) "Tribe" means a federally recognized Indian tribe, including,
but not limited to, the governing body of that tribe or any entity
that is an affiliate of that tribe.

      Article 3.  Legal Authorized Games Offered Over the Internet in
California


   19990.10.  Under the Unlawful Internet Gambling Enforcement Act of
2006, California is permitted to authorize games as long as all
players and the online wagering activities are located within the
state and the games are not played by minors.
   19990.11.  Notwithstanding any other law, a person in California
over 21 years of age is hereby permitted to participate as a
registered player in an authorized game provided over the Internet by
a hub operator as described in this chapter.
   19990.12.  (a) A person shall not offer any game on the Internet
in this state unless that person holds a valid contract entered into
with the state to offer authorized games as a hub operator pursuant
to this chapter.
   (b) It is unlawful for any person to play any game provided on the
Internet that is not authorized by the state pursuant to this
chapter.
   (c) Chapter 5 (commencing with Section 19800) of Division 8 shall
not apply to this chapter.

      Article 4.  Selection of a Hub Operator


   19990.20.  Consistent with this chapter within ____ days of the
operative date of this chapter the department shall do the following:

   (a) Issue an RFP to enter into contracts with up to three hub
operators to provide lawful Internet games in California for a period
of five years.
   (b) Issue all rules governing the submission of proposals and
awarding of hub contracts consistent with this chapter.
   19990.21.  A person shall not have an ownership interest in more
than one hub.
   19990.22.  (a) In issuing the RFP, the department shall clearly
and precisely describe how any hub applicant's proposal shall be
scored and the basis it will use to determine which proposal or
proposals it will accept.
   (1) The department shall establish a minimum score that any hub
applicant must achieve in order to be qualified to receive an offer
for a state contract to become a hub operator.
   (2) Factors to be considered in evaluating hub applicants shall
include, but are not limited to, quality, competence, experience,
past performance, efficiency, reliability, financial viability,
durability, adaptability, timely performance, integrity, security,
and the consideration promised to the state.
   (3) In establishing scoring parameters for evaluation of all the
proposals and what weight should be given to the specific elements
within each hub applicant's proposal, the department's selection
criteria shall give preference to proposals that meet the following
criteria:
   (A) Are most responsive.
   (B) Are most qualified.
   (C) Have as a managing general partner or chief executive officer
for the proposed hub operator either of the following:
   (i) A holder of an owner license issued by the commission pursuant
to subdivision (a) of Section 19851 of the Business and Professions
Code who is in good standing at the time the hub applicant submits
its proposal.
   (ii) An official representative of the government of a federally
recognized Indian tribe with a tribal-state gaming compact with the
state.
   (D) Have as a hub applicant or as a subcontractor or
subcontractors a small business or microbusiness eligible to
participate in the Small Business Procurement and Contract Act
(Chapter 6.5 (commencing with Section 14835) of Part 5.5 of Division
3 of Title 2 of the Government Code).
   (E) Have as a hub applicant or a subcontractor or subcontractors a
disabled veteran business enterprise contractor, subcontractor, or
supplier eligible to participate in the California Disabled Veteran
Business Enterprise Program (Article 6 (commencing with Section 999)
of Division 4 of the Military and Veterans Code).
   (F) Propose to locate hub facilities in a distressed area
designated by the Office of Planning and Research under the Target
Area Contract Preference Act (Chapter 10.5 (commencing with Section
4530) of Division 5 of Title 1 of the Government Code), or the
regulations promulgated under that act.
   (G) Propose to locate hub facilities in a enterprise zone
designated by the State Trade and Commerce Agency pursuant to the
Enterprise Zone Act (Chapter 12.8 (commencing with Section 7070) of
Division 7 of Title 1 of the Government Code), or the regulations
promulgated under that act.
   (H) Propose to locate hub facilities in a military base area
designated by the State Trade and Commerce Agency pursuant to the
Local Agency Military Base Recovery Area Act (Chapter 12.97
(commencing with Section 7105) of Division 7 of Title 1 of the
Government Code), or the regulations promulgated under that act.
   (4) The department shall not have to comply with the provisions of
Section 12103.5 of the Public Contracts Code prior to issuing the
RFP.
   (b) The department shall accept up to three proposals within one
year of the operative date of this chapter pursuant to its
determination of rules governing the awarding of a hub contract, as
described in Section 19990.20.
   (c) A person or entity submitting a proposal to become a hub
operator shall be a resident of California or an entity organized in
California and have all of its hub facilities in California.
   (1) At all times, a hub applicant or hub operator shall be
domiciled in California and in good standing with the Secretary of
State and the Franchise Tax Board.
   (2) All subcontractors of a hub applicant or a hub operator, or
otherwise providing goods or performing services in connection with
the operation of authorized games for the hub applicant, hub
operator, or any of its subcontractors, shall be subject to the
provisions of this subdivision. If a hub operator desires to enter
into an agreement with a person or entity to provide goods or
services in connection with the operation of authorized games, that
person or entity shall be subject to the provisions of this
subdivision and investigation and a finding of suitability as set
forth in Section 19990.23.
   (d) In addition to any other confidentiality protections afforded
to applicants for state contracts, the state and its agencies shall
treat the proprietary information contained in any proposal of any
hub applicant as confidential to protect the hub applicant and to
protect the security of any prospective hub. Nothing in this chapter
prohibits the exchange of confidential information between or among
state agencies considering a proposal by a hub applicant to become a
hub operator. The confidentiality provisions in this chapter shall
exempt proprietary information supplied by a hub applicant to a state
agency from public disclosure consistent with subdivision (b) of
Section 6253 of the Government
    Code.
   (e) At the time of its submission of a proposal and response to
the RFP, a hub applicant shall pay a nonrefundable filing charge of
____ dollars ($____) to be paid to the state and received by the
department for the reasonably anticipated costs to be incurred by the
state agencies to evaluate the proposal separate from costs
associated with evaluating the suitability of a hub applicant.
   (f) At the time of its submission of a proposal response to the
RFP, any hub applicant shall post a bond payable to the state in the
amount of ____ dollars ($____).
   (1) The bond shall be returned to the hub applicant if the
commission finds that the hub applicant is not suitable to be a hub
operator or if its proposal is not accepted by the department.
   (2) Upon acceptance of a hub applicant's proposal and the granting
of a contract to that applicant to operate a hub in the state, the
bond shall become immediately due and owing to the state.
   (g) A federally recognized Indian tribe, including, but not
limited to, the governing body of that tribe or any entity that is an
affiliate of that tribe, that submits a proposal in response to the
RFP issued by the department shall waive its sovereignty for the
purpose of evaluation of its proposal. The proposal shall
affirmatively declare that the hub applicant is subject to the state'
s jurisdiction as set forth in this chapter and in the rules adopted
by state agencies. Any contract between the state and a federally
recognized Indian tribe entered into to provide authorized games as a
hub operator shall include that tribe's affirmative agreement to be
subject to the jurisdiction of the state for all purposes under this
chapter.
   (h) A hub applicant may withdraw its proposal at any time prior to
final action on the proposal submitted in response to the RFP by the
filing of a written request to the department.
   19990.23.  Prior to considering any proposal submitted in response
to the RFP, the department shall send the proposal to the commission
and the division to review the hub applicant's suitability to be a
hub operator.
   (a) The commission and division shall conduct an investigation
into the suitability of any hub applicant to be a hub operator and
the commission shall issue findings of suitability to be a hub
operator to the department within ____ days of the submission of the
proposal. The investigation shall include the following entities and
individuals:
   (1) The hub applicant and all of its subcontractors.
   (2) All officers of a hub applicant and its subcontractors.
   (3) Any employee, independent contractor, or other person with
decisionmaking authority with respect to the hub applicant or any of
its subcontractors.
   (4) The owners of the following:
   (A) A hub applicant.
   (B) Any affiliate of the hub applicant.
   (C) Any subcontractors of a hub applicant, or other persons or
entities otherwise providing goods or performing services.
   (D) Any affiliate of a subcontractor of a hub applicant, or other
persons or entities otherwise providing goods or performing services.

