BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
SB 383 (Wolk)
Hearing Date: 1/17/2012 Amended: 1/12/2012
Consultant: Maureen Ortiz Policy Vote: GO 10-0
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BILL SUMMARY: SB 383, an urgency measure, makes revisions to the
Remote Caller Bingo Program administered by the California
Gambling Control Commission.
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Fiscal Impact (in thousands)
Major Provisions 2012-13 2013-14 2014-15 Fund
Remote caller bingo registry $108 $108
$108
(potentially offset by fees revenue) Special*
Audit ------unknown, potentially offset by
fees--- Special*
*California Bingo Fund
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STAFF COMMENTS:
The California Gambling Control Commission (CGCC) estimates
annual costs of approximately $108,000 for one PY Associate
Management Auditor for workload associated with the charity
registration, establishing the specified registry, and reviewing
audits that are required to be submitted by a management company
that contracts with a licensed organization. In addition, costs
will be incurred for optional audits of the books and records of
an organization licensed to conduct remote caller bingo. SB 383
authorizes the Commission to charge fees to cover the full costs
of any audits performed.
SB 383 authorizes the California Gambling Control Commission to
charge an annual registration fee of $100 for the maintenance of
the registry, but authorizes the CGCC to adjust the fee as
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needed to ensure that revenues will fully offset, but not
exceed, the actual costs incurred by the Commission related to
the registry program. Fee revenue will be deposited in the
California Bingo Fund. Additionally, the bill authorizes the
CGCC to charge an annual filing fee of $200 to cover
administrative and enforcement costs - also to be deposited in
the California Bingo Fund.
Due to the very limited participation in the existing remote
caller bingo program at this time, it is likely that initial
revenue will not be sufficient to cover administrative costs to
the CGCC. It is estimated that approximately 360 nonprofit
organizations will need to register with the Commission assuming
that each organization pays a total of $300 in fees per year for
registration and the registry. There are currently 18
organizations authorized to conduct remote caller bingo games,
and only eight are currently doing so (see CGCC report comments
below).
Current law 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. Existing law requires the California
Gambling Control Commission to regulate remote caller bingo,
including licensure and operation. Any person who conducts a
remote caller bingo game and any person who manufactures
equipment for use in the playing of a remote caller bingo game
are required to be licensed. The Commission must approve all
equipment used for remote caller bingo, monitor operation of the
transmission, and monitor the game.
SB 383 will delete all state licensure requirements for the
conduct of remote caller bingo, as well as the Commission's
responsibilities for approving remote caller bingo equipment and
card-minding devices, and instead requires an organization that
is eligible to conduct remote caller bingo games to register
annually with the Commission. The Commission will be required
to maintain a registry on its Internet Web site of all
organizations registered for remote caller bingo play. SB 383
authorizes the Commission to charge an annual registration fee
of $100 to cover administration and enforcement costs, and
authorizes the Commission to adopt regulations. In addition, an
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organization that conducts remote caller bingo must register all
of its local bingo licenses with the Commission. SB 383
authorizes the Commission to charge a fee to cover the cost of
this registration requirement. The bill also expands the list
of eligible entities that may conduct remote caller bingo to
include community college districts.
Additionally, SB 383 authorizes the CGCC to conduct audits of
the books and records of a licensed organization or a management
company contracted to conduct remote caller bingo at any time
and to charge to offset the costs of the audit.
Current law, enacted by SB 1369 (Cedillo), Chapter 748, Statutes
of 2008, and updated by SB 126 (Cedillo), Chapter 562, Statutes
of 2009, requires charities to be organized for 3 years before
operating remote caller bingo and prohibits the charity from
organizing for the sole purpose of conducting bingo games.
Current law authorizes nonprofit organizations to conduct remote
caller bingo two times per week and SB 383 allows the operation
of one extra game per quarter. The bingo games must be open to
the public and are limited to 750 players in a single location.
