BILL ANALYSIS �
SB 340
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Date of Hearing: July 6, 2011
ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
Isadore Hall, Chair
SB 340 (Wolk) - As Amended: June 30, 2011
SENATE VOTE : 37-0
SUBJECT : Remote caller bingo.
SUMMARY : Modifies "remote caller bingo" law, enacted in 2008,
which is a system by which authorized charitable bingo games are
linked electronically so that games can be called from one site
while being played at multiple venues in the state. SB 340
reforms existing law regarding remote caller bingo, by removing
the California Gambling Control Commission (CGCC) as the
licensing and regulating entity and, instead, gives that task to
local jurisdictions. Furthermore, this bill requires operators
to register with the Department of Justice (DOJ) which is
similar to other charitable fundraising activities such as
raffles and casino nights. Specifically, this bill :
1) Permits a city, county, or city and county to amend an
existing local ordinance that allows bingo games to be
conducted, by resolution, to permit the conduct of remote caller
bingo games pursuant to that ordinance, as specified.
2) Requires an organization authorized to conduct remote caller
bingo games to provide at least 10 days' advance written notice
of intent to conduct a remote caller bingo game on a form
prescribed by the city, county, or city and county, and to
provide at least 24 hours' advance notice if the location of the
remote caller bingo game changes and repeal the model ordinance.
3) Requires the live, physical calling and broadcast of a
remote caller bingo game to be conducted from a jurisdiction
that authorizes by local ordinance the conduct of remote caller
bingo games.
4) Deletes all state licensure requirements for the conduct of
remote caller bingo, and instead, requires an organization that
is eligible to conduct remote caller bingo games to register
annually with DOJ, as specified.
5) Requires the DOJ to maintain a registry on its Internet Web
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site of all organizations registered to conduct remote caller
bingo, and authorizes the DOJ to charge an annual registration
fee of $100, to be deposited into the California Bingo Fund, to
cover the actual costs of the department to administer and
enforce these provisions, and allows DOJ to adopt regulations.
6) Makes other technical and conforming changes relating to the
duties of the DOJ and the CGCC, including setting forth
procedures for a city, county, or city and county, as the local
licensing entity, to obtain a background check from the DOJ.
7) States DOJ may audit the books and records of a licensed
organization or vendor of equipment used in a remote caller
bingo game at any time and to charge a fee for the audit.
8) Deletes the requirement that the CGCC approve all equipment
used for remote caller bingo in advance, but requires the city,
county, or city and county to monitor operation of the
transmission and other equipment used for remote caller bingo
and to monitor the game.
8) Authorizes a city, county, or city and county, until June 1,
2012, to recognize a state license, work permit, or approval of
equipment that was issued by the CGCC and effective on June 30,
2011, as specified.
9) Permits an authorized organization to contract with a
management company to provide business services, but requires
the organization to give notice of the contract to the city,
county, or city and county and meet other requirements, as
specified.
10) Makes additional changes relating to the requirements for
cosponsoring remote caller bingo games, and simplifies other
procedures and requirements applicable to the conduct of remote
caller bingo games.
11) Deletes the requirement that a loan from the Gambling
Control Fund to the California Bingo Fund be repaid within 5
years - still requiring repayment, but eliminating the
designated timeframe.
12) Repeals provisions relating to card-minding devices and the
duties of the CGCC.
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13) Allows an organization to conduct one extra remote caller
bingo game per quarter in addition to the current two days per
week authorization.
14) Contains an urgency clause.
EXISTING LAW :
1) Declares in Section 19(c) of Article IV of the California
Constitution that the Legislature may enact statutes authorizing
cities and counties to provide for bingo games, but only for
charitable purposes.
2) Authorizes cities and counties to permit eligible nonprofit
organizations to conduct bingo games and remote caller bingo
games for charitable purposes pursuant to an ordinance that
allows those games to be conducted in accordance with specified
requirements.
3) Prohibits an organization from conducting remote caller
bingo more than two days per week.
4) Requires an organization authorized to conduct remote caller
bingo games to give at least 30 days' advance written notice of
its intent to conduct a remote caller bingo game.
5) Requires CGCC to regulate remote caller bingo, including
licensure and operations, as defined.
6) Requires any person who conducts a remote caller bingo game,
and any person who manufactures or otherwise provides equipment
for use in the playing of a remote caller bingo game to be
licensed by CGCC.
7) Requires the CGCC to approve in advance all equipment used
for remote caller bingo, to monitor operation of the
transmission and other equipment used for remote caller bingo,
and to monitor the game itself.
8) Requires the CGCC to submit a report to the Legislature, on
or before January 1, 2012, on the fundraising effectiveness and
regulation of remote caller bingo.
9) Allows for a loan from the Gambling Control Fund to the
California Bingo Fund for the start-up costs relating to
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remote-caller bingo is required to be repaid within five years.