   (b) In addition to the bond paid at the time of submitting a
proposal response to the RFP pursuant to subdivision (f) of Section
19990.22, a hub applicant shall pay an additional nonrefundable
charge of ____ dollars ($____) to be paid to the state and received
by the division to compensate the commission and the division for the
reasonably anticipated costs to be incurred by the commission and
the division to determine the suitability of the applicant to be a
hub operator.
   (c) The commission shall issue a finding of suitability for a hub
applicant to be a hub operator only if, based on all of the
information and documents submitted, and based upon the
recommendation of the division, the commission is satisfied that each
of the individuals subject to investigation pursuant to subdivision
(a) is both of the following:
   (1) A person of good character, honesty, and integrity.
   (2) A person whose prior activities, criminal record, if any,
reputation, habits, and associations do not pose a threat to the
public interest of this state, or to the effective regulation and
control of controlled gambling, or create or enhance the dangers of
unsuitable, unfair, or illegal practices, methods, and activities in
the conduct of controlled gambling or in the carrying on of the
business and financial arrangements incidental thereto.
   (d) The commission shall issue a finding that a hub applicant is
not suitable to be a hub operator if it finds that any individual or
entity subject to investigation pursuant to subdivision (a):
   (1) Fails to clearly establish eligibility and qualification in
accordance with this chapter.
   (2) Fails to provide information, documentation, and assurances
required by this chapter or requested by the commission, or, with
respect to a hub applicant, fails to reveal any fact material to
qualification, or supplies information that is untrue or misleading
as to a material fact pertaining to the suitability criteria.
   (3) Has been convicted of a felony, including a conviction by a
federal court or a court in another state for a crime that would
constitute a felony if committed in California.
   (4) Has been convicted of any misdemeanor involving dishonesty or
moral turpitude within the 10-year period immediately preceding the
submission of the application, unless the applicant has been granted
relief pursuant to Section 1203.4, 1203.4a, or 1203.45 of the Penal
Code. However, the granting of relief pursuant to Section 1203.4,
1203.4a, or 1203.45 of the Penal Code shall not constitute a
limitation on the discretion of the commission or affect the
applicant's burden.
   (5) Has associated with criminal profiteering activity or
organized crime, as defined in Section 186.2 of the Penal Code.
   (6) Has contemptuously defied any legislative investigative body,
or other official investigative body of any state or of the United
States, when that body is engaged in the investigation of crimes
relating to gambling, official corruption related to gambling
activities, or criminal profiteering activity or organized crime, as
defined in Section 186.2 of the Penal Code.
   (7) Is less than 21 years of age.
   (8) Offers games over the Internet in this state without a valid
contract with the state to be a hub operator.
   (e) The commission may find either a holder of a current state
gambling license to own or operate a land-based gambling entity, or a
federally recognized Indian tribe operating a gambling establishment
pursuant to a tribal-state gaming compact, suitable to become a hub
operator.
   (f) The department shall reject the RFP of any hub applicant which
the commission finds unsuitable to be a hub operator subject to the
provisions of this section.
   (1) If denial of the application is recommended, the commission
shall prepare and file written reasons upon which the recommendation
is based with the department.
   (A) Prior to filing a recommendation with the department, the
commission shall meet with the applicant, or the applicant's duly
authorized representative, and inform the applicant generally of the
basis for any proposed recommendation that the application be denied,
restricted, or conditioned.
   (B) This section neither requires the commission to divulge to the
applicant any confidential information received from any law
enforcement agency or any information received from any person with
assurances that the information would be maintained confidential, nor
to divulge any information that might reveal the identity of any
informer or jeopardize the safety of any person.
   (2) A recommendation of denial of an application shall be without
prejudice to a new and different application filed in accordance with
any rules adopted by the department with respect to the submission
of proposals.
   19990.24.  In addition to any other data that the RFP shall
request from hub applicants as a matter of law and to ensure that any
hub applicant is legally, technically, and financially qualified to
become a hub operator, the RFP shall request that any hub applicant
name, describe, or provide all of the following:
   (a) The hub applicant's qualification and the qualifications of
its executives and Internet hub employees to receive an Internet hub
employee work permit as set forth in Section 19990.31.
   (b) The hub applicant's experience and qualifications to provide
the services anticipated of a hub operator as set forth in this
article.
   (c) The names of all of the hub applicant's owners, executives,
and Internet hub employees as well as sufficient personally
identifiable information on each of those persons to conduct
background checks as required by the commission and the division.
   (d) The fingerprints of the owners, directors, managers,
executives, and Internet hub employees of the hub operator, its
affiliates, and subcontractors taken in either a police station in
the state or at a department office in the state.
   (e) Documentation and information relating to the hub applicant
and its direct and indirect owners, including, but not limited to,
all of the following:
   (1) With respect to the hub applicant and any of its
subcontractors, proof of formation in California, including, as
applicable, articles of incorporation, articles of organization,
bylaws, operating agreement, partnership agreement, or other founding
documents.
   (2) Current and historical audited financial and accounting
records.
   (3) Any and all documents relating to legal and regulatory
proceedings.
   (4) Any and all documents relating to the hub applicant's business
history.
   (5) Any and all documents relating to the nature and sources of
the hub applicant's financing, including, but not limited to,
operating agreements, partnership agreements, stock purchase
agreements, pro forma cap tables, pro forma statements of profits and
loss, investor rights agreements, voting agreements, and shareholder
agreements, provided however, that these materials may be submitted
subject to a request for confidentiality.
   (6) Any and all documentation that demonstrates that the hub
applicant is financially qualified to perform the obligations of a
hub operator as described in this article.
   (f) Documentation and information relating to all proposed
subcontractors of the hub applicant, including, but not limited to,
all of the following:
   (1) A description of the services to be provided by each
subcontractor.
   (2) Information for each subcontractor as set forth in
subdivisions (b), (c), and (d).
   (3) For subcontractors that are not formed in California, a
commitment in writing by the subcontractor to create a California
subsidiary prior to the commencement of authorized games provided by
the hub operator.
   (g) A description of the games and services the hub applicant
proposes to offer to registered players.
   (h) A description of how the hub facilities will accomplish the
goals of this chapter, including, but not limited to:
   (1) The hub's location within the state.
   (2) The hub's security systems.
   (i) The hub applicant's proposal for how it will facilitate
compliance with all of the standards set forth in this chapter and
federal law, including, but not limited to, Section 5362(10)(B) of
Title 31 of the United States Code, including, but not limited to,
all of the following:
   (1) Age and location verification requirements reasonably designed
to block access to minors and persons located out of state.
   (2) Appropriate data security standards to prevent unauthorized
access by any persons whose age and current location have not been
verified in accordance with this chapter and applicable regulations.
   (3) The requirement that the hub is located in California and all
bets are initiated and received or otherwise made exclusively within
California.
   (j) The system requirements that the hub applicant plans to
implement to achieve the state's goals under the state's contract
with a hub operator, including, but not limited to:
   (1) Connectivity.
   (2) Hardware.
   (3) Software.
   (4) Antifraud systems.
   (5) Virus prevention.
   (6) Data protection.
   (7) Access controls.
   (8) Firewalls.
   (9) Disaster recovery.
   (10) Redundancy.
   (11) Gaming systems, including, but not limited to, hardware and
software that ensure all of the following:
   (A) The games are legal.
   (B) The games are independent and fair and played by live persons.

