BILL NUMBER: AB 2431 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MAY 6, 2002
INTRODUCED BY Committee on Governmental Organization (Horton
(Chair), Strickland (Vice Chair), Canciamilla, Chavez, Harman,
Maldonado, Nation, Reyes, Wesson, Wiggins, and Wright)
FEBRUARY 21, 2002
An act to amend Sections 19804, 19805, and 19807 of, to amend and
renumber Sections 19801.2, 19802, 19809, 19810A, 19811A, 19812A,
19813A, 19814A, 19815, 19815.5A, 19815.8A, 19817A, 19818A, 19820A,
19821A, 19822A, 19823A, 19823.5, 19824A, 19825, 19827, 19828, 19829,
19830A, 19834A, 19834.5A, 19834.6A, 19835A, 19835.5A, 19840, 19840.5,
19841A, 19842A, 19844, 19846, 19847A, 19848A, 19848.5, 19850A,
19851A, 19851.5, 19852A, 19852.1, 19853A, 19853.5, 19854A, 19855,
19856A, 19857A, 19858A, 19858.5, 19858.7A, 19859, 19860A, 19861,
19862A, 19862.5, 19863A, 19864A, 19870, 19871A, 19872A, 19873, 19880,
19881, 19882A, 19883A, 19900A, 19901A, 19902A, 19903A, 19904A,
19905A, 19906A, 19910.4, 19910.5A, 19911A, 19912A, 19913A, 19915A,
19915.5, 19916, 19917, 19918A, 19920A, 19921A, 19922, 19930, 19932,
19933, 19933.5A, 19934, 19940, 19941, 19942A, 19944, 19950, 19950.1,
19950.2, 19950.3, 19951, 19956, 19957, 19958, 19959, 19959.5A,
19960.2A, 19960.4, and 19980 of, to add a heading for Article 10
(commencing with Section 19930) to, Article 11 (commencing with
Section 19940) to, Article 12 (commencing with Section 19950) to,
Article 13 (commencing with Section 19960) to, Article 14 (commencing
with Section 19970) to, Article 15 (commencing with Section 19980),
and Article 16 (commencing with Section 19984) to, Chapter 5 of
Division 8 of, to repeal Sections 19808, 19836A, and 19906A of, and
to repeal the headings of Article 9.5 (commencing with Section
19920A) of, Article 10 (commencing with Section 19930) of, Article 11
(commencing with Section 19940) of, Article 12 (commencing with
Section 19950) of, Article 13 (commencing with Section 19956) of, and
Article 14 (commencing with Section 19959) of, Chapter 5 of Division
8 of, the Business and Professions Code, relating to gambling
control.
LEGISLATIVE COUNSEL'S DIGEST
AB 2431, as amended, Committee on Governmental Organization.
Gambling control.
Existing law, the Gambling Control Act, provides for the licensure
and regulation of various legalized gambling activities and
establishments by the California Gambling Control Commission and the
investigation, and discipline of those activities and establishments
by the Division of Gambling Control within the Department of Justice,
as specified.
This bill would renumber various sections and article headings
within the Gambling Control Act; delete obsolete references to the
former California Gambling Control Board; delete outdated operative
date provisions within the act; and make other technical,
nonsubstantive changes.
The bill would also increase the salary of the chairman of the
commission; authorize additional commission offices in addition to
the principal office; revise the deadline for the payment of license
fees; and redistribute various powers and duties between the
executive officer of the commission, the commission, and the
division.
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 19801.2 of the Business and Professions Code is
amended and renumbered to read:
19802. The Legislature further finds and declares as follows:
Appropriate regulation of banking and percentage games or of
gambling devices consistent with public safety and welfare would
require, at a minimum, all of the following safeguards:
(a) The creation of an adequately funded gambling control
commission with comprehensive powers to establish minimum standards
and technical specifications for gambling equipment and devices.
(b) The creation of an adequately funded law enforcement
capability within state government to inspect, test, and evaluate
gambling equipment and devices and modifications thereto.
