BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
SB 778 (Padilla)
Hearing Date: 1/17/2012 Amended: 1/05/2012
Consultant: Maureen Ortiz Policy Vote: GO 10-0
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BILL SUMMARY: SB 778 authorizes wine, beer and spirits
producers to conduct, sponsor, or participate in consumer
contests or sweepstakes.
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Fiscal Impact (in thousands)
Major Provisions 2012-13 2013-14 2014-15 Fund
Admin/enforcement $47.5 $95
$95 Special*
*Alcoholic Beverage Control Fund
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STAFF COMMENTS:
The Department of Alcoholic Beverage Control (ABC) indicates the
need for one new Investigator position in the Trade Enforcement
Unit at a cost of approximately $95,000 annually for salary and
benefits. This estimate is based on about 25 additional
investigations resulting each year from the new contests and
sweepstakes authorization. Investigations are complaint driven
and involve requesting, collecting and reviewing records,
conducting interviews, as well as other administrative duties.
SB 778 will allow licensees to conduct, sponsor, or participate
in contests and sweepstakes subject to numerous conditions
including the following:
1) A purchase or entry fee shall not be required to enter a
contest or sweepstakes; entry shall be limited to persons 21
years of age or older; and entry or extra chances shall not be
made available via the purchase of an alcoholic beverage.
2) Items that are attached to an alcoholic beverage such as
caps, corks, labels, etc shall not be used to enter a contest or
SB 778 (Padilla)
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to determine the amount or size of the prize. Neck hangers may
carry an entry form but forms must also be made available at the
point of sale.
3) Scratch-offs, pull tabs, or other means of instant wins are
not permitted; and a visit to a retail premise shall not be
required to enter a contest or sweepstakes.
4) Prizes must not include alcoholic beverages or anything
redeemable for alcoholic beverages.
5) Retail licensees are prohibited from serving as an agent of
an authorized licensee and may not collect or forward entries or
award prizes to a winner.
6) A licensee that is not an authorized licensee shall not
share in, or contribute to, the costs of a contest.
Additionally, SB 778 places several conditions on the
advertising of contests and sweepstakes including the following:
1) Advertising at an on-sale or off-sale retail license
location must comply with existing signage and advertising
restrictions, and with any regulations issued by the department.
2) No retail licensee can be identified during any advertising
or promotion of a contest or sweepstakes.
3) Advertising or promotion of a contest or sweepstakes shall
only be conducted on the premises of a retail licensee when such
advertisement or promotion involves a minimum of two
unaffiliated retail licensees.
4) Placement of signs or other advertising of a contest or
sweepstakes in a licensed retail premises shall not be
conditional upon product placement within that premises, nor on
the sale of any product produced by an authorized licensee.
5) Contest prizes shall not be awarded to any retail or
wholesale licensee or agent, officer, or family member of any
retail or wholesale licensee. An authorized licensee shall
maintain all records pertaining to a contest or sweepstakes for
three years following the completion of the contest.
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SB 778 authorizes the department to, in addition to any other
penalty imposed, prohibit an authorized licensee from
conducting, sponsoring, or participating in a contest or
sweepstakes for a period of 12 months for violations of these
provisions.
SB 778 defines "contest" as a game, contest, puzzle, scheme,
plan, or similar activity that holds out or offers to
participants the opportunity to receive or compete for gifts,
prizes, gratuities, or other things of value as determined by
skill, knowledge, or ability rather than upon random selection.
"Sweepstakes" is defined as a procedure, activity, or event for
the distribution of anything of value by lot, chance or random
selection where the odds for winning a prize are equal for each
entry.
Alcohol retailers had been offering contests and sweepstakes to
California consumers until the ABC amended its Rule 106 in 1999
to clarify that existing law prohibits the giving of any
premium, gift, or free goods, by any means whatsoever,
including, but not limited to, sweepstakes, drawings, prizes,
and cross-merchandising promotions, where the value of such
premium, gift, or free good exceeds the monetary limits
determined in statute. These contests are authorized in 49
other states.