   (C) Game and betting rules are available to all registered
players.
   (D) All data used for the conduct of each game is randomly
generated and unpredictable.
   (12) Accounting systems, including but not limited to, those for
any of the following:
   (A) Registered player accounts.
   (B) Per hand charges.
   (C) Transparency and reporting to all state agencies.
   (D) Distribution of funds, pursuant to the contract and this
chapter, to the state and registered players.
   (E) Ongoing auditing.
   (13) Hub facility security systems to protect the hub from either
internal or external threats.
   (k) The hub applicant's proposal to facilitate the functions of
the state agencies with jurisdiction over aspects of the hub's
operations, including, but not limited to, all of the following:
   (1) The division.
   (2) The commission.
   (3) The Treasurer.
   (4) The Franchise Tax Board.
   (l) In addition to demonstrating that the hub applicant is
legally, technically, and financially qualified to become a hub
operator, a hub applicant's proposal in response to the RFP shall
describe how it will comply with all contractual obligations as
provided in this chapter.
   19990.245.  (a) A holder of an owner license issued by the
commission pursuant to subdivision (a) of Section 19851 who is in
good standing at the time the hub applicant submits its proposal
shall not be deemed unqualified to operate a land-based gambling
entity by reason of an investment in a hub applicant or a hub
operator.
   (b) An official representative of the government of a federally
recognized Indian tribe with a tribal-state gaming compact with the
state shall not be deemed unqualified to operate a land-based
gambling entity by reason of an investment in a hub applicant or a
hub operator.
   (c) A person or entity who is a hub operator in another state is
eligible to become a hub operator in California.
   19990.25.  The department, after considering the contents of the
proposal, the recommendation of the commission, and any other written
comments, shall apply the scoring standard released in issuing the
RFP pursuant to Section 19990.22 and shall either deny a proposal or
offer to enter into contract with a qualified hub applicant.
   (a) The department shall determine that a hub applicant is
qualified to receive an offer to become a hub operator if both of the
following conditions are met:
   (1) The hub applicant's proposal exceeds the minimum scoring
standards established by Section 19990.22.
   (2) The hub applicant's proposal is among the three highest
scoring proposals submitted by all hub applicants.
   (b) When the department offers to enter into a contract with a hub
applicant, the department shall transmit the offer in writing to the
hub applicant. The offer may limit or place restrictions that vary
from the proposal as may be deemed necessary in the public interest,
consistent with the policies described in this chapter.
   (c) In order for the hub applicant to accept an offer, it shall
respond in writing to the department within 10 days.
   (d) Acceptance of the offer shall create a binding contract
between the state and the hub applicant.
   (e) If the department does not offer a hub applicant a contract
with the state, the department shall prepare and issue a detailed
statement of the department's reasons.
   (f) A hub applicant whose proposal has not led to an offer from
the department may bring an action to appeal that decision to the
Office of Administrative Hearings.
   (g) The decision by the department shall be upheld by the Office
of Administrative Hearings if there is any substantial evidence to
support the department's decision to deny the hub applicant's
proposal.
   (h) In the event that the Office of Administrative Hearings finds
for the hub applicant, it shall return the proposal to the department
for action consistent with the decision of the Office of
Administrative Hearings.
   19990.26.  (a) At least two years prior to the expiration of any
hub operator's contract with the state, the Bureau of State Audits
shall issue a report to the Legislature consistent with Section
19990.96. The Legislature may consider whether to amend the statutes
that govern the terms and conditions of the hub operator's contract
with the state contained in Article 5 (commencing with Section
19990.30) before the expiration of the contracts with hub operators.
   (b) In the event that the Legislature amends the provisions of
Article 5 (commencing with Section 19990.30) that govern a contract
between the state and a hub operator, the department shall offer an
existing hub operator a new contract for five years or more under the
new terms and conditions in accordance with statutory changes
approved by the Legislature pursuant to this section. A hub operator
shall indicate whether it accepts the new contract within 30 days of
receiving the offer from the department. A hub operator's acceptance
of the department's offer shall create a binding contract between the
hub operator and the state.
   19990.27.  In the event that the Legislature authorizes the
department to issue an RFP for an additional hub operator or hub
operators, the department shall solicit proposals from new hub
applicants to enter into a contract with the state for ____-year
terms. In establishing scoring parameters for evaluation of all the
proposals and what weight should be given to the specific elements
within each hub applicant's proposal, the department's selection
criteria shall be consistent with the amendments adopted to this
chapter.
   19990.28.  At least one year prior to the expiration of a hub
operator's contract with the state issued pursuant to Section
19990.25, or as a result of the RFP process established pursuant to
Section 19990.22, the department shall issue an RFP to solicit
proposals from hub applicants to enter into a contract with the state
for a ____-year term. In establishing scoring parameters for
evaluation of all the proposals and what weight should be given to
the specific elements within each hub applicant's proposal, the
department's selection criteria shall give preference to proposals
from an existing hub operator in compliance with its contractual
obligations.