(c) An appropriation by the Legislature to sufficiently fund a
full-time commission and law enforcement capability with
responsibilities commensurate with the expanded scope of gambling.
(d) The enactment of necessary regulations setting forth standards
and procedures for the licensing of persons connected with the
manufacture, sale, and distribution of equipment and devices in this
state.
(e) The enactment of standards related to the trustworthiness and
fairness of equipment and devices, upon the commission's
recommendation to the Legislature.
(f) The enactment of statutory provisions governing the
importation, transportation, sale, and disposal of equipment and
devices, upon the commission's recommendation to the Legislature.
(g) The enactment of statutes providing for appropriate inspection
and testing of equipment and devices, upon the commission's
recommendation to the Legislature.
SEC. 2. Section 19802 of the Business and Professions Code is
amended and renumbered to read:
19803. (a) It is the intent of the Legislature, in enacting this
chapter, to provide uniform, minimum standards of regulation of
permissible gambling activities and the operation of lawful gambling
establishments.
(b) Nothing in this chapter shall be construed to preclude any
city, county, or city and county from prohibiting any gambling
activity, from imposing more stringent local controls or conditions
upon gambling than are imposed by this chapter or by the commission,
from inspecting gambling premises to enforce applicable state and
local laws, or from imposing any local tax or license fee, if the
prohibition, control, condition, inspection, tax, or fee is not
inconsistent with this chapter. Nothing in this chapter shall be
construed to affect the responsibility of local law enforcement
agencies to enforce the laws of this state, including this chapter.
SEC. 3. Section 19804 of the Business and Professions Code is
amended to read:
19804. (a) In any action for declaratory or injunctive relief, or
for relief by way of any extraordinary writ, other than an action
initiated pursuant to Section 19932, wherein the construction,
application, or enforcement of this chapter, or any regulation
adopted pursuant thereto, or any order of the division or the
commission issued pursuant thereto, is called into question, a court
shall not grant any preliminary or permanent injunction, or any
peremptory writ of mandate, certiorari, or prohibition, in connection
therewith, except as follows:
(1) Upon proof by clear and convincing evidence that the division
or the commission is abusing or threatens to abuse its discretion.
(2) Upon proof by clear and convincing evidence that the division
or the commission is exceeding or threatens to exceed its
jurisdiction.
(b) No temporary injunction or other provisional order shall issue
to restrain, stay, or otherwise interfere with any action by the
division or the commission, except upon a finding by the court, based
on clear and convincing evidence, that the public interest will not
be prejudiced thereby, and no such order shall
order may be effective for more than 15 calendar days.
(c) This section does not relieve a petitioner's obligation to
exhaust administrative remedies.
(d) In an action for relief of any nature wherein the
construction, application, or enforcement of this chapter, or any
regulation adopted pursuant thereto, or any order of the division or
commission issued pursuant thereto, is called into question, the
party filing the pleading shall furnish a copy thereof to the
division and to the commission. The copy shall be furnished by the
party filing the pleading within 10 business days after filing.
SEC. 4. 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 division
is required or permitted under this chapter.
(c) "Banking game 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 division 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) "Commission" means the California Gambling Control Commission.
(e) "Controlled gambling" means to deal, operate, carry on,
conduct, maintain, or expose for play any controlled game.
(f) "Controlled game" means any controlled game, as defined by
subdivision (e) of Section 337j of the Penal Code.
(g) "Director," when used in connection with a corporation, means
any director of a corporation or any person performing similar
functions with respect to any organization. In any other case,
"director" means the Director of the Division of Gambling Control.
(h) "Division" means the Division of Gambling Control in the
Department of Justice.
(i) "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
subdivision (a) of Section 19859.
(j) "Game" and "gambling game" means any controlled game.
(k) "Gambling" means to deal, operate, carry on, conduct,
maintain, or expose for play any controlled game.
(l) "Gambling enterprise employee" means any natural person
employed in the operation of a gambling enterprise, including,
without limitation, dealers, floormen, 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.
(m) "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.
(n) "Gambling license" or "state gambling license" means any
license issued by the state that authorizes the person named therein
to conduct a gambling operation.
