BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 1290|
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THIRD READING
Bill No: AB 1290
Author: Hill (D)
Amended: 8/23/12 in Senate
Vote: 21
PRIOR VOTES NOT RELEVANT
SUBJECT : Gaming
SOURCE : Author
DIGEST : This bill repeals an existing body of law in the
Gambling Control Act relative to an exemption from
licensing requirements for a card club on the grounds of a
racetrack and recast that body of law. This bill is to
ensure continued operations of the card club located at the
Hollywood Park Racetrack.
ANALYSIS :
This bill:
1. Provides that in the case of a card club that is owned
directly or indirectly by a "racetrack limited
partnership owner," the licensing requirements of the
Gambling Control Act shall apply only to the following
and no other person or entity shall be required to be
licensed:
A. In the case of a corporation, its officers,
CONTINUED
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directors and key employees of the card club, but not
its shareholders, provided those individuals hold the
exclusive right to actually control or influence the
day-to-day operation of the card club without
influence from or direction by the racetrack limited
partnership.
B. If the corporation chooses to retain another
person or entity to manage, supervise, control, and
conduct the day-to-day operations and direct the
policies of the card club then the corporation's
officers, directors and key employees must be
licensed in accordance with applicable licensing
requirements of the Gambling Control Act.
2. Makes it explicit that these provisions shall apply to a
gambling enterprise or gambling establishment if the
following conditions are met:
A. The gambling establishment is located on any
portion of or contiguous to the grounds on which a
racetrack is or had been previously located and
horserace meetings were authorized to be conducted by
the California Horse Racing Board on or before
January 1, 2012; and
B. Such grounds are directly or indirectly owned by a
racetrack limited partnership owner.
3. Defines "racetrack limited partnership owner" as a
limited partnership or, individually or collectively, a
number of related limited partnerships, that are at
least 80% capitalized by limited partners that that are
an "institutional investor," as defined in federal law,
or an investment company that manages a state university
endowment.
4. Contains legislative findings and declarations relative
to the card club located at the Hollywood Park Racetrack
and that existing law governing the licensing of the
card club neither adequately contemplates nor
accommodates the ownership of real property or the
improvements thereon, including the premises of a card
club, by a number of related limited partnerships that
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are substantially capitalized by public pension plans
nor does it accommodate the role of affiliates of, and
advisors to, those partnerships.
5. Stipulates that this measure is intended to ensure that
the continued operation of the card club located at
Hollywood Park Racetrack is possible.
Background
Existing law regulates card clubs in this state and
establishes various criteria regarding those individuals
involved with a card club who are subject to licensure.
With regard to card clubs located at horseracing tracks in
California, the legislature has twice recognized the unique
situation where a card club is located at a racetrack,
which is more likely to be owned by publicly traded
corporations or similar entities �SB 100 (Maddy, 1995) and
AB 3068 (Horton, 2006)].
In those cases, the persons associated with the card club
who are subject to licensure are the board of directors of
the public company, officers of the public company and
anyone owning 5% or more of the public company's stock.
AB 3068 (Horton, 2006), among other things, exempted from
licensure the institutional investors which currently own
Hollywood Park, but required individuals associated with
the operation of the card club to be licensed.
According to the author's office, AB 1290 is intended to be
a clean-up to the provisions of AB 3068 of 2006. The
author's office states that this bill clarifies that in the
case of a card club located at a racetrack which is owned
by public pension plans (entities such as the California
Public Employee'' Retirement System, California State
Teachers' Retirement System, and other state pension plans)
the persons to be licensed are the officers, directors and
key employees of the card club (those individuals who
actually control or influence the operation of the card
club). Additionally, the author's office notes that under
this bill, if the pension plans choose to lease the card
club to a third party to operate, the officers, directors
and key employees of the card club and the lessee operating
the card club must also be licensed. Furthermore, the
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author's office indicates that this bill provides that in
either case, the pension plans and their financial advisors
can have no control or involvement in the day to day
operation of the card club.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 8/28/12)
Hollywood Park
UniteHERE
OPPOSITION : (Verified 8/28/12)
Bicycle Club
California Gaming Association
California Nations Indian Gaming Association
Commerce Casino
Hawaiian Gardens Casino
Hustler Casino
Morongo Band of Mission Indians
Normandie Casino
Pechanga Band of Luiseno Indians
San Manuel Band of Mission Indians
Santa Ynez Band of Chumash Indians
Tribal Alliance of Sovereign Indian Nations
Yocha Dehe Wintun Nation
ARGUMENTS IN SUPPORT : Proponents contend that the public
policy addressed in this bill can be summed up as follows:
"Who should be licensed when a card club is owned by public
pension plans?" and "Should the public pension plans and
their financial advisors be required to be licensed just
because their investment portfolio includes, among hundreds
of investments, a card club located in California at a
racetrack?"
Proponents argue that the Legislature has previously
addressed this issue and established policy that those
individuals should not be required to be licensed simply
because they own the facility. The persons that should be
licensed are those who control the operation of the card
club.
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Additionally, proponents note that the provisions of this
measure require anyone involved in the day to day operation
of the card club to be licensed, as is the case in every
other card club in the state. This bill only exempts from
licensure the public pension plans and their advisors,
provided those plans and individuals have no control or
direction of the operation of the card club.
Proponents emphasize that the card club at Hollywood Park
Racetrack has been in existence since 1995 and provides
significant revenue and economic activity to the City of
Inglewood. In addition, proponents point out that the card
club provides nearly 1,000 jobs for individuals in and
around the City of Inglewood.
ARGUMENTS IN OPPOSITION : Tribal interests note that the
state's current policy that effectively precludes publicly
traded corporations from owning California gambling
establishments is consistent with the will of the voters
and necessary to ensure the integrity of the state's public
policy relative to gaming in general. Tribal interests
point out that the Legislature has created an exception to
this rule three times in the past for Hollywood Park
Casino, but rather than adhere to those exceptions the
owners of Hollywood Park are once again asking to change
the rules due to changes in their investment strategy.
Tribal interests argue that unlike previous efforts, there
is considerably more at stake today because of on-going
negotiations concerning the authorization of intrastate
on-line poker.
The card clubs and casinos indicate that "Stockbridge's
proposed legislation seeks to circumvent the path to
licensure provided to Stockbridge by the California
Gambling Control Commission at its January 26, 2012
meeting. Stockbridge's refusal to adhere to the
Commission's orders is contrary to current law and
undermines the long standing requirement that every owner
of a card room be fully investigated by the Department of
Justice. There is no rational basis to allow a sole card
club among the 89 licensed card rooms in the State to be
exempted from California's longstanding public policy which
prohibits card room owners from having more than a 1%
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interest in gambling operations that they could not operate
in California. This legislation is clearly intended to
allow Stockbridge Corporation to own the Sahara Casino in
Las Vegas, Nevada and simultaneously own Hollywood Park
Casino. The initial draft of this bill language belies any
attempt by Stockbridge to mask its true motivation. This
type of legislative subterfuge should not be permitted to
stand. In sum, Stockbridge has been provided with a path
to licensure and their outright refusal to follow and
blatant attempt to evade this path is unconscionable.
Moreover, Stockbridge should not be rewarded for its
recalcitrant behavior by being permitted to successfully
abuse the legislative process to solely benefit themselves
to the detriment of every other card room and long standing
public policy."
DLW:m 8/28/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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