California Legislature—2013–14 Regular Session

Assembly Bill No. 1691

Introduced by Assembly Member Jones-Sawyer

February 13, 2014

An act to add Section 320.6 to the Penal Code, relating to gaming.

LEGISLATIVE COUNSEL’S DIGEST

AB 1691, as introduced, Jones-Sawyer. Charitable raffles.

The California Constitution authorizes the Legislature to permit private, nonprofit, eligible organizations to conduct raffles as a funding mechanism to support beneficial and charitable works, if, among other conditions, at least 90% of the gross receipts from the raffle go directly to beneficial or charitable purposes in California. The California Constitution further authorizes the Legislature to amend the percentage of gross receipts required to be dedicated to beneficial or charitable purposes by a statute passed by a 2/3 vote of each house of the Legislature. Existing statutory law implements those provisions and requires the Department of Justice to administer and enforce those provisions.

This bill would authorize a raffle conducted by an eligible organization, as defined, for the purpose of directly supporting specified beneficial or charitable purposes in California, or financially supporting another private, nonprofit, eligible organization, as defined, that performs those purposes if, among other requirements, each ticket sold contains a unique and matching identifier, 50% of the net receipts generated from the sale of raffle tickets are used to benefit or provide support for beneficial or charitable purposes, as defined, and the other 50% is paid to the winner. The bill would authorize a random number generator to be used to select the winning ticket. This bill would define an eligible organization as a private, nonprofit organization established by, or affiliated with, a team from specified sports organizations that has been qualified to conduct business in California for at least one year prior to conducting a raffle and is exempt from taxation pursuant to specified provisions of federal and California law.

The bill would require, if an eligible organization conducts a raffle for purposes of financially supporting another private, nonprofit, eligible organization, the eligible organization conducting the raffle to distribute to the other eligible organization all proceeds not paid out to the winners within 15 days of conducting the raffle. The bill would require an eligible organization to disclose to all ticket purchasers the designated private, nonprofit organization for which the raffle is being conducted.

This bill would also prohibit an eligible organization from conducting a raffle without first having obtained and thereafter maintained a registration from the Department of Justice, as specified. This bill would authorize the department to issue regulations to enforce these provisions, to assess an annual registration fee of $10 to be deposited in the General Fund to cover the actual costs of establishing and operating this registration system, and would require the department to maintain a database of registrants, with specified exemptions, and conduct specified proceedings in compliance with the Administrative Procedure Act.

Vote: ²⁄₃. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 320.6 is added to the Penal Code, to read:

320.6.  

(a) Notwithstanding Section 320.5, this section shall
apply to an eligible organization, as defined in subdivision (c).

(b) A raffle conducted by an eligible organization as defined in
subdivision (c) for the purpose of directly supporting beneficial
or charitable purposes or financially supporting another private,
nonprofit eligible organization, as defined in subdivision (c) of
Section 320.5 that performs beneficial or charitable purposes may
be conducted in accordance with this section.

(c) For purposes of this section, “eligible organization” means
a private, nonprofit organization established by, or affiliated with,
a team from the Major League Baseball, National Hockey League,
National Basketball Association, National Football League,
Women’s National Basketball Association, Professional Golfers
Association, Ladies Professional Golfers Association, National
Association for Stock Car Auto Racing, or Major League Soccer
that has been qualified to conduct business in California for at least
one year prior to conducting a raffle, is qualified for an exemption
under Section 501(3)(c) of the Internal Revenue Code, and is
exempt from taxation pursuant to Section 23701a, 23701b, 23701d,
23701e, 23701f, 23701g, 23701k, 23701l, 23701t, or 23701w of
the Revenue and Taxation Code.

(d) For purposes of this section, “raffle” means a scheme for
the distribution of prizes by chance among persons who have paid
money for paper tickets that provide the opportunity to win these
prizes, in which all of the following are true:

(1) Each ticket sold contains a unique and matching identifier.

(2) Winners of the prizes are determined by draw from tickets
described in paragraph (1) that have been sold for entry in the
draw. A random number generator may be used to select the
winning ticket. The prize paid to the winner is comprised of
one-half or 50 percent of the net receipts generated from the sale
of raffle tickets for a raffle.

