BILL ANALYSIS �
SB 383
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Date of Hearing: August 8, 2012
ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
Isadore Hall, Chair
SB 383 (Wolk) - As Amended: June 28, 2012
SENATE VOTE : 38-0
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. Removes the
California Gambling Control Commission (CGCC) as the licensing
and regulating entity and, instead, gives that task to local
jurisdictions. 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
within that jurisdiction, by resolution, to permit the conduct
of remote caller bingo games pursuant to that ordinance, as
specified.
2) Includes charitable organizations affiliated with a community
college district among the organizations eligible to conduct
remote caller bingo. Prohibits an organization from conducting
remote caller bingo more than 2 days a week, but allows an
organization to conduct one additional game in each calendar
quarter if it so chooses. Makes changes relating to the
requirements for cosponsoring remote caller bingo games, as
defined.
3) 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 notice within 24 hours if the location of the remote
caller bingo game changes.
4) Repeals the model remote caller bingo ordinance as set forth
in existing law.
5) Deletes state licensure requirements for the conduct of
remote caller bingo, and would, instead, require an organization
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that is eligible to conduct remote caller bingo games to
register annually with CGCC or the Department of Justice (DOJ),
as specified.
6) Requires CGCC or DOJ to maintain a registry of all
organizations registered to conduct remote caller bingo and the
dollar amount received by those organizations to repay a
specified loan to the Charitable Bingo Mitigation Fund.
Authorizes CGCC or DOJ 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 these provisions, and
allows CGCC or DOJ to adopt regulations, as defined.
7) Requires an organization licensed to conduct remote caller
bingo, or a management company contracted with a licensed
organization, to register all of its local bingo licenses with
CGCC or DOJ. Authorizes CGCC or DOJ to charge a fee to cover
the cost of this registration requirement and would require that
registration information be made available to the public upon
request.
8) Makes other technical and conforming changes relating to the
duties of DOJ and CGCC, including setting forth procedures for a
city, county, or city and county, as the local licensing entity,
to request a background check from DOJ. Authorizes DOJ to
charge a fee sufficient to cover the cost of processing the
background check, and would provide for the deposit of that fee
revenue into the Fingerprint Fees Account, to be continuously
appropriated to the department for that cost.
9) Requires DOJ to conduct a background investigation of each
management company and to conduct field enforcement, as
specified. Each application for a license as a management
company shall be accompanied by a nonrefundable fee to cover the
background investigation costs of DOJ. The department shall
submit the results of the background investigation of a
management company to the local licensing entity.
10) Authorizes DOJ to audit the books and records of a licensed
organization or a management company contracted by a licensed
organization to conduct remote caller bingo at any time and to
charge a fee for the audit. The bill would require the audit
information to be made available to the public upon request.
11) Requires a management company to retain an independent
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California certified public accountant to conduct an annual
audit of its books and records, and would subject a management
company to a civil penalty for filing false information with the
CGCC or the department.
12) Permits an authorized organization to contract with a
management company to provide business services, but would
require the organization to give notice of the contract to the
city, county, or city and county and to meet other requirements,
as specified.
13) 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.
14) Deletes the requirement CGCC approve all equipment used for
remote caller bingo in advance, but would require 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.
15) Deletes a requirement that a loan to the CGCC from the
Gambling Control Fund be repaid within 5 years, although it does
not extinguish the repayment obligation.
16) Repeals provisions relating to bingo card-minding devices
and related duties of the CGCC.
17) Requires DOJ and CGCC, on or before October 1, 2015, to
report their findings to the Legislature, as to whether
continuation of the remote caller bingo program and state
oversight of that program is warranted based on specified
findings.
18) Contains a sunset date for remote caller bingo program as of
January 1, 2017.
19) 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
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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
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.
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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
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
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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.
California Gambling Control Report to the Legislature - January
2012 : In January 2012, the CGCC 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, CGCC stated, "While CGCC'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 CGCC's regulatory costs; with expenditures totaling
approximately $402,000 (CGCC did not expend 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 CGCC 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. Due to lack of funding and positions to
regulate the Program, CGCC discontinued Program regulatory
activities on July 1, 2011. To avoid disruption of remote
caller bingo games, CGCC 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.
2012 Litigation : In May 2012, Bingo Innovations of California,
Inc. filed suit in Sacramento County Superior Court against the
CGCC, and each of the four Commissioners in their official
capacity. The suit alleged that the CGCC failed to properly
fulfill its obligation to implement the Remote Caller Bingo
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Program, to include the review and approval of applications for
licensure or recognition. Bingo Innovations sought a stay to
prevent the expiration of licenses, work permits and other
approvals which were set to expire on May 31, 2012. In
addition, Bingo Innovations requested an order compelling the
CGCC to resume processing applications.
As noted above, the CGCC terminated regulatory activities on
June 30, 2011, due to the lack of an appropriation in the Budget
Act for FY 2011-12, but extended licenses and work permits
previously issued until May 31, 2012 to allow the limited number
of organizations that had sought approval to continue to provide
remote caller bingo games.
