California Senate Bill SB1125 Amended / Bill

 BILL NUMBER: SB 1125AMENDED BILL TEXT AMENDED IN ASSEMBLY AUGUST 2, 2010 AMENDED IN ASSEMBLY JUNE 28, 2010 AMENDED IN ASSEMBLY JUNE 22, 2010 AMENDED IN SENATE MAY 27, 2010 AMENDED IN SENATE APRIL 20, 2010 AMENDED IN SENATE MARCH 22, 2010 INTRODUCED BY Senator Florez FEBRUARY 18, 2010 An act to amend  Sections 19805 and   Section  19867 of, and to add Sections 19843.5 and 19943.5 to, the Business and Professions Code, relating to gaming. LEGISLATIVE COUNSEL'S DIGEST SB 1125, as amended, Florez. Gambling Control Act. (1) The Gambling Control Act provides for the licensure of certain individuals and establishments involved in various gambling activities, and for the regulation of those activities, by the California Gambling Control Commission. Existing law provides for the enforcement of those activities by the Department of Justice. Existing law requires that an application for a license or a determination of suitability be accompanied by a deposit that, in the judgment of the head of the entity within the Department of Justice that is responsible for fulfilling the obligations imposed by the act, will be adequate to pay the anticipated costs and charges incurred in the investigation and processing of the application. Existing law requires the head of that entity to adopt a schedule of costs and charges of investigation for use as guidelines in fixing the amount of any required deposit under these provisions. This bill would require the department to establish an enhanced fee schedule to provide for additional fees to be charged to applicants who wish to have their applications processed and background investigations conducted in an expedited manner. (2) Existing law permits the commission to adopt regulations related to the operation of a gambling establishment, as provided. This bill would provide that jackpot funds, to which players have made contributions, are considered trust funds that are held for the benefit of the players and are not the property of the gambling establishment. (3) Existing law requires the department to approve the play of any controlled game, including, but not limited to, placing restrictions and limitations on how a controlled game is played. This bill would provide that a gambling establishment that conducts play of a controlled game that has been approved by the department, but is later found to be unlawful, has an absolute defense to any criminal, administrative, or civil action, so long as the game was being played in the manner approved and during the time for which it was approved.  (4) Existing law provides that a person is unsuitable to hold a state gambling license if the person has any financial interest in any business or organization that is engaged in any form of gambling, as provided. However, existing law authorizes the commission to deem an applicant suitable if the person has a 1% interest, or less, in a business that conducts lawful gambling outside the state.   This bill would define financial interest for those purposes.  Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:  SECTION 1.   Section 19805 of the Business and Professions Code is amended to read: 19805. As used in this chapter, the following definitions shall apply: (a) "Affiliate" means a person who, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, a specified person. (b) "Applicant" means any person who has applied for, or is about to apply for, a state gambling license, a key employee license, a registration, a finding of suitability, a work permit, a manufacturer' s or distributor's license, or an approval of any act or transaction for which the approval or authorization of the commission or department is required or permitted under this chapter. (c) "Banking game" or "banked game" does not include a controlled game if the published rules of the game feature a player-dealer position and provide that this position must be continuously and systematically rotated amongst each of the participants during the play of the game, ensure that the player-dealer is able to win or lose only a fixed and limited wager during the play of the game, and preclude the house, another entity, a player, or an observer from maintaining or operating as a bank during the course of the game. For purposes of this section, it is not the intent of the Legislature to mandate acceptance of the deal by every player if the department finds that the rules of the game render the maintenance of or operation of a bank impossible by other means. The house shall not occupy the player-dealer position. (d) "Chief" means the head of the entity within the department that is responsible for fulfilling the obligations imposed upon the department by this chapter. (e) "Commission" means the California Gambling Control Commission. (f) "Controlled gambling" means to deal, operate, carry on, conduct, maintain, or expose for play any controlled game. (g) "Controlled game" means any controlled game, as defined by subdivision (e) of Section 337j of the Penal Code. (h) "Department" means the Department of Justice. (i) "Director" means any director of a corporation or any person performing similar functions with