(3) The draw is conducted in California under the supervision
of a natural person who is 18 years of age or older.

(4) (A) Fifty percent of the net receipts generated from the sale
of raffle tickets for any given draw are used by the eligible
organization conducting the raffle to benefit or provide support
for beneficial or charitable purposes, or used to benefit another
private, nonprofit organization, provided that an organization
receiving these funds is itself an eligible organization as defined
in subdivision (c) of Section 320.5. As used in this section,
“beneficial purposes” excludes purposes that are intended to benefit
officers, directors, or members, as defined by Section 5056 of the
Corporations Code, of the eligible organization. Funds raised by
raffles conducted pursuant to this section shall not be used to fund
any beneficial, charitable, or other purpose outside of California.
This section does not preclude an eligible organization from using
funds from sources other than the sale of raffle tickets to pay for
the administration or other costs of conducting a raffle.

(B) An employee of an eligible organization who is a direct
seller of raffle tickets shall not be treated as an employee for
purposes of workers’ compensation under Section 3351 of the
Labor Code if the following conditions are satisfied:

(i) Substantially all of the remuneration, whether or not paid in
cash, for the performance of the service of selling raffle tickets is
directly related to sales rather than to the number of hours worked.

(ii) The services performed by the person are performed pursuant
to a written contract between the seller and the eligible organization
and the contract provides that the person will not be treated as an
employee with respect to the selling of raffle tickets for workers’
compensation purposes.

(C) For purposes of this section, an employee selling raffle
tickets shall be deemed to be a direct seller as described in Section
650 of the Unemployment Insurance Code as long as he or she
meets the requirements of that section.

(e) A person who receives compensation in connection with the
operation of the raffle shall be an employee of the eligible
organization that is conducting the raffle, and in no event may
compensation be paid from revenues required to be dedicated to
beneficial or charitable purposes.

(f) No raffle otherwise permitted under this section may be
conducted by means of, or otherwise utilize, any gaming machine
that meets the definition of slot machine contained in Section 330a,
330b, or 330.1.

(g) (1) No raffle otherwise permitted under this section may be
conducted, nor may tickets for a raffle be sold, within an operating
satellite wagering facility or racetrack inclosure licensed pursuant
to the Horse Racing Law (Chapter 4 (commencing with Section
19400) of Division 8 of the Business and Professions Code) or
within a gambling establishment licensed pursuant to the Gambling
Control Act (Chapter 5 (commencing with Section 19800) of
Division 8 of the Business and Professions Code).

(2) A raffle may not be operated or conducted in any manner
over the Internet, nor may raffle tickets be sold, traded, or redeemed
over the Internet. For purposes of this paragraph, an eligible
organization shall not be deemed to operate or conduct a raffle
over the Internet, or sell raffle tickets over the Internet, if the
eligible organization advertises its raffle on the Internet or permits
others to do so. Information that may be conveyed on an Internet
Web site pursuant to this paragraph includes, but is not limited to,
all of the following:

(A) Lists, descriptions, photographs, or videos of the raffle
prizes.

(B) Lists of the prize winners.

(C) The rules of the raffle.

(D) Frequently asked questions and their answers.

(E) Raffle entry forms, which may be downloaded from the
Internet Web site for manual completion by raffle ticket purchasers,
but shall not be submitted to the eligible organization through the
Internet.

(F) Raffle contact information, including the eligible
organization’s name, address, telephone number, facsimile number,
or e-mail address.

(h) No individual, corporation, partnership, or other legal entity
shall hold a financial interest in the conduct of a raffle, except the
eligible organization that is itself authorized to conduct that raffle,
and any private, nonprofit, eligible organizations receiving financial
support from that charitable organization pursuant to subdivisions
(b) and (d).

(i) An eligible organization may conduct no more than one
major league sports raffle per home game.

(j) An employee may not sell raffle tickets in any seating area
designated as a family section.

(k) An eligible organization shall disclose to all ticket purchasers
the designated private, nonprofit, eligible organization for which
the raffle is being conducted.