The CGCC stated, "Because the Commission does not receive any
General Funds, the lack of an appropriation to the California
Bingo Fund prevented CGCC from incurring the costs required to
regulate the Program."
Stipulation and Order : In May 2012, the CGCC and the
plaintiff's counsel agreed to a stipulation and order to stay
expiration of Remote Caller Bingo licenses. The stipulation and
order extended all licenses, permits and approvals in effect on
the date of the order until the earlier of: (1) the disposition
of the lawsuit; (2) an appropriation of funds; or, (3) a change
in law which relieves CGCC of its obligation to review and
approve applications related to the Program. Judge Kenney
signed the order approving this stipulation on May 25, 2012.
The hearing on the merits of the lawsuit is currently scheduled
to begin in November 2012.
Purpose of this bill : The author states, the 2008 remote caller
legislation was intended to allow remote caller bingo events for
charitable organizations. However, the existing regulatory
process is too cumbersome and inefficient for many charities.
According to the author, 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 allowing for supervision by state and local
authorities.
The author states, SB 383 will give local agencies the option of
amending their existing bingo ordinances to authorize remote
caller bingo within their jurisdictions rather than adopting the
model ordinance provided by current law, or drafting a new
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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 require organizations that receive local approval
for remote caller bingo to register annually with a designed
state regulatory authority. The registry will contain all of
the organizations who conduct remote caller bingo and the dollar
amount received by those organizations to repay a specified loan
to the Charitable Bingo Mitigation Fund.
The author points out, the bill contains a detailed procedure if
a local licensing entity requests a background check from DOJ,
as well as a fee sufficient to cover the processing costs of the
request. In addition, DOJ will have concurrent jurisdiction
with local law enforcement agencies to enforce the overall
program.
SB 383 authorizes DOJ to audit the books and records of a
licensed organization or a management company contracted by a
licensed organization to conduct remote caller bingo at any time
and to charge a fee for the audit. Additionally, a management
company would be required to retain an independent California
certified public accountant to conduct an annual audit of its
books and records, and would subject a management company to a
civil penalty for filing false information with DOJ.
The author states, that this bill takes into consideration the
Governor's Reorganization Plan No. 2 of 2012 (GRP 2), which
consolidates the support, investigatory, auditing, and
compliance functions of the CGCC and transfers these duties to
DOJ. For this reason, the bill states "commission or
department" in specific instances in order to define the roles
of DOJ and CGCC relating to remote caller bingo.
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In support : Supporters state that, under the current
legislation, charities are required to follow complicated
bureaucratic guidelines, which stunt the ability of qualified
honorable charities to provide fundraising games in their
community. The process for licensure requires excessive
paperwork and a lengthy period of review for qualification.
Supporters believe that this bill will streamline and revise
oversight of remote caller bingo. This legislation provides for
very strictly defined accountability, thus protecting the
public, at the same time as it makes charitable bingo more
accessible by simplifying procedures and requirements for
conducting remote caller bingo games.
Supporters state that the current regulatory program is too
complicated and overwhelming for charities to navigate. Smaller
charities seeking part time fundraising (Schools, little
leagues, clubs, etc.) have found the licensing process too
complicated for their occasional small events. In the spirit of
the law, remote caller bingo was designed to enable all
qualified charities a method of fundraising to help their
organizations to provide essential services.
More Background :
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).
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 night fundraisers.
Nonprofit organizations and suppliers of equipment and/or
services for such fundraising events must submit an annual
registration form to DOJ 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.
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Author amendments : The author will offer amendments in
committee which further clarify the roles and responsibilities
of CGCC and DOJ, and a local licensing entity to regulate and
provide statewide transparency for remote caller bingo licenses.
In addition, the amendments will further provide clarification
of the roles and responsibilities of CGCC and DOJ pursuant to
the Governor's Reorganization Plan No. 2 of 2012.
Prior Legislation : SB 340 (Wolk) of 2011. SB 340 reforms
existing law regarding remote caller bingo, by removing the CGCC
as the licensing and regulating entity and, instead, gives that
task to local jurisdictions. Furthermore, this bill requires
operators to register with DOJ which is similar to other
charitable fundraising activities such as raffles and casino
nights. (Held under submission in Assembly Appropriations
Committee in 2011.
SB 1090 (Cedillo), Chapter 514, Statutes of 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
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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
California Association of Nonprofits (source)
American Legion Post 283
American Legion Post 30
American Legion Post 739
American Legion-Department of California
AMVETS- Department of California
Bingo Innovations of California, Inc.
California Association of County Veterans Service Officers
California State Commanders Veterans Council
Corona Elks 2045
Desert Hot Springs Lodge #2639
Knights of Columbus, Council 4438
Moose Lodge 2284
St. Pius X Catholic Church
Veterans of Foreign Wars 2085
Vietnam Veterans of America-California State Council
Yucaipa Elks Lodge #2389
Opposition
None on file
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531
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