BILL ANALYSIS �
SB 383
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Date of Hearing: August 16, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
SB 383 (Wolk) - As Amended: August 9, 2012
Policy Committee: Governmental
Organization Vote: 14 - 0
Urgency: Yes State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill eliminates the current state licensing requirements
for organizations that wish to conduct remote caller bingo
games. Specifically, this bill:
1)Deletes all state Gambling Control Commission (GCC) oversight
and licensure requirements for remote caller bingo, and
instead requires an organization that is eligible to conduct
remote caller bingo games, or a management company contracted
by a licensed organization to conduct remote caller bingo on
behalf of a nonprofit organization, to register with the GCC.
2)Shortens, from 30 days to 10 days, the requirement that an
organization authorized to conduct remote caller bingo games
provide advance written notice of intent to conduct a remote
caller bingo game.
3)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
GCC or DOJ. Authorizes GCC or DOJ to charge a fee to cover
the cost of this registration requirement and requires that
registration information be made available to the public upon
request.
4)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
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management company to the local licensing entity.
5)Authorizes DOJ to audit the books and records of a licensed
organization of a management company contracted by a licensed
organization to conduct remote caller bingo at any time, and
to charge a fee for the audit.
6)Requires a management company to retain an independent
California certified public accountant to conduct an annual
audit of its books and records, and subjects a management
company to a civil penalty for filing false information with
the GCC or the department.
7)Requires DOJ and GCC, 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.
8)Sunsets the proposed remote caller bingo program January 1,
2017.
FISCAL EFFECT
On-going costs in excess of $700,000 (California Bingo Fund or
GF) for DOJ to conduct audits of books and records of licensed
organizations, conduct background investigations of management
companies, and conduct ongoing field enforcement of remote
caller bingo establishments.
This figure is based on the assumption that six management
companies will provide management services for remote caller
bingo games. Should more than six vendors provide management
services, the associated DOJ workload costs will increase.
COMMENTS
1)Purpose . The 2008 remote caller legislation was intended to
allow remote caller bingo events for charitable organizations.
However, the author of this bill contends 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 charities to
participate, while maintaining an oversight process that
ensures legitimacy by bringing in supervision by DOJ and local
law enforcement.
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2)Background . In 2008, the Legislature passed and the governor
signed SB 1369 (Cedillo), Statutes of 2008. The purpose of
that bill was to outlaw electronic bingo machines. As a
compromise in the bill, the Legislature authorized the limited
use of remote caller bingo as a way of helping non-profit
organizations that had come to rely heavily on electronic
bingo machines for their funding.
3)Remote Caller Bingo . The major differences between remote
caller bingo and traditional bingo are that remote caller
bingo allows for the transmission of an audio and video signal
of a live bingo game from one organization (a YMCA, for
example) located in a local jurisdiction that has adopted a
remote caller bingo ordinance to either an affiliated or
unaffiliated organization (another YMCA or a Boys' and Girls'
Club, for example) located in other jurisdictions across the
state that have also adopted remote caller bingo ordinances.
4)California Gambling Control Commission Report to the
Legislature - January 2012 . The GCC recently submitted 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 GCC 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 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
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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 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.
5)Bingo Innovations of California Inc. v. the Gambling Control
Commissions, et al . The vendor for remote caller bingo and a
supporter of this bill, Bingo Innovations of California, Inc.,
recently filed a lawsuit in the Sacramento County Superior
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Court against the GCC.
The suit alleged that the GCC failed to properly fulfill its
obligation to implement the remote caller bingo program,
including 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
GCC to resume processing applications, notwithstanding the
lack of funding for program.
The GCC has agreed to extend the current licenses pending
disposition of the lawsuit, an appropriation to fund the
program, or a change in statute that relieves the GCC of its
regulatory responsibilities for this program. This bill
provides that statutory change.
6)Prior Legislation : In 2011, SB 340 (Wolk) would have
eliminated the state licensing requirements for organizations
who wish to conduct remote caller bingo games. That bill was
held on this committee's Suspense File.
SB 1090 (Cedillo), Statutes of 2010, allowed charitable
organizations to conduct remote caller bingo games up to two
days per week, instead of one day per week.
SB 126 (Cedillo), 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), 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.
Analysis Prepared by : Julie Salley-Gray / APPR. / (916)
319-2081
SB 383
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