      Article 5.  Rights and Obligations of a Hub Operator


   19990.30.  A hub operator shall comply with the terms of its
contract with the state.
   (a) An accepted proposal agreed to by the department and any hub
applicant shall govern interpretation of the contract entered into
between the state and a hub operator.
   (b) Subject to state and federal law, a contract may be amended by
mutual agreement of the department and a hub operator.
   (c) In the event of an act by the Legislature that amends this
chapter and is adopted after the terms of a contract between the
state and any hub operator are established, a hub operator may
declare the contract void within 60 days of the effective date of the
amendment. If a hub operator does not make that declaration, it
agrees to be bound by those amendments to this chapter.
   (d) In the event of commercial infeasibility created by a change
in federal law rendering the provision of intrastate Internet gaming
services illegal or some other event, a hub operator may abandon its
contract after providing the department with 90 days advance notice
of its intent to end the contract and a statement explaining its
interpretation that continuing to provide services under the contract
is commercially infeasible. In response to notice provided by the
hub operator under this subdivision, the state may file an action in
the Superior Court of the County of Sacramento as it deems necessary
to protect any state interests, including, but not limited to, the
interests of registered players.
   (e) In the event that any dispute arises between the parties to
the contract, either the department or a hub operator may file an
action in the superior court of any county in which the Attorney
General has an office for an interpretation of the contract and the
rights and responsibilities of the contract.
   19990.31.  Prior to initiating operations and thereafter, a hub
operator shall ensure that every Internet hub employee has been
issued an Internet hub employee work permit by the commission prior
to having access to the hub facilities.
   (a) A hub operator shall ensure that every person, who, as an
employee of the hub operator, whether for hire or not, either solely
or in conjunction with others, deals, operates, carries on, conducts,
maintains, or exposes for play any authorized game in this state,
shall apply for and obtain from the commission, and shall thereafter
maintain, a valid Internet hub employee work permit, in the case of
Internet hub employees, or work permit, otherwise.
   (b) No Internet hub employee work permit shall be issued to any
person unless, based on all of the information and documents
submitted, the commission is satisfied that the applicant is all of
the following:
   (1) A person of good character, honesty, and integrity.
   (2) A person whose prior activities, criminal record, if any,
reputation, habits, and associations do not pose a threat to the
public interest of this state, or to the effective regulation and
control of controlled gambling, or create or enhance the dangers of
unsuitable, unfair, or illegal practices, methods, and activities in
the conduct of controlled gambling or in the carrying on of the
incidental business and financial arrangements.
   (3) A person who is in all other respects qualified to hold an
Internet hub employee work permit as provided in this chapter.
   (c) The commission shall disqualify an applicant for a Internet
hub employee work permit for any of the following reasons:
   (1) Failure of the applicant to clearly establish eligibility and
qualification in accordance with this chapter.
   (2) Failure of the applicant to provide information,
documentation, and assurances required by this chapter or requested
by any state official, or failure of the applicant to reveal any fact
material to the qualification, or the supplying of information that
is untrue or misleading as to a material fact pertaining to the
qualification criteria.
   (3) Conviction of a felony, including a conviction by a federal
court or a court in another state for a crime that would constitute a
felony if committed in California.
   (4) Conviction of the applicant for any misdemeanor involving
dishonesty or moral turpitude within the 10-year period immediately
preceding the submission of the application, unless the applicant has
been granted relief pursuant to Section 1203.4, 1203.4a, or 1203.45
of the Penal Code. However, the granting of relief pursuant to
Section 1203.4, 1203.4a, or 1203.45 of the Penal Code shall not
constitute a limitation on the discretion of the commission or affect
the applicant's burden under subdivision (b).
   (5) Association of the applicant with criminal profiteering
activity or organized crime, as defined by Section 186.2 of the Penal
Code.
   (6) Contemptuous defiance by the applicant of any legislative
investigative body, or other official investigative body of any state
or of the United States, when that body is engaged in the
investigation of crimes relating to gambling, official corruption
related to gambling activities, or criminal profiteering activity or
organized crime, as defined by Section 186.2 of the Penal Code.
   (7) The applicant is less than 21 years of age.
   (d) A hub operator shall apply for an Internet hub employee work
permit on behalf of each Internet hub employee.
   (e) A person shall not be issued an Internet hub employee work
permit unless the person would qualify to be the owner of a hub
operator, as specified in Section 19990.23.
   (f) The commission shall establish a fee to be paid by a hub
operator in submitting applications for Internet hub employee work
permits on behalf of those hub operators' employees.
   (g) A hub operator, affiliate, or subcontractor of a hub operator
shall not enter into, without prior approval of the department, any
contract or agreement with a person who is denied a gambling license
pursuant to Chapter 5 (commencing with Section 19850) or Internet hub
employee work permit, or whose gambling license or Internet hub
employee work permit is suspended or revoked by the commission or
department, or with any business enterprise under the control of that
person, after the date of receipt of notice of the commission's or
department's action.
   (h) A hub operator, affiliate, or subcontractor of a hub operator
shall not employ, without prior approval of the commission, any
person in any capacity for which he or she is required to have an
Internet hub employee work permit, if the person has been denied an
Internet hub employee work permit or a gambling license pursuant to
Chapter 5 (commencing with Section 19850) or if his or her Internet
hub employee work permit or gambling license has been suspended or
revoked after the date of receipt of notice of the action by the
commission. A hub operator or subcontractor of a hub operator shall
not enter into a contract or agreement with a person whose
application for an Internet hub employee work permit or gambling
license has been withdrawn with prejudice, or with any business
enterprise under the control of that person, for the period of time
during which the person is prohibited from filing a new application
for an Internet hub employee work permit or gambling license.
   (i) If an employee who is required to hold an Internet hub
employee work permit pursuant to this chapter is denied an Internet
hub employee work permit, or has his or her Internet hub employee
work permit revoked by the commission or department, the employee
shall be terminated in any capacity in which the employee is required
to hold an Internet hub employee work permit and the employee shall
not be permitted to exercise a significant influence over the
gambling operation, or any part thereof, upon being notified of that
action.
   (1) If an employee who is required to hold an Internet hub
employee work permit pursuant to this chapter has his or her Internet
hub employee work permit suspended, the employee shall be suspended
in any capacity in which he or she is required to hold an Internet
hub employee                                           work permit
and shall not be permitted to exercise a significant influence over
the gambling operation, or any part thereof, during the period of
suspension, upon being notified of that action.
   (2) If a hub operator, affiliate, or subcontractor of a hub
operator designates another employee to replace the employee whose
employment was terminated, the hub operator or subcontractor shall
promptly notify the department and shall apply for an Internet hub
employee work permit on behalf of the newly designated employee.
   (j) A hub operator, affiliate, or subcontractor of a hub operator
shall not pay to a person whose employment has been terminated
pursuant to subdivision (i) any remuneration for any service
performed in any capacity in which the person is required to hold an
Internet hub employee work permit, except for amounts due for
services rendered before the date of receipt of notice of the
commission's or department's action of suspension or termination. A
hub operator, affiliate, or subcontractor of a hub operator, during
the period of suspension, shall not pay to a person whose employment
has been suspended pursuant to subdivision (i), any remuneration for
any service performed in any capacity in which the person is required
to hold an Internet hub employee work permit, except for amounts due
for services rendered before the date of receipt of notice of the
commission's or department's action.
   (k) Except as provided in subdivision (i), a contract or agreement
for the provision of services or property to a hub operator,
affiliate, or subcontractor of an affiliate or for the conduct of any
activity pertaining to the operation of a hub, which is to be
performed by a person required by this chapter or by regulations
adopted pursuant to this chapter, to hold an Internet hub employee
work permit, shall be terminated upon a suspension or revocation of
the person's Internet hub employee work permit.
   (l) In any case in which a contract or agreement for the provision
of services or property to a hub operator or an affiliate thereof,
or for the conduct of any activity at a hub, is to be performed by a
person required by this chapter or by regulations adopted by the
commission to hold an Internet hub employee work permit, the contract
shall be deemed to include a provision for its termination without
liability on the part of the hub operator, affiliate, or
subcontractor or its duly registered holding company upon a
suspension or revocation of the person's Internet hub employee work
permit. In any action brought by the division or commission to
terminate a contract pursuant to subdivision (k) or this subdivision,
it shall not be a defense that the agreement does not expressly
include the provision described in this subdivision, and the lack of
express inclusion of the provision in the agreement shall not be a
basis for enforcement of the contract by a party thereto.
   (m) If a hub operator does not comply with the contractual
obligations of this section, the department may impose liquidated
damages of not more than ____ dollars ($____) per occurrence. In the
event that a hub operator negligently, willfully, or wantonly fails
to comply with this contractual obligation, the department may
initiate an enforcement action and subject a hub operator to ____
dollars ($____) in liquidated damages and may begin proceedings to
suspend or revoke a hub operator's contract.
   19990.32.  The hub operator shall be responsible for providing
current and accurate documentation on a timely basis to all state
agencies as provided in this chapter.
   (a) In addition to any other confidentiality protections provided
to entities that are in contract with the state, the state and its
agencies shall treat the proprietary information provided by a hub
operator as confidential to protect the hub operator and to protect
the security of the hub.
   (b) The confidentiality provisions of this chapter exempt
proprietary information supplied by a hub operator to a state agency
from public disclosure consistent with subdivision (b) of Section
6253 of the Government Code.
   19990.33.  (a) Changes in ownership or interest of an affiliate of
5 percent or more of the stock or other equity in the hub operator
or any affiliate shall be approved by the department and the
commission prior to the closing of any proposed transaction.
   (b) The department and the commission shall investigate to ensure
that any entity acquiring interest in a hub operator is suitable and
otherwise financially, technically, and legally qualified to be a hub
operator consistent with the provisions of this chapter. This
investigation shall be concluded within 90 days of the receipt of
notice by the department and the commission. In the event that an
acquiring entity is found to be unsuitable to be a hub operator or
otherwise not financially, technically, and legally qualified to be a
hub operator, the hub operator or the acquiring entity may challenge
that determination consistent with subdivision (f) of Section
19990.25.
   (c) A change in ownership or interest of a hub operator of less
than 5 percent shall be reported to the department and the commission
within 20 days after the change, unless that change results in a
cumulative total of 5 percent or more and requires compliance with
subdivision (a). The department and commission may then conduct an
investigation to ensure that the hub operator's contract with the
state is properly updated to show the change in ownership or
interest, or that the person is suitable pursuant to the requirements
in this chapter.
   19990.34.  All facilities, software, and any and all other
property, both tangible and intangible, used by the hub operator in
offering authorized games shall be the property of a hub operator or
its subcontractors.
   19990.35.  A hub operator shall ensure that registered players are
eligible to play authorized games and implement appropriate data
security standards to prevent access by a person whose age and
location has not been verified in accordance with this chapter.
   (a) All registered players must be physically located within the
State of California at the time of gambling.
   (b) No registered player may be less than 21 years of age.
   (c) A hub operator shall exclude from play any person who has
filled out an Online Self-Exclusion Form.
   (1) The commission shall develop an Online Self-Exclusion Form and
deliver it to the Department of Justice within six months of the
effective date of this chapter.
   (2) The Department of Justice shall deliver the form to each hub
operator.
   (3) A hub operator shall prominently display a link to the
commission's Responsible Gaming site and the Online Self-Exclusion
Form on the Web page that is displayed when either of the following
apply:
   (A) A person registers as a registered player.
   (B) A registered player first accesses the Web site of the hub
prior to playing.
   (4) A hub operator shall retain the Online Self-Exclusion Form to
identify persons who want to be excluded from play.
   (5) No hub operator that has complied with this subdivision shall
be held liable in any way if a person who has filled out an Online
Self-Exclusion Form plays despite that person's request to be
excluded.
   19990.36.  A hub operator shall only offer games and process bets
in accordance with the specified game and betting rules established
by the hub operator and approved by the division with input from the
commission consistent with Section 19990.37.
   19990.37.  A hub operator shall only provide authorized games
approved by the division.
   (a) In order to propose a game for play, a hub operator shall
provide the division and the commission with all of the following:
   (1) A description of the game and the betting rules it proposes to
offer to registered players.
   (2) A legal opinion explaining how the game complies with federal
and state laws and how the game is not a violation of tribal-state
gaming compacts.
   (3) Documentation relating to development and testing of the game'
s software.
   (b) The division shall consult with the commission on whether a
proposed game is authorized under this section.
   (c) If the division does not object to the proposal within ____
days, a hub operator may offer the game to registered players.
   (d) Only the division may object to the offering of a game to
registered players or file an action to prevent that offering.
   19990.38.  A hub operator shall ensure that games are fair.
   (a) The gaming system shall display for each game the following
information:
   (1) The name of the game.
   (2) Any restrictions on play.
   (3) The rules of the game.
   (4) All instructions on how to play.
   (5) The unit and total bets permitted.
   (6) The registered player's current account balance which shall be
updated in real time.
   (7) Any other information that a hub operator determines is
necessary for the registered player to have in real time to compete
fairly in the game.
   (b) Game results shall be unpredictable.
   (1) Data used to create results shall be unpredictable so that it
is infeasible to predict the next occurrence in a game, given
complete knowledge of the algorithm or hardware generating the
sequence and all previously generated numbers.
   (2) The game or any game event outcome shall not be affected by
the effective bandwidth, link utilization, bit error rate, or other
characteristic of the communications channel between the gaming
system and the playing device used by the player.
   (c) A hub operator shall deploy controls and technology to
minimize fraud or cheating through collusion, including external
exchange of information between different players, robotic play, or
any other means.
   (1) If a hub operator becomes aware that fraud or cheating is
taking place or has taken place, it shall take steps to stop those
activities immediately and inform the State Chief Information Officer
and the division of all relevant facts.
   (2) The department may not bring an action for damages against a
hub operator to prevent fraud or cheating if a hub operator can
demonstrate that it acted responsibly to prevent those activities as
soon as a hub operator became aware of them.
   (d) In the event that the gaming server or software does not allow
a game to be completed, the game shall be void and all funds
relating to the incomplete game shall be returned to the registered
player's account.
   19990.39.  A hub operator shall register players and establish
player accounts prior to play.
   (a) A person shall not participate in any game provided by a hub
operator unless the person is a registered player and holds an
account.
   (b) Accounts shall be established in person, by mail, telephone,
or by any electronic means.
   (c) To register and establish an account, a person shall provide
the following registration information:
   (1) First name and surname.
   (2) Principal residence address.
   (3) Telephone number.
   (4) Social security number.
   (5) Identification or certification to prove that person is at
least 21 years of age.
   (6) Valid e-mail address.
   (d) A hub operator shall provide registered players with the means
to update the registration information provided to the hub operator.