(o) "Gambling operation" means exposing for play one or more
controlled games that are dealt, operated, carried on, conducted, or
maintained for commercial gain.
(p) "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.
(q) "House" means the gambling establishment, and any owner,
shareholder, partner, key employee, or landlord thereof.
(r) "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.
(s) "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.
(t) "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 division for reasons consistent with the policies of this
chapter.
(u) "Key employee license" means a state license authorizing the
holder to be associated with a gambling enterprise as a key employee.
(v) "Licensed gambling establishment" means the gambling premises
encompassed by a state gambling license.
(w) "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.
(x) "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.
(y) "Owner licensee" means an owner of a gambling enterprise who
holds a state gambling license.
(z) "Person," unless otherwise indicated, includes a natural
person, corporation, partnership, limited partnership, trust, joint
venture, association, or any other business organization.
(aa) "Player" means a patron of a gambling establishment who
participates in a controlled game.
(bb) "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.
(cc) "Publicly traded racing association" means a corporation
licensed to conduct horse racing and simulcast wagering pursuant to
Chapter 4 (commencing with Section 19400) whose stock is publicly
traded.
(dd) "Qualified racing association" means a corporation 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.
(ee) "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. 5. Section 19807 of the Business and Professions Code is
amended to read:
19807. Except as otherwise provided in this chapter, whenever the
division or commission is a defendant or respondent in any
proceeding, or when there is any legal challenge to regulations
issued by the commission or division, venue for the proceeding shall
be in the County of Sacramento, the City and County of San Francisco,
the County of Los Angeles, or the County of San Diego.
SEC. 6. Section 19808 of the Business and Professions Code is
repealed.
SEC. 7. Section 19809 of the Business and Professions Code is
amended and renumbered to read:
19810. There is within the Department of Justice the Division of
Gambling Control as provided in Section 15001 of the Government Code.
Except as otherwise provided in this chapter, any power or
authority of the division described in this chapter may be exercised
by the Attorney General or such any
other person as the Attorney General may delegate.
SEC. 8. Section 19810A of the Business and Professions Code is
amended and renumbered to read:
19811. (a) There is in state government the California Gambling
Control Commission, consisting of five members appointed by the
Governor, subject to confirmation by the Senate. The California
Gambling Control Commission shall succeed to all of the powers of the
former California Gambling Control Board.
(b) Jurisdiction, including jurisdiction over operation and
concentration, and supervision over gambling establishments in this
state and over all persons or things having to do with the operations
of gambling establishments is vested in the commission.
SEC. 9. Section 19811A of the Business and Professions Code is
amended and renumbered to read:
19812. (a) Each member of the commission shall be a citizen of
the United States and a resident of this state.
(b) No Member of the Legislature, no person holding any elective
office in state, county, or local government, and no officer or
official of any political party is eligible for appointment to the
commission.
(c) No more than three of the five members of the commission shall
be members of the same political party.
(d) A person is ineligible for appointment to the commission if,
within two years prior to appointment, the person, or any partnership
or corporation in which the person is a principal, was employed by,
retained by, or derived substantial income from, any gambling
establishment. For the purposes of this subdivision, "gambling
establishment" means one or more rooms wherein any gaming within the
meaning of Chapter 10 (commencing with Section 330) of Title 9 of
Part 1 of the Penal Code, or any controlled game within the meaning
of Section 337j of the Penal Code, is conducted, whether or not the
activity occurred in California.
(e) One member of the commission shall be a certified public
accountant with auditing experience, one member shall be an attorney
and a member of the State Bar of California with regulatory law
experience, one member shall have a background in law enforcement and
criminal investigation, one member shall have a background in
business with at least five years of business experience, and one
member shall be from the public at large.
SEC. 10. Section 19812A of the Business and Professions Code is
amended and renumbered to read:
19813. (a) Of the members initially appointed, two shall be
appointed for a term of two years, two shall be appointed for a term
of three years, and one shall be appointed for a term of four years.
After the initial terms, the term of office of each member of the
commission is four years.