10) Permits players who are physically present at a bingo game
to use hand-held, portable card-minding devices, as specified,
that are approved prior to use by the CGCC.
11) Requires the CGCC to license persons or entities that
manufacture, supply, or service card-minding devices and related
equipment, and may inspect and prohibit the use of any
card-minding devices that are noncompliant.
12) Requires the CGCC to adopt regulations concerning remote
caller bingo and card-minding devices.
FISCAL EFFECT : Unknown.
COMMENTS :
Background : In 1976, through enactment of Proposition 9,
California charities and nonprofit organizations were authorized
to operate conventional paper bingo games for charitable
purposes. After the onset of legalized Indian Gaming and
enhancements to the California State Lottery, charities
fundraising efforts through the play of bingo began to subside.
To regain lost participation and income, some charitable
organizations began offering bingo play using electronic bingo
machines. However, during 2007-08 it was acknowledged that the
use of electronic bingo games violated exclusivity clauses
contained in Indian Gaming compacts and the games were also
declared illegal per a DOJ "Law Enforcement Advisory notice."
In 2008, SB 1369 (Cedillo), Chapter 748, was enacted to allow
the play of remote caller bingo in an effort to help nonprofit
organizations continue their fundraising efforts. Remote caller
bingo is played through the use of audio and video technology to
link any number of facilities for the purpose of transmitting
the remote "calling" of a live bingo game from a single location
to multiple locations owned, leased, or rented by that
organization. Remote caller bingo games can offer payouts equal
to 37 percent of gross revenues, but at least 43 percent of
revenues must go to the sponsoring charity or nonprofit, with no
more than 20 percent of receipts spent on overhead.
Existing law requires CGCC to regulate remote caller bingo,
including, but not limited to, licensure and operations. The
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CGCC shall license and register any person that conducts remote
caller bingo or any person that provides supplies or equipment
designed for the play of remote caller bingo. Existing
law requires all equipment used for remote caller bingo to be
approved in advance by CGCC.
To date, a limited amount of charitable organizations have been
licensed or organized to operate the game. While it had been
anticipated that thousands of charities would apply for
licensure under the CGCC, only about 32 actually did apply and
very few complied with the licensing requirements to establish
remote caller bingo games. The existing model ordinance
provided to cities and counties requires the charity to get a
tax exempt certification from the Franchise Tax Board (FTB),
however the complicated process requires excessive paperwork and
a lengthy period of review and the fundraising efforts of
charities have not increased under the current remote caller
bingo model.
Since the inception of the Remote Caller Bingo program in FY
2008-09, CGCC's start-up, operating and personnel costs have
totaled $340,000, with offsetting revenue of only $5,000 per
year. Nearly all of its costs have been funded from a loan from
the Gambling Control Fund on January 1, 2009 which was to be
repaid as soon as there was sufficient money in the California
Bingo Fund, but no later than five years after the date of the
loan. SB 340 will delete the requirement that the loan be
repaid within 5 years - still requiring repayment, but
eliminating the designated timeframe. As of June 30, 2011, CGCC
will no longer have funding or limited-term positions for
support of this program.
Purpose of this bill : The author states, although the 2008
legislation was clearly intended to allow remote caller bingo
events for charitable organizations, the author and supporters
of this bill contend that the existing regulatory process is too
cumbersome and inefficient for many charities. According to the
author and supporters, this bill is designed to streamline the
process and make it easier for the charities to participate,
while still maintaining an oversight process that ensures
legitimacy by bringing in supervision by DOJ and local law
enforcement.
The bill gives local agencies the option of amending their
existing bingo ordinances to authorize remote caller bingo
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within their jurisdictions rather than adopting the model
ordinance provided by current law, or drafting a new ordinance.
This will make it simpler for agencies to codify authorization
for remote caller bingo in their municipal codes and streamline
the time-line for both local jurisdictions and charities to get
a game underway in a locality.
The author further emphasizes this bill will: 1) streamline
paperwork for both the charities and the regulators while
maintaining the integrity of the game; 2) maintain and
strengthen local control over bingo; 3) maintain the highest
statutory charity proceeds in the country at a 43% return of
their locations' gross receipts; and; 4) make charitable bingo
easier to operate at the local level which will help these
charities better serve our communities
This bill will also require organizations that receive local
approval for remote caller bingo to register with the DOJ. This
will give the DOJ sufficient knowledge of those organizations
that are participating in remote caller bingo and provide a
centralized statewide data base. DOJ will be authorized to
charge an annual registration fee of $100, to be deposited into
the California Bingo Fund, to cover the actual costs to
administer and enforce the provisions of this bill. This
registration program is designed to be similar to the charitable
raffle and "casino nights" program and fee structure
administered by DOJ. Charities and DOJ have had many years of
experience with this program. The charitable raffle and
"poker-night" registration system through DOJ has worked well
and this bill emulates it for remote caller bingo.