   19990.40.  A hub operator shall provide a means for registered
players to put funds into a registered player account and transfer
funds out of that account.
   (a) A registered player shall identify the source of funds to be
used to put money into the account established once the registration
process is complete, and a hub operator shall provide a means for a
registered player to transfer money into and out of the player's hub
account.
   (b) At the time of establishing a hub account, a registered player
shall designate the bank account into which funds from the
registered player's hub account are to be transferred.
   (c) A registered player shall establish only one account on any
hub.
   (d) While playing an authorized game, a registered player shall
not increase the amount of money in that registered player's account
after that game has started and before its completion.
   (e) A hub operator shall maintain records on the balance of each
registered player's account.
   (f) A hub operator shall not permit a registered player to place a
wager unless the registered player's account has sufficient funds to
cover the amount of the wager.
   (g) A hub operator shall not provide credit to a registered player'
s account or act as agent for a credit provider to facilitate the
provision of funds.
   (h) No interest shall be paid by a hub operator with respect to
registered player accounts.
   19990.41.  A hub operator shall segregate funds it holds in all
registered player accounts from all of its other assets.
   (a) A hub operator shall not commingle funds in the segregated
account containing funds paid by registered players with any other
funds held by the hub operator.
   (b) Funds held in a registered player's account shall only be used
for the following purposes:
   (1) To pay per hand or tournament charges owed by a registered
player to the hub operator for play of authorized games.
   (2) To transfer funds from one registered player's account to the
account of another registered player to reconcile the result of a
loss in the play of an authorized game.
   (3) To transfer funds from a registered player's account to a
temporary account to be held by a hub operator pending the outcome of
an authorized game.
   (4) To remit tax proceeds due and owing from a registered player
to the Franchise Tax Board, at the option of the player.
   (5) To transfer funds from a registered player's account with the
hub operator to an account specified by a registered player upon that
registered player's request.
   19990.42.  Prior to completing the registration process, a hub
operator shall explain to the person in a conspicuous fashion the
privacy policies of the hub, and a person shall assent to the
following policies:
   (a) No personally identifiable information shall be shared with
any nongovernment third parties except as provided in subdivision (j)
of Section 19990.47.
   (b) All personally identifiable information about registered
players shall be shared with state agencies, including the
department, the commission, and the Franchise Tax Board as necessary
to assist them in fulfilling their obligations under this chapter.
   (c) Personally identifiable information may only be shared with
government agencies in circumstances other than as set forth in
subdivision (b) or subject to court order as provided in subdivision
(j) of Section 19990.47.
   19990.43.  A hub operator may also require that a person must
agree to a Terms of Use Registered Player's Agreement applying to
registered players.
   19990.44.  A hub operator may suspend or revoke the account of a
registered player for any of the following reasons:
   (a) A person or registered player provided false information to
the hub operator, including, but not limited to, in the registration
process.
   (b) The registered player has not updated registration information
to keep it current.
   (c) The registered player has violated the hub's Terms of Use
Registered Player's Agreement.
   (d) The person has already been registered.
   (e) The hub operator suspects that the registered player has
participated in an illegal or unauthorized activity on the hub.
   (f) The hub operator is directed by a state agency to suspend or
revoke the registered player's account.
   19990.45.  (a) Upon registration and at each time when a
registered player logs into a hub, the hub operator shall permit a
registered player to adjust his or her play settings to:
   (1) Set a limit on the deposits that can be made per day.
   (2) Set a limit on the amount that can be wagered within a
specified period of time.
   (3) Set a limit on the losses the player may incur within a
specified period of time.
   (4) Set a limit on the amount of time that can be played after
logging into the hub.
   (5) Prevent the hub from allowing the registered player to play
for a definite or indefinite period of time.
   (b) During play, in order to assist a registered player to decide
whether to suspend play, the registered player's screen shall do all
of the following:
   (1) Indicate how long the player has been playing.
   (2) Indicate the player's winnings or losses since the time of
last logging in.
   (3) At least once every six hours require the registered player to
confirm that the player has read the message or give an option to
the player to end the session or return to the game.
   19990.46.  A hub operator shall establish a toll-free telephone
customer service hotline that shall be available to registered
players 24 hours a day and 365 days a year. All Internet hub operator
employees shall be physically present in the state while in contact
with registered players.
   19990.47.  A hub operator shall protect the privacy of registered
players and their data.
   (a) A hub operator shall comply with all state and federal privacy
and data protection laws.
   (b) At the time of registration with a hub operator as a
registered player, and at least once a year thereafter, a hub
operator shall provide notice in the form of a separate, written
statement to the registered player which clearly and conspicuously
informs the registered player of all of the following:
   (1) The nature of personally identifiable information collected or
to be collected with respect to the registered player and the nature
of the use of that information.
   (2) The nature, frequency, and purpose of any disclosure which may
be made of personally identifiable information, including an
identification of the types of persons to whom the disclosure may be
made.
   (3) The period during which personally identifiable information
will be maintained by the hub operator.
   (4) The times and place at which the registered player may have
access to personally identifiable information in accordance with
subdivision (g).
   (5) The limitations provided by this section with respect to the
collection and disclosure of personally identifiable information by a
hub operator and the right of the registered player under
subdivision (i) or (j) to enforce those limitations.
   (c) A hub operator shall not collect personally identifiable
information concerning any registered player without the prior
written or electronic consent of the registered player concerned.
   (d) A hub operator may collect personally identifiable information
in order to do both of the following:
   (1) Obtain information necessary to operate the hub and offer
authorized games to registered players pursuant to this chapter.
   (2) Detect unauthorized play, activities contrary to a hub
operator's Terms of Use Registered Player's Agreement, or activities
contrary to state or federal law.
   (e) Except as provided in subdivision (f), a hub operator shall
not disclose personally identifiable information concerning any
registered player without the prior written or electronic consent of
the registered player concerned and shall take actions necessary to
prevent unauthorized access to that information by a person other
than the registered player or hub operator.
   (f) A hub operator may disclose personally identifiable
information if the disclosure is any of the following:
   (1) Necessary to render, or conduct a legitimate business activity
related to, the provision of authorized games to the registered
player by the hub operator.
   (2) Subject to subdivision (j), made pursuant to a court order
authorizing the disclosure, if the registered player is notified of
the order by the person to whom the order is directed.
   (3) A disclosure of the names and addresses of registered players
to any tournament sponsor, if both of the following apply:
   (A) The hub operator has provided the registered player the
opportunity to prohibit or limit the disclosure.
   (B) The disclosure does not reveal, directly or indirectly, the
nature of any transaction made by the registered player over the hub.

   (4) To a state agency as authorized in this chapter.
   (g) A registered player shall be provided access to all personally
identifiable information regarding that registered player which is
collected and maintained by a hub operator. The information shall be
made available to the registered player at reasonable times and at a
place designated by the hub operator. A registered player shall be
provided reasonable opportunity to correct any error in the
information.
   (h) A hub operator shall destroy personally identifiable
information if the information is no longer necessary for the purpose
for which it was collected, and there are no pending requests or
orders for access to the information under subdivision (j).
   (i) Any person aggrieved by any act of a hub operator in violation
of this section may bring a civil action in any superior court. The
court may award:
   (1) Actual damages but not less than liquidated damages computed
at the rate of ____ a day for each day of violation or ____,
whichever is higher.
   (2) Punitive damages.
   (3) Reasonable attorney's fees and other litigation costs
reasonably incurred.
   (j) Except as provided in subdivision (f), a governmental or
nongovernmental third party may obtain personally identifiable
information concerning a registered player pursuant to a court order
only if, in the court proceeding relevant to the court order, both of
the following apply:
   (1) The third party offers clear and convincing evidence that the
subject of the information is reasonably suspected of engaging in
criminal activity or otherwise relevant to a pending civil action and
that the information sought would be material evidence in the case.
   (2) The registered player about whom the information is requested
is afforded the opportunity to appear and contest the third-party's
claim.
   19990.48.  A hub operator shall establish a book of accounts and
regularly audit all of its financial records and reports which must
include all of the following:
   (a) Monthly auditable and aggregate financial statements of gaming
transactions.
   (b) Calculation of all amounts payable to the state.
   (c) The identity of players.
   (d) The balance on each player's account at the start of a session
of play.
   (e) The wagers placed on each game, time stamped by the games
server.
   (f) The result of each game, time stamped by the games server.
   (g) The amount won or lost by each player.
   (h) The amount, if any, as determined by the player, withheld from
winnings for federal or state income tax purposes.
   (i) The balance on the player's account at the end of the game.
   19990.49.  A hub operator shall make all financial records
established and maintained pursuant to Section 19990.48 available as
required by the state agencies to the division, the commission, the
department, the Treasurer, and the Franchise Tax Board so that those
state agencies can fulfill their responsibilities under this chapter.