(b) The Governor shall appoint the members of the commission,
subject to confirmation by the Senate, and shall designate one member
to serve as chairperson. The initial appointments shall be made
within three months of the operative date of this section.
Thereafter, vacancies shall be filled within 60 days of the date of
the vacancy by the Governor, subject to confirmation by the Senate.
(c) The Governor may remove any member of the commission for
incompetence, neglect of duty, or corruption upon first giving him or
her a copy of the charges and an opportunity to be heard.
SEC. 11. Section 19813A of the Business and Professions Code is
amended and renumbered to read:
19814. (a) During their terms of office, the members of the
commission shall not engage in any other business, vocation, or
employment.
(b) Before entering upon the duties of his or her office, the
director and each member of the commission shall subscribe to the
constitutional oath of office and, in addition, swear that he or she
is not, and during his or her term of office shall not be,
pecuniarily interested in, or doing business with, any person,
business, or organization holding a gambling license.
SEC. 12. Section 19814A of the Business and Professions Code is
amended and renumbered to read:
19815. (a) The director and the members of the
commission shall receive the salary provided for by Section 11553.5
of the Government Code.
(b) The chairperson of the commission shall receive the salary
provided for by Section 11553 of the Government Code.
SEC. 13. Section 19815 of the Business and Professions Code is
amended and renumbered to read:
19816. (a) The commission shall have an executive director
appointed by the commission. A person is ineligible for appointment
as executive director or deputy executive director if, within two
years prior to appointment, the person, or any partnership or
corporation in which the person is a principal, was employed by,
retained by, or derived substantial income from, any gambling
establishment, whether or not a controlled gambling establishment.
(b) The executive director shall receive the annual salary
established by the commission and approved by the Department of
Personnel Administration. The executive director shall be the
commission's executive officer and shall carry out and execute the
duties as specified by law and by the commission.
(c) The commission may appoint other staff and clerical personnel
as necessary to carry out its duties under this chapter.
SEC. 14. Section 19815.5A of the Business and Professions Code is
amended and renumbered to read:
19817. The commission shall establish and appoint a Gaming Policy
Advisory Committee of 10 members. The committee shall be composed
of representatives of controlled gambling licensees and members of
the general public in equal numbers. The executive director shall,
from time to time, convene the committee for the purpose of
discussing matters of controlled gambling regulatory policy and any
other relevant gambling-related issue. The recommendations
concerning gambling policy made by the committee shall be presented
to the commission, but shall be deemed advisory and not binding on
the commission in the performance of its duties or functions.
SEC. 15. Section 19815.8A of the Business and Professions Code is
amended and renumbered to read:
19818. (a) The commission shall investigate the following
matters:
(1) The consequences, benefits, and disadvantages of imposing a
state tax on revenue generated by licensed gambling establishments.
(2) Regulation of advertising for the purpose of limiting exposure
of children to materials promoting gambling.
(b) The commission shall report its findings to the Legislature
and the Governor no later than January 1, 2003.
SEC. 16. Section 19817A of the Business and Professions Code is
amended and renumbered to read:
19819. (a) The commission shall establish and maintain one or
more offices for the transaction of its business, including a
principal office in Sacramento. The commission may hold meetings at
any place within the state when the interests of the public may be
better served.
(b) A public record of every vote shall be maintained at the
commission's principal office.
(c) A majority of the membership of the commission is a quorum of
the commission. The concurring vote of three members of the
commission shall be required for any official action of the
commission or for the exercise of any of the commission's duties,
powers, or functions.
(d) Except as otherwise provided in this chapter, Article 9
(commencing with Section 11120) of Chapter 1 of Part 1 of Division 3
of Title 2 of the Government Code applies to meetings of the
commission. Notwithstanding Section 11125.1 of the Government Code,
documents, which are filed with the commission by the division for
the purpose of evaluating the qualifications of an applicant, are
exempt from disclosure under Chapter 3.5 (commencing with Section
6250) of Division 7 of Title 1 of the Government Code.