(l) An eligible organization that conducts a raffle to financially
support another private, nonprofit eligible organization as defined
in subdivision (c) of Section 320.5 shall distribute all proceeds not
paid out to the winners of the prizes to the private, nonprofit
organization within 15 days of conducting the raffle, in accordance
with this section.

(m) Any raffle prize remaining unclaimed by a winner at the
end of the season for a team with an affiliated eligible organization
that conducted a raffle to financially support another private,
nonprofit eligible organization as defined in subdivision (c) of
Section 320.5 shall be donated within 30 days from the end of the
season by the eligible organization to the designated private,
nonprofit organization for which the raffle was conducted.

(n) (1) An eligible organization may not conduct a raffle
authorized under this section, unless it registers annually with the
Department of Justice. The department shall furnish a registration
form via the Internet or upon request to eligible nonprofit
organizations. The department shall, by regulation, collect only
the information necessary to carry out the provisions of this section
on this form. This information shall include, but is not limited to,
the following:

(A) The name and address of the eligible organization.

(B) The federal tax identification number, the corporate number
issued by the Secretary of State, the organization number issued
by the Franchise Tax Board, or the California charitable trust
identification number of the eligible organization.

(C) The name and title of a responsible fiduciary of the
organization.

(2) The department may require an eligible organization to pay
an annual registration fee of ten dollars ($10) to cover the actual
costs of the department to administer and enforce this section. The
department may, by regulation, adjust the annual registration fee
as needed to ensure that revenues will fully offset, but do not
exceed, the actual costs incurred by the department pursuant to
this section. The fee shall be deposited by the department into the
General Fund.

(3) The department shall receive moneys for the costs incurred
pursuant to this section subject to an appropriation by the
Legislature.

(4) The department shall adopt regulations necessary to
effectuate this section, including emergency regulations, pursuant
to the Administrative Procedure Act (Chapter 3.5 (commencing
with Section 11340) of Part 1 of Division 3 of Title 2 of the
Government Code).

(5) The department shall maintain an automated database of all
registrants. Each local law enforcement agency shall notify the
department of any arrests or investigation that may result in an
administrative or criminal action against a registrant. The
department may audit the records and other documents of a
registrant to ensure compliance with this section.

(6) Once registered, an eligible organization must file annually
thereafter with the department a report that includes the following:

(A) The aggregate net receipts from the operation of raffles.

(B) The aggregate direct costs incurred by the eligible
organization from the operation of raffles.

(C) The charitable or beneficial purposes for which proceeds
of the raffles were used, or identify the eligible recipient
organization to which proceeds were directed, and the amount of
those proceeds.

(7) The department shall annually furnish to registrants a form
to collect this information.

(8) The registration and reporting provisions of this section do
not apply to any religious corporation sole or other religious
corporation or organization that holds property for religious
purposes, to a cemetery corporation regulated under Chapter 19
(commencing with Section 9600) of Division 3 of the Business
and Professions Code, or to any committee as defined in Section
82013 of the Government Code that is required to and does file
any statement pursuant to the provisions of Article 2 (commencing
with Section 84200) of Chapter 4 of Title 9 of the Government
Code, or to a charitable corporation organized and operated
primarily as a religious organization, educational institution,
hospital, or a health care service plan licensed pursuant to Section
1349 of the Health and Safety Code.

(o) The department may take legal action against a registrant if
it determines that the registrant has violated this section or a
regulation adopted pursuant to this section, or that the registrant
has engaged in any conduct that is not in the best interests of the
public’s health, safety, or general welfare. An action taken pursuant
to this subdivision does not prohibit the commencement of an
administrative or criminal action by the Attorney General, a district
attorney, city attorney, or county counsel.

(p) An action and hearing conducted to deny, revoke, or suspend
a registry, or other administrative action taken against a registrant
shall be conducted pursuant to the Administrative Procedure Act
(Chapters 4.5 (commencing with Section 11400) and 5
(commencing with Section 11500) of Part 1 of Division 3 of Title
2 of the Government Code). The department may seek recovery
of the costs incurred in investigating or prosecuting an action
against a registrant or applicant in accordance with those
procedures specified in Section 125.3 of the Business and
Professions Code. A proceeding conducted under this subdivision
is subject to judicial review pursuant to Section 1094.5 of the Code
of Civil Procedure.