   19990.50.  A hub operator shall implement technical systems that
materially aid the department and commission in the protection of
registered players.
   (a) A hub operator shall define and document its methodology for
developing software and applications and address how software
protects registered players from fraud and other risks in the play of
authorized games and in the management of registered player
accounts.
   (b) A hub operator shall meet minimum game server connectivity
requirements to ensure that players are protected from losses due to
connectivity problems.
   (c) A hub operator shall ensure that all transactions involving
player funds shall be recoverable by the system in the event of a
failure or malfunction.
   (d) All information required for viewing a game interrupted due to
loss of connectivity shall be recoverable by the hub operator.
   (e) Preventative and detective controls addressing money
laundering and fraud risks shall be documented and implemented by the
hub operator.
   19990.51.  A hub operator shall be permitted to charge registered
players to play in authorized games, subject to the approval of the
division.
   (a) Per hand charges are permitted.
   (1) A per hand charge shall be designated and conspicuously posted
on the screen prior to the start of each authorized game.
   (2) A hub operator shall be permitted to vary the per hand charges
on registered players based on betting limits or other factors.
   (b) Tournament charges shall be permitted.
   (1) A tournament charge shall be designated and conspicuously
posted on the screen prior to the start of the first authorized game
of any tournament.
   (2) A hub operator shall be permitted to vary tournament charges
based on tournament prizes or other factors.
   19990.52.  A hub operator shall be permitted to enter into an
agreement with any third party to sponsor or underwrite prizes for a
tournament, subject to the approval of the division.
   19990.53.  A hub operator shall be permitted to enter into an
agreement to sell advertisement space on any Web site it controls,
subject to the approval of the division.
   19990.54.  A hub operator shall be permitted to enable a chat
function between registered players as long as it has in place
effective controls against collusion, subject to the approval of the
division.
   19990.55.  A hub operator shall be permitted to post Web links on
the Web site it controls to permit registered players to access
remote Web sites, subject to the approval of the division.
   19990.56.  A hub operator may enter into contractual agreements
with one or more hub operators for the purpose of ensuring adequate
player liquidity, subject to the approval of the division.
   19990.57.  A hub operator may allow a registered player to
participate simultaneously in multiple games or tournaments, as long
as the hub operator has technical controls that prohibit a registered
player from playing multiple hands simultaneously in the same game,
subject to the approval of the division.
   19990.58.  In consideration for its contract with the state, and
in recognition of the fact that the initial investments and efforts
required to start up this business venture, and to ensure the state
hub operators are in the best position to compete with offshore
operators and be successful, a hub operator shall disperse at least
20 percent of its gross revenues to the Treasurer on a monthly basis
as determined by the proposal.
   (a) Each monthly payment shall be due on the 10th of the following
month.
   (b) A hub operator shall make all electronic and written financial
records available to the Treasurer, the commission, and the
department.
                                                (c) For the purposes
of determining gross revenues, the hub operator and the Treasurer
shall use generally accepted accounting principles.
   (d) With respect to the dispensation of the bond posted by a hub
applicant pursuant to subdivision (f) of Section 19990.22, both of
the following apply:
   (1) In the event that the aggregate amount due to the state in
consideration for a hub operator's contract is an amount greater than
one hundred million dollars ($100,000,000) in the first year of
operation of the hub, the bond referred to in subdivision (f) of
Section 19990.22 shall be released in the final calendar quarter of
the hub operator's first year of operation, determined on a rolling
basis.
   (2) In the event that the aggregate amount due to the state in
consideration for a hub operator's contract is an amount less than
one hundred million dollars ($100,000,000) in the first year of
operation of the hub, under the hub operator's contract with the
state, the bond referred to in subdivision (f) of Section 19990.22
shall not be released and shall be collected by the state in the
final calendar quarter of the hub operator's first year of operation,
determined on a rolling basis.
   19990.59.  The hub operator shall facilitate the collection of
personal income taxes from registered players by the Franchise Tax
Board.
   (a) The hub operator shall withhold 5 percent of tournament
winnings for state income tax if the winnings minus the tournament
charge are more than six hundred dollars ($600) and are at least 300
times the tournament charge.
   (1) The hub operator shall transfer that withheld income to the
Franchise Tax Board.
   (2) Winnings and losses of the registered player from other
tournaments sponsored by the hub operator during the year are not
taken into account in arriving at the six hundred dollar ($600)
amount. Required withholding is determined on a
tournament-by-tournament basis.
   (b) Within six months of the effective date of this chapter, the
Franchise Tax Board shall publish a form to be used annually by a hub
operator to ensure that the state is able to collect income tax
revenues from registered players. The form shall include, but shall
not be limited to, the following information:
   (1) The registered player's first name and surname.
   (2) Social security number.
   (3) The total amount the registered player deposited in their
account during the year.
   (4) The registered player's total winnings, if any, during the
year.
   (5) The registered player's total losses, if any, during the year.

   (6) The total amount withheld by the hub operator, if any, during
the year for purposes of federal or state income taxes.
   (7) Whether the registered player opened or closed his or her
account during the year.
   (c) The hub operator shall electronically file a copy of the form
with the Franchise Tax Board for each registered player who held an
account with the hub operator for all, or any portion of, the taxable
year. The hub operator shall electronically provide each registered
player with a copy of the form.
   19990.60.  A hub operator shall not engage in certain business
dealings or transactions without prior approval of the division. The
division shall adopt contract provisions establishing the procedures
for these transactions.
   (a) A security interest in a hub operator shall not be enforced
without the prior approval of the division.
   (b) It is unlawful for any person to sell, purchase, lease,
hypothecate, borrow, or loan money, or create a voting trust
agreement or any other agreement of any sort with a hub operator with
a contract with the state pursuant to this chapter or with respect
to any portion of the provision of authorized games, except in
accordance with the division.
   (c) Every hub operator that is involved in a transaction for the
extension or redemption of credit by the hub operator, or for the
payment, receipt, or transfer of coin, currency, or other monetary
instruments, as specified by the division, in an amount,
denomination, or amount and denomination, or under circumstances
prescribed by regulations, and any other participant in the
transaction, as specified by the commission, shall, if required by
regulation, make and retain a record of, or file with the division a
report on, the transaction, at the time and in the manner prescribed
in a hub operator's contract.
   19990.61.  A hub operator shall act expeditiously to cure any
failure in performance under its contract in the offering or
administrating of legal games that interferes with its obligations to
the state or registered players under this chapter.
   (a) If a hub operator becomes aware of any failure of performance,
it will notify the division immediately and work with the division
to develop a plan to rectify the failure.
   (b) If the division becomes aware of any failure of, or suspected
failure of, performance under the contract between the state and a
hub operator, or if it becomes aware of any activities that might
lead to a failure to perform, the division shall provide notice of
that failure to the hub operator and a reasonable opportunity to cure
the failure. The division shall also provide the notice to the
commission.
   (c) All state agencies with responsibilities under this chapter
shall report any actual or suspected failure of performance of the
hub operator's duty under the contract, or activities which might
lead to the failure, to the division and commission immediately so
that the division can assess whether it needs to commence an
investigation or enforcement action.
   (d) A hub operator shall be afforded a reasonable time period to
cure any reported failure of performance.
   (e) Prior to the issuance of the RFP, the division shall issue a
schedule of liquidated damages that will be part of the contract with
a hub operator for delineating damages that will be owed to the
state for failure of the hub operator to perform specific duties
under this chapter.
   (1) Liquidated damages shall not exceed ____ ($____) for each
failure of a hub operator to perform under its contract or for a
violation of this chapter.
   (2) All liquidated damages payments imposed and remitted to the
state shall be deposited in the Internet Gambling Fund, as created by
Section 19990.86.
   (3) The imposition of liquidated damages shall not make
performance by the hub operator commercially infeasible.
   (f) Prior to the issuance of the RFP, the commission and the
division shall issue rules relating to enforcement proceedings under
the contract consistent with this chapter.
   (1) The rules shall describe the procedures for the development of
a record and give the hub operator the opportunity to comment in
advance of any final action.
   (2) The rules shall describe enforcement provisions, including
intermediate procedures it shall take prior to the imposition of
liquidated damages on the hub operator.
   (3) The division shall have the subpoena power in any
investigation.
   (4) The commission, division, and a hub operator shall be parties
to any investigation or enforcement action.
   (5) The rules shall give a hub operator the opportunity to respond
to any allegation of failure of performance prior to the issuance of
a specific order from the commission or division to cure any failure
of performance or any order to pay liquidated damages is issued.
   (6) The commission or division may revoke or suspend a hub
operator's contractual rights under this chapter upon reaching a
finding that the hub operator is in negligent, willful, or wanton
violation of any provision of this chapter.
   (g) A hub operator may appeal any decision of the commission to
the superior court. The superior court shall hear any appeal de novo.

   19990.62.  The commission shall protect the rights and assets of
registered players on a hub should that hub operator's contract with
the state be revoked or should the hub operator become bankrupt.
   19990.63.  A hub operator shall at all times indemnify, defend,
and hold harmless the state and its agencies from and against any and
all claims, damages, liabilities, costs, and expenses, including
reasonable attorneys' fees and expenses arising out of any
third-party claim made against the state or any of its agencies
relating to actions of the hub operator and the provisions of this
chapter.
   (a) The state and its agencies shall promptly notify a hub
operator of any claim or litigation to which the indemnity set forth
in Section 19990.62 applies.
   (b) At the option of a hub operator, it may assume the defense of
any claim or litigation. If a hub operator assumes the defense of any
claim or litigation, the hub operator's obligation with respect
thereto shall be limited to the payment of any settlement approved by
the hub operator, or any judgment in connection with that claim or
litigation.