Who regulates traditional bingo ? According to the California
Constitution, Article IV, Section 19, and section 326.5 of the
California Penal Code, the regulation of bingo is the
responsibility of local jurisdictions, such as cities and
counties. Generally, regulation at the local level is through
city or county municipal codes or ordinances. In many local
jurisdictions, the enforcement and oversight of traditional
bingo is assigned to the local law enforcement agencies
(sheriff's offices and police departments).
Currently, who regulates Charitable Gambling ? On January 1,
2007, AB 830, Torrico, Chapter 707, Statutes of 2006 went into
effect allowing eligible nonprofit organizations to conduct
fundraisers using controlled games i.e., casino nights or poker
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night fundraisers. Nonprofit organizations and suppliers of
equipment and/or services for such fundraising events must
submit an annual registration form to DOJ (the Bureau of
Gambling Control) for approval. Nonprofit organizations may
register with the Bureau to host one event per calendar year.
The Bureau monitors and tracks all applications received by the
Charitable Gambling Program.
DOJ has oversight over authorized entities who conduct raffles :
In California, charities and certain other private nonprofit
organizations may conduct raffles to raise funds for beneficial
or charitable purposes. Unless specifically exempted, a
nonprofit organization must register with the Attorney General's
Registry of Charitable Trusts prior to conducting the raffle and
file financial disclosure reports on each raffle event. The
information available includes registration and raffle report
data (such as the amount of money collected), and dates on which
a charity intends to hold a raffle.
In support : This bill's supporters say that the current law
requires charities to follow complicated bureaucratic
guidelines, which stunt the ability of qualified honorable
charities to easily provide fundraising games in their
communities. The current process requires excessive paperwork
and a lengthy period of review for qualification. Simply put,
it is too overwhelming for charities to navigate. Supporters
argue that the spirit of the remote caller bingo law was to
enable charities to utilize an easy method of fundraising to
help their organizations provide essential services.
In opposition : The California Coalition Against Gambling
Expansion writes that, before policymakers vote for more bills
to expand existing forms or authorize new types of gambling
activities, they ought to consider the social, economic, and
moral impact that more legalized gambling will have on
our state and its citizenry. Specifically, they are troubled by
the provisions in this bill that allows for limitless numbers of
persons participating in a bingo game at a single location via
remote call-in, the deletion of the advance written notice of
such activities, transfer of oversight of remote caller bingo
from the CGCC to the DOJ, and the continued erosion of
the primary purpose of legalized bingo, i.e., its charitable
fundraising.
Prior Legislation : SB 1090 (Cedillo), Chapter 514, Statutes of
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2010, allowed charitable organizations to conduct remote caller
bingo games up to two days per week, instead of 1 day per week.
Amended the model local ordinance to provide additional
flexibility for local agencies to verify the tax-exempt status
of organizations applying for a license to conduct bingo games.
SB 126 (Cedillo), Chapter 562, Statutes of 2009, enacted a model
local ordinance for use by local government agencies to sanction
remote caller bingo in the city or county jurisdiction, and
specified that an organization may be authorized to offer remote
caller bingo not more than two times per week.
SB 1369 (Cedillo), Chapter 748, Statutes of 2008, banned the use
of electronic bingo machines, but authorized the play of remote
caller bingo up to one time per week in jurisdictions that have
a remote caller bingo ordinance, and created a mitigation fund
to minimize the impacts to the charities that previously
operated electronic bingo machines.
AB 839 (Torrico), Chapter 707, Statutes of 2006, provides
statutory authority for specified nonprofit organizations to
conduct described fundraisers using controlled games (i.e.,
poker nights).
SB 639 (McPherson), Chapter 778, Statutes of 2000, was enabling
legislation to implement SCA 4 (McPherson), Resolution Chapter
123, Statutes of 1999, permitting the legalization and
regulation of charitable raffles as described in California.
SCA 4 became Proposition 17 of 2000, which was enacted by the
electorate and amended the State Constitution to permit the
Legislature to authorize private, nonprofit, eligible
organizations to conduct raffles as funding mechanisms to
support their own or other private, nonprofit beneficial and
charitable works.
SB 1810 (Davis), Chapter 445, Statutes of 1998, required all
individuals involved in charitable fundraising, to register with
the Attorney General to provide sufficient information to
identify and contact any entity engaged in possible illicit
activity as specified.
REGISTERED SUPPORT / OPPOSITION :
Support
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AMVETS, Department of California
Bingo Innovations of California, Inc.
California Association of Nonprofits
Knights of Columbus, Council 11137
Knights of Columbus, Council 1875
Knights of Columbus, Our lady Lourdes Council 4438
St. Rose of Lima Catholic Parish and School
Vietnam Veterans of America, California State Council
Opposition
California Coalition Against Gambling Expansion
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531