respect to any organization. (j) "Financial interest," as used in Sections 19858 and 19858.5, means to operate or exercise control over the operation of a gambling business and receive a pecuniary gain or sustain a pecuniary loss from that gambling business. This definition only applies to a qualified racing association or to an affiliate of a qualified racing association. (k) "Finding of suitability" means a finding that a person meets the qualification criteria described in subdivisions (a) and (b) of Section 19857, and that the person would not be disqualified from holding a state gambling license on any of the grounds specified in Section 19859. (l) "Game" and "gambling game" means any controlled game. (m) "Gambling" means to deal, operate, carry on, conduct, maintain, or expose for play any controlled game. (n) "Gambling enterprise" means a natural person or an entity, whether individual, corporate, or otherwise, that conducts a gambling operation and that by virtue thereof is required to hold a state gambling license under this chapter. (o) "Gambling enterprise employee" means any natural person employed in the operation of a gambling enterprise, including, without limitation, dealers, floor personnel, security employees, countroom personnel, cage personnel, collection personnel, surveillance personnel, data-processing personnel, appropriate maintenance personnel, waiters and waitresses, and secretaries, or any other natural person whose employment duties require or authorize access to restricted gambling establishment areas. (p) "Gambling establishment," "establishment," or "licensed premises," except as otherwise defined in Section 19812, means one or more rooms where any controlled gambling or activity directly related thereto occurs. (q) "Gambling license" or "state gambling license" means any license issued by the state that authorizes the person named therein to conduct a gambling operation. (r) "Gambling operation" means exposing for play one or more controlled games that are dealt, operated, carried on, conducted, or maintained for commercial gain. (s) "Gross revenue" means the total of all compensation received for conducting any controlled game, and includes interest received in payment for credit extended by an owner licensee to a patron for purposes of gambling, except as provided by regulation. (t) "Hours of operation" means the period during which a gambling establishment is open to conduct the play of controlled games within a 24-hour period. In determining whether there has been expansion of gambling relating to "hours of operation," the department shall consider the hours in the day when the local ordinance permitted the gambling establishment to be open for business on January 1, 1996, and compare the current ordinance and the hours during which the gambling establishment may be open for business. The fact that the ordinance was amended to permit gambling on a day, when gambling was not permitted on January 1, 1996, shall not be considered in determining whether there has been gambling in excess of that permitted by Section 19961. (u) "House" means the gambling enterprise, and any owner, shareholder, partner, key employee, or landlord thereof. (v) "Independent agent," except as provided by regulation, means any person who does either of the following: (1) Collects debt evidenced by a credit instrument. (2) Contracts with an owner licensee, or an affiliate thereof, to provide services consisting of arranging transportation or lodging for guests at a gambling establishment. (w) "Initial license" means the license first issued to a person authorizing that person to commence the activities authorized by that license. (x) "Institutional investor" means any retirement fund administered by a public agency for the exclusive benefit of federal, state, or local public employees, any investment company registered under the Investment Company Act of 1940 (15 U.S.C. Sec. 80a-1 et seq.), any collective investment trust organized by banks under Part Nine of the Rules of the Comptroller of the Currency, any closed-end investment trust, any chartered or licensed life insurance company or property and casualty insurance company, any banking and other chartered or licensed lending institution, any investment advisor registered under the Investment Advisors Act of 1940 (15 U.S.C. Sec. 80b-1 et seq.) acting in that capacity, and other persons as the commission may determine for reasons consistent with the policies of this chapter. (y) "Key employee" means any natural person employed in the operation of a gambling enterprise in a supervisory capacity or empowered to make discretionary decisions that regulate gambling operations, including, without limitation, pit bosses, shift bosses, credit executives, cashier operations supervisors, gambling operation managers and assistant managers, managers or supervisors of security employees, or any other natural person designated as a key employee by the department for reasons consistent with the policies of this chapter. (z) "Key employee license" means a state license authorizing the holder to be employed as a key employee. (aa) "License" means a gambling license, key employee