      Article 6.  Authority of State Agencies


   19990.70.  State agencies shall perform the duties described in
this chapter and in all ways facilitate the operation of the hub in
compliance with this chapter.
   (a) Any rule adopted by a state agency shall be consistent with
this chapter.
   (1) Any rule of a state agency that this chapter intends to be
part of a hub operator's contract shall be adopted in advance of
issuance of the RFP by the department.
   (2) Any rule adopted after the issuance of the RFP by the
department shall facilitate a hub operator's responsibilities to
registered players, and state revenue raising functions and other
responsibilities under its contract with the state.
   (b) Each state agency with responsibility under the contract
between a hub operator and the state shall identify an employee or
employees of the agency to act as the point of contact with the hub
operator and describe the responsibility or responsibilities of the
employee or employees with respect to the state agency's function.
   (c) Any notice provided by a hub operator to a state agency with
responsibility under the contract between a hub operator and the
state shall be addressed to the point of contact identified by the
state agency pursuant to subdivision (b).
   (d) Unless otherwise provided by this chapter, notice by a hub
operator to the state shall be deemed effectively given upon personal
delivery, three days after deposit in the United States mail by
certified or registered mail, return receipt requested, one business
day after its deposit with any return receipt express courier,
prepaid, or one business day after electronically confirmed
transmission by facsimile.

      Article 7.  Protection of Registered Players


   19990.75.  A hub operator shall use its best efforts to protect
registered players.
   19990.76.  In the event a registered player has a complaint
against a hub operator, the exclusive remedy shall be to register the
complaint with the commission, unless an action is brought pursuant
to the remedies described in subdivision (i) of Section 19990.47.
   19990.77.  The commission, in consultation with the division,
shall establish rules with respect to registered player complaints.
   (a) Under the rules, the division shall do all of the following:
   (1) Investigate registered player complaints to determine if a hub
operator has failed to meet its obligation under its contract to a
registered player.
   (2) Attempt to resolve complaints by registered players if a hub
operator fails to meet an obligation under its contract to a
registered player.
   (3) Initiate enforcement actions to require specific performance
of any obligation that a hub operator has under a contract with the
state and to impose mitigated damages on a hub operator consistent
with the rules adopted pursuant to this chapter.
   (4) Recommend to the commission, the imposition of liquidated
damages upon a hub operator based upon clear and convincing evidence
that the hub operator is required to pay liquidated damages under its
contract with the state.
   (b) Under the rules, the commission shall do both of the
following:
   (1) Impose liquidated damages upon a hub operator based upon clear
and convincing evidence that the hub operator is required to pay
liquidated damages under its contract with the state.
   (2) Order payment by the hub operator of restitution to a
registered player for actual losses and interest thereon.
   19990.78.  A hub operator may appeal the imposition of liquidated
damages by the commission to the superior court which shall review
the appeal de novo.

      Article 8.  Disposition of State Proceeds


   19990.85.  In consideration for the contract entered into between
the state and a hub operator, a hub operator shall remit at least 20
percent of its gross revenues to the Treasurer on a monthly basis as
determined by the proposal.
   19990.86.  The Treasurer shall transfer all amounts received from
a hub operator to the Controller for deposit in the Internet Gambling
Fund which is created in the State Treasury and which shall be
administered by the Controller subject to annual appropriation by the
Legislature, and which shall not be subject to the formulas
established by statute directing expenditures from the General Fund.
   (a) The state agencies shall submit revenue needs to fulfill their
obligations under this chapter for the upcoming fiscal year to the
Senate Committee on Budget and Fiscal Review and the Assembly
Committee on Budget, as well as the Senate and Assembly Committees on
Governmental Organization and the Department of Finance by March 31
of the preceding fiscal year. A justification of those costs shall be
provided with each submission of revenue needs.
   (b) The State Department of Alcohol and Drug Programs, Office of
Problem Gambling shall submit revenue needs for programs to alleviate
problem gaming that results from the offering of authorized games
for the upcoming fiscal year to the Senate Committee on Budget and
Fiscal Review and the Assembly Committee on Budget, as well as the
Senate and Assembly Committees on Governmental Organization, the
Senate and Assembly Committees on Human Services, and the Department
of Finance by March 31 of the preceding fiscal year. A justification
of those costs shall be provided with each submission of revenue
needs.
   (c) All remaining proceeds not allocated to subdivisions (a) and
(b) shall remain in the Internet Gaming Fund subject to appropriation
by the Legislature for purposes related to this chapter.

      Article 9.  Preemption of Local Regulation


   19990.90.  A city, county, or city and county shall not regulate,
tax, or enter into a contract with respect to any matter related to
this chapter.

      Article 10.  Judicial Review


   19990.93.  Any action to assert that this chapter interferes with
a right contained within a compact entered into between the state and
a federally recognized Indian tribe on Indian lands in California or
to clarify that this chapter does not interfere with a right
contained within a tribal-state gaming compact entered into between
the state and a federally recognized Indian tribe on Indian lands in
California, shall be brought by extraordinary writ of mandate to the
superior court, and within 60 days of the existence of any matter
giving rise to an action under this section. Petitions brought
pursuant to this section shall be given preference over all other
civil actions before the court in the matter of setting the same for
hearing, and in hearing the same, to the end that these petitions
shall be speedily heard and determined, and in any case in which a
petition has been filed within the time allowed, the superior court
shall issue its decision within 90 days of the filing of any such
petition.
   (a) Notwithstanding any other law, the exclusive means to obtain
review of a superior court judgment entered in an action brought
pursuant to this section shall be by petition to the Court of Appeal
for writ of review. Any petition shall be filed within 15 days
following the notice of entry of the superior court judgment, and no
extension of that period shall be allowed. Within 10 days after the
petition is filed, the respondent or any real party in interest,
separately or jointly, may serve and file a preliminary opposition.
Within 10 days after a preliminary opposition is filed, the
petitioner may serve and file a reply.
   (1) If no petition is filed within the time allowed for this
purpose, the decision of the superior court shall be final and
enforceable, notwithstanding any other provision of law, including,
without limitation, Sections 473 and 473.5 of the Code of Civil
Procedure, and thereupon become and thereafter be forever binding and
conclusive, as to all matters therein adjudicated or which at that
time could have been adjudicated, against any agency and any other
persons, and the judgment shall permanently enjoin the institution by
any person of any action or proceeding raising any issue as to which
the judgment is binding and conclusive.
   (2) In any case in which a petition has been filed within the time
allowed, the Court of Appeal shall issue its opinion within 90 days
of the filing of any the petition.
   (b) Notwithstanding any other law, the exclusive means to obtain
review of the decision of the Court of Appeal entered pursuant to
this section shall be by petition to the California Supreme Court for
extraordinary writ of review. The petition shall be filed within 10
days following the notice of decision of the Court of Appeal, and no
extension of that period shall be allowed.
   (c) In the event that a court of competent jurisdiction finds this
section to be illegal or unenforceable in a final, nonappealable
order, this section shall be removed from this chapter without impact
on the other provisions of this chapter.

      Article 11.  Reports to the Legislature


   19990.95.  Notwithstanding Section 10231.5 of the Government Code,
within one year of the effective date of this chapter and, annually
thereafter, the commission, in consultation with the department,
Treasurer, and Franchise Tax Board, shall issue a report to the
Legislature describing the state's efforts to meet the policy goals
articulated in this chapter. The report shall be submitted in
compliance with Section 9795 of the Government Code.
   19990.96.  At least two years before the expiration of any hub
operator's contract with the state, the Bureau of State Audits shall
issue a report to the Legislature detailing its implementation of
this chapter. The State Auditor may advise the Legislature on whether
the state should solicit additional hub applicants beyond the number
of existing hub operators as of that date, as well as, any other
recommendations regarding the terms of the contract, including the
consideration paid to the state. The report may also advise the
Legislature as to any proposed changes to Article 5 (commencing with
Section 19990.30) of this chapter. The State Auditor shall advise the
Legislature whether continuation of the moratorium on state gaming
contained in Section 19962 is justified, given statewide competition
with legalized Internet gaming.
   19990.97.  This chapter shall remain in effect only until January
1, 2017, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2017, deletes or extends
that date.
   SEC. 2.    The Legislature finds and declares that
Section 1 of this act, which adds Chapter 5.2 to the Business and
Professions Code, imposes a limitation on the public's right of
access to the meetings of public bodies or the writings of public
officials and agencies within the meaning of Section 3 of Article I
of the California Constitution. Pursuant to that constitutional
provision, the Legislature makes the following findings to
demonstrate the interest protected by this limitation and the need
for protecting that interest:  
   The limitations of the people's rights of access set forth in this
chapter are necessary to protect the privacy and integrity of
information submitted by the registered players as well as the
proprietary information of the hub applicants and hub operators.