To ensure continuity of remote caller bingo games, SB 383
authorizes local agencies to recognize a state license, work
permit, or approval of equipment that was issued by the
California Gambling Control Commission and effective on June 30,
2011, until June 1, 2012. If a local entity decides to
recognize a state-issued license, work permit, or equipment
approval, it will be responsible for regulatory oversight and
enforcement in accordance with the standards and procedures
pursuant to local ordinance.
SB 383 provides that if the local licensing entity requests a
background check from the Department of Justice, it must submit
fingerprint images and related information as well as a fee
sufficient to cover the processing costs of the request. The
Department of Justice will have concurrent jurisdiction with
local law enforcement agencies to enforce the program.
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
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California State Lottery, charitable fundraising efforts through
the play of bingo began to subside. To regain lost
participation and income, 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 ceased. In 2008, SB 1369 was
enacted to allow the play of remote caller bingo in an effort to
help nonprofit organizations continue their fundraising efforts.
However, the existing regulatory process has proven to be
cumbersome and inefficient for many charities, therefore, remote
caller bingo has not proven to be a viable option. SB 383 will
streamline the regulatory process while still maintaining
oversight by the California Gambling Control Commission and
local law enforcement agencies.
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.
California Gambling Control Report to the Legislature - January
2012
The Commission has just completed its report to the Legislature
entitled "Fundraising Effectiveness and Regulation of Remote
Caller Bingo" as required by Penal Code Section 326.3(y). In
part, the Commission reports the following:
"The Program has been particularly complex, with three separate
components under the
enabling legislation. While the Commission's regulatory costs
were intended to be offset by Program fees, the minimal fee
revenues generated have covered only a fraction of the costs
associated with the Program. To date, the Program has received
loans from the Gambling Control Fund of approximately $989,000
for the Commission's regulatory costs, with expenditures
totaling approximately $402,000 (the Commission did not expend
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the full amount of the loans). The Program has only generated
fee revenues to the California Bingo Fund of approximately
$61,000, since inception.
The Program also has an outstanding loan balance of
approximately $1.8 million to the
Indian Gaming Special Distribution Fund (SDF) for grants to
eligible nonprofit
organizations that ceased using electronic bingo devices other
than card-minding devices as a fundraising tool. Existing law
requires nonprofit organizations that conduct remote caller
bingo games to pay to the Commission an amount equal to 5
percent of the gross revenues of each remote caller bingo game
played until that time as the full advanced amount plus interest
on the loan at the rate accruing to moneys in the Pooled Money
Investment Account is reimbursed. These SDF loan reimbursement
payments from nonprofit organizations have only totaled
approximately $9,000 since inception.
Due to lack of funding and positions to regulate the Program,
the Commission discontinued Program regulatory activities on
July 1, 2011. To avoid disruption of remote caller bingo games,
the Commission extended all remote caller bingo licenses and
work permits through May 31, 2012, for those licenses and work
permits in effect on June 30, 2011.
Of the 18 nonprofit organizations authorized by the Commission
to conduct remote caller bingo games, only eight of these
organizations have conducted games. Legislation is pending to
attempt to streamline the Program and simplify the requirements
for nonprofits to participate in the Program.
Overall, the Program has not been an effective fundraising tool
for California nonprofit
organizations. Based on limited financial information submitted
to the Commission, it is
estimated that the Program has generated gross receipts totaling
approximately $181,000 for the 1st through 3rd calendar quarters
of 2011, which should have resulted in at least $69,000 provided
to nonprofit organizations conducting remote caller bingo
games."
As noted, lack of funding and position authority has caused the
Commission to terminate regulatory activities of the remote
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caller bingo program effective July 1, 2011. However, to avoid
disruption of the remote caller bingo games, the Commission on
June 16, 2011, extended all remote caller bingo licenses and
work permits through
May 31, 2012 for those which were in effect on June 30, 2011.