license, or any other license issued by the commission pursuant to this chapter or regulations adopted pursuant to this chapter. (ab) "Licensed gambling establishment" means the gambling premises encompassed by a state gambling license. (ac) "Limited partnership" means a partnership formed by two or more persons having as members one or more general partners and one or more limited partners. (ad) "Limited partnership interest" means the right of a general or limited partner to any of the following: (1) To receive from a limited partnership any of the following: (A) A share of the revenue. (B) Any other compensation by way of income. (C) A return of any or all of his or her contribution to capital of the limited partnership. (2) To exercise any of the rights provided under state law. (ae) "Owner licensee" means an owner of a gambling enterprise who holds a state gambling license. (af) "Person," unless otherwise indicated, includes a natural person, corporation, partnership, limited partnership, trust, joint venture, association, or any other business organization. (ag) "Player" means a patron of a gambling establishment who participates in a controlled game. (ah) "Player-dealer" and "controlled game featuring a player-dealer position" refer to a position in a controlled game, as defined by the approved rules for that game, in which seated player participants are afforded the temporary opportunity to wager against multiple players at the same table, provided that this position is rotated amongst the other seated players in the game. (ai) "Publicly traded racing association" means a corporation licensed to conduct horse racing and simulcast wagering pursuant to Chapter 4 (commencing with Section 19400), as of July 1, 2010. (aj) "Qualified racing association" means a limited liability company licensed to conduct horse racing and simulcast wagering pursuant to Chapter 4 (commencing with Section 19400) that is a wholly owned subsidiary of a corporation whose stock is publicly traded. (ak) "Renewal license" means the license issued to the holder of an initial license that authorizes the license to continue beyond the expiration date of the initial license. (al) "Work permit" means any card, certificate, or permit issued by the commission, or by a county, city, or city and county, whether denominated as a work permit, registration card, or otherwise, authorizing the holder to be employed as a gambling enterprise employee or to serve as an independent agent. A document issued by any governmental authority for any employment other than gambling is not a valid work permit for the purposes of this chapter.   SEC. 2.   SECTION 1.  Section 19843.5 is added to the Business and Professions Code, to read: 19843.5. Jackpot funds held by a gambling establishment, to which players have made contributions, following the deduction of any administrative fee approved by the bureau, shall be considered to be trust funds that are held for the benefit of the players. These jackpot funds are not the property of the gambling establishment, but are held solely for the benefit of the players.  SEC. 3.   SEC. 2.  Section 19867 of the Business and Professions Code is amended to read: 19867. (a) An application for a license or a determination of suitability shall be accompanied by the deposit of a sum of money that, in the judgment of the chief, will be adequate to pay the anticipated costs and charges incurred in the investigation and processing of the application. The chief shall adopt a schedule of costs and charges of investigation for use as guidelines in fixing the amount of any required deposit under this section. The schedule shall distinguish between initial and renewal licenses with respect to costs and charges. (b) During an investigation, the chief may require an applicant to deposit any additional sums as are required by the department to pay final costs and charges of the investigation. (c) Any money received from an applicant in excess of the costs and charges incurred in the investigation or the processing of the application shall be refunded pursuant to regulations adopted by the department. At the conclusion of the investigation, the chief shall provide the applicant a written, itemized accounting of the costs and charges thereby incurred. (d) The department shall establish an enhanced fee schedule for applicants who wish to have their applications processed and background investigations conducted in an expedited manner. The payment of those enhanced fees shall entitle the applicant to have their applications processed in a shorter period of time than normally would be the case.  SEC. 4.   SEC. 3.  Section 19943.5 is added to the Business and Professions Code, to read: 19943.5. If a gambling establishment conducts play of a controlled game that has been approved by the department pursuant to Section 19826, and the controlled game is subsequently found to be unlawful, so long as the game was played in the manner approved, the approval by the department shall be an absolute defense to any criminal, administrative, or civil action that may be brought, provided that the game is played during the time for which it was approved by the department.