   SEC. 3.    No reimbursement is required by this act
pursuant to Section 6 of Article XIII B of the California
Constitution because the only costs that may be incurred by a local
agency or school district will be incurred because this act creates a
new crime or infraction, eliminates a crime or infraction, or
changes the penalty for a crime or infraction, within the meaning of
Section 17556 of the Government Code, or changes the definition of a
crime within the meaning of Section 6 of Article XIII B of the
California Constitution. 
   SEC. 4.    This act is an urgency statute necessary
for the immediate preservation of the public peace, health, or safety
within the meaning of Article IV of the Constitution and shall go
into immediate effect. The facts constituting the necessity are:
 
   In order to protect the interests of Californians who play online
gambling games and to ensure that people play fair games, that the
state realizes the revenues, and that suitable persons operate online
gambling Web sites, it is necessary that this act take effect
immediately.  
  SECTION 1.    Section 19805 of the Business and
Professions Code is amended to read:
   19805.  As used in this chapter, the following definitions shall
apply:
   (a) "Affiliate" means a person who, directly or indirectly through
one or more intermediaries, controls, is controlled by, or is under
common control with, a specified person.
   (b) "Applicant" means any person who has applied for, or is about
to apply for, a state gambling license, a key employee license, a
registration, a finding of suitability, a work permit, a manufacturer'
s or distributor's license, or an approval of any act or transaction
for which the approval or authorization of the commission or
department is required or permitted under this chapter.
   (c) "Banking game" or "banked game" does not include a controlled
game if the published rules of the game feature a player-dealer
position and provide that this position must be continuously and
systematically rotated amongst each of the participants during the
play of the game, ensure that the player-dealer is able to win or
lose only a fixed and limited wager during the play of the game, and
preclude the house, another entity, a player, or an observer from
maintaining or operating as a bank during the course of the game. For
purposes of this section, it is not the intent of the Legislature to
mandate acceptance of the deal by every player if the department
finds that the rules of the game render the maintenance of or
operation of a bank impossible by other means. The house shall not
occupy the player-dealer position.
   (d) "Chief" means the head of the entity within the department
that is responsible for fulfilling the obligations imposed upon the
department by this chapter.
   (e) "Commission" means the California Gambling Control Commission.

   (f) "Controlled gambling" means to deal, operate, carry on,
conduct, maintain, or expose for play any controlled game.
   (g) "Controlled game" means any controlled game, as defined by
subdivision (e) of Section 337j of the Penal Code.
   (h) "Department" means the Department of Justice.
   (i) "Director" means any director of a corporation or any person
performing similar functions with respect to any organization.
   (j) "Finding of suitability" means a finding that a person meets
the qualification criteria described in subdivisions (a) and (b) of
Section 19857, and that the person would not be disqualified from
holding a state gambling license on any of the grounds specified in
Section 19859.
   (k) "Game" and "gambling game" means any controlled game.
   (l) "Gambling" means to deal, operate, carry on, conduct,
maintain, or expose for play any controlled game.
   (m) "Gambling enterprise" means a natural person or an entity,
whether individual, corporate, or otherwise, that conducts a gambling
operation and that by virtue thereof is required to hold a state
gambling license under this chapter.
   (n) "Gambling enterprise employee" means any natural person
employed in the operation of a gambling enterprise, including,
without limitation, dealers, floor personnel, security employees,
countroom personnel, cage personnel, collection personnel,
surveillance personnel, data-processing personnel, appropriate
maintenance personnel, waiters and waitresses, and secretaries, or
any other natural person whose employment duties require or authorize
access to restricted gambling establishment areas.
   (o) "Gambling establishment," "establishment," or "licensed
premises," except as otherwise defined in Section 19812, means one or
more rooms where any controlled gambling or activity directly
related thereto occurs.
   (p) "Gambling license" or "state gambling license" means any
license issued by the state that authorizes the person named therein
to conduct a gambling operation.
   (q) "Gambling operation" means exposing for play one or more
controlled games that are dealt, operated, carried on, conducted, or
maintained for commercial gain.
   (r) "Gross revenue" means the total of all compensation received
for conducting any controlled game, and includes interest received in
payment for credit extended by an owner licensee to a patron for
purposes of gambling, except as provided by regulation.
   (s) "Hours of operation" means the period during which a gambling
establishment is open to conduct the play of controlled games within
a 24-hour period. In determining whether there has been expansion of
gambling relating to "hours of operation," the department shall
consider the hours in the day when the local ordinance permitted the
gambling establishment to be open for business on January 1, 1996,
and                                               compare the current
ordinance and the hours during which the gambling establishment may
be open for business. The fact that the ordinance was amended to
permit gambling on a day, when gambling was not permitted on January
1, 1996, shall not be considered in determining whether there has
been gambling in excess of that permitted by Section 19961.
   (t) "House" means the gambling enterprise, and any owner,
shareholder, partner, key employee, or landlord thereof.
   (u) "Independent agent," except as provided by regulation, means
any person who does either of the following:
   (1) Collects debt evidenced by a credit instrument.
   (2) Contracts with an owner licensee, or an affiliate thereof, to
provide services consisting of arranging transportation or lodging
for guests at a gambling establishment.
   (v) "Initial license" means the license first issued to a person
authorizing that person to commence the activities authorized by that
license.
   (w) "Institutional investor" means any retirement fund
administered by a public agency for the exclusive benefit of federal,
state, or local public employees, any investment company registered
under the Investment Company Act of 1940 (15 U.S.C. Sec. 80a-1 et
seq.), any collective investment trust organized by banks under Part
Nine of the Rules of the Comptroller of the Currency, any closed-end
investment trust, any chartered or licensed life insurance company or
property and casualty insurance company, any banking and other
chartered or licensed lending institution, any investment advisor
registered under the Investment Advisors Act of 1940 (15 U.S.C. Sec.
80b-1 et seq.) acting in that capacity, and other persons as the
commission may determine for reasons consistent with the policies of
this chapter.
   (x) "Key employee" means any natural person employed in the
operation of a gambling enterprise in a supervisory capacity or who
is empowered to make discretionary decisions with regard to gambling
operations, including, without limitation, shift managers, credit
executives, cashier operations supervisors, gambling operation
managers and assistant managers, managers or supervisors of security
employees, surveillance managers or supervisors, or any other natural
person designated as a key employee by the department for reasons
consistent with the policies of this chapter.
   (y) "Key employee license" means a state license authorizing the
holder to be employed as a key employee.
   (z) "License" means a gambling license, key employee license, or
any other license issued by the commission pursuant to this chapter
or regulations adopted pursuant to this chapter.
   (aa) "Licensed gambling establishment" means the gambling premises
encompassed by a state gambling license.
   (ab) "Limited partnership" means a partnership formed by two or
more persons having as members one or more general partners and one
or more limited partners.
   (ac) "Limited partnership interest" means the right of a general
or limited partner to any of the following:
   (1) To receive from a limited partnership any of the following:
   (A) A share of the revenue.
   (B) Any other compensation by way of income.
   (C) A return of any or all of his or her contribution to capital
of the limited partnership.
   (2) To exercise any of the rights provided under state law.
   (ad) "Owner licensee" means an owner of a gambling enterprise who
holds a state gambling license.
   (ae) "Person," unless otherwise indicated, includes a natural
person, corporation, partnership, limited partnership, trust, joint
venture, association, or any other business organization.
   (af) "Player" means a patron of a gambling establishment who
participates in a controlled game.
   (ag) "Player-dealer" and "controlled game featuring a
player-dealer position" refer to a position in a controlled game, as
defined by the approved rules for that game, in which seated player
participants are afforded the temporary opportunity to wager against
multiple players at the same table, provided that this position is
rotated amongst the other seated players in the game.
   (ah) "Publicly traded racing association" means a corporation
licensed to conduct horse racing and simulcast wagering pursuant to
Chapter 4 (commencing with Section 19400) whose stock is publicly
traded.
   (ai) "Qualified racing association" means a corporation licensed
to conduct horse racing and simulcast wagering pursuant to Chapter 4
(commencing with Section 19400) that is a wholly owned subsidiary of
a corporation whose stock is publicly traded.
   (aj) "Renewal license" means the license issued to the holder of
an initial license that authorizes the license to continue beyond the
expiration date of the initial license.
   (ak) "Work permit" means any card, certificate, or permit issued
by the commission, or by a county, city, or city and county, whether
denominated as a work permit, registration card, or otherwise,
authorizing the holder to be employed as a gambling enterprise
employee or to serve as an independent agent. A document issued by
any governmental authority for any employment other than gambling is
not a valid work permit for the purposes of this chapter.