SEC. 17. Section 19818A of the Business and Professions Code is
amended and renumbered to read:
19820. The commission may employ not more than eight attorneys.
Nothing in this section shall be deemed to exempt the commission from
the operation of Section 11040, 11042, or 11043 of the Government
Code.
SEC. 18. Section 19820A of the Business and Professions Code is
amended and renumbered to read:
19821. (a) The commission shall cause to be made and kept a
record of all proceedings at regular and special meetings of the
commission. These records shall be open to public inspection.
(b) The commission shall maintain a file of all applications for
licenses under this chapter, together with a record of all actions
taken with respect to those applications. The file and record shall
be open to public inspection.
(c) The division and commission may maintain any other files and
records as they deem appropriate. Except as provided in this
chapter, the records of the division and commission are exempt from
disclosure from Chapter 3.5 (commencing with Section 6250) of
Division 7 of Title 1 of the Government Code.
(d) Except as necessary for the administration of this chapter, no
commissioner and no official, employee, or agent of the commission
or the division, having obtained access to confidential records or
information in the performance of duties pursuant to this chapter,
shall knowingly disclose or furnish the records or information, or
any part thereof, to any person who is not authorized by law to
receive it. A violation of this subdivision is a misdemeanor.
(e) Notwithstanding subdivision (k) of Section 1798.24 of the
Civil Code, a court shall not compel disclosure of personal
information in the possession of the division or the commission to
any person in any civil proceeding wherein the division or the
commission is not a party, except for good cause and upon a showing
that the information cannot otherwise be obtained. Nothing herein
shall be construed to authorize the disclosure of personal
information that would otherwise be exempt from disclosure.
SEC. 19. Section 19821A of the Business and Professions Code is
amended and renumbered to read:
19822. (a) All files, records, reports, and other information in
possession of any state or local governmental agency that are
relevant to an investigation by the division conducted pursuant to
this chapter shall be made available to the division as requested.
However, any tax information received from a governmental agency
shall be used solely for effectuating the purposes of this chapter.
To the extent that the files, records, reports, or information
described in this section are confidential or otherwise privileged
from disclosure under any law or exercise of discretion, they shall
not lose that confidential or privileged status for having been
disclosed to the division.
(b) All files, records, reports, and other information pertaining
to gambling matters in the possession of the division shall be open
at all times to inspection by the members of the commission.
SEC. 20. Section 19822A of the Business and Professions Code is
amended and renumbered to read:
19823. (a) The responsibilities of the commission include,
without limitation, all of the following:
(1) Assuring that licenses, approvals, and permits are not issued
to, or held by, unqualified or disqualified persons, or by persons
whose operations are conducted in a manner that is inimical to the
public health, safety, or welfare.
(2) Assuring that there is no material involvement, directly or
indirectly, with a licensed gambling operation, or the ownership or
management thereof, by unqualified or disqualified persons, or by
persons whose operations are conducted in a manner that is inimical
to the public health, safety, or welfare.
(b) For the purposes of this section, "unqualified person" means a
person who is found to be unqualified pursuant to the criteria set
forth in Section 19857, and "disqualified person" means a person who
is found to be disqualified pursuant to the criteria set forth in
Section 19859.
SEC. 21. Section 19823A of the Business and Professions Code is
amended and renumbered to read:
19824. The commission shall have all powers necessary and proper
to enable it fully and effectually to carry out the policies and
purposes of this chapter, including, without limitation, the power to
do all of the following:
(a) Require any person to apply for a license, permit,
registration, or approval as specified in this chapter, or
regulations adopted pursuant to this chapter.
(b) For any cause deemed reasonable by the commission, deny any
application for a license, permit, or approval provided for in this
chapter or regulations adopted pursuant to this chapter, limit,
condition, or restrict any license, permit, or approval, or impose
any fine upon any person licensed or approved.
(c) Approve or disapprove transactions, events, and processes as
provided in this chapter.
(d) Take actions deemed
to be reasonable to ensure that no ineligible, unqualified,
disqualified, or unsuitable persons are associated with controlled
gambling activities.
(e) Take actions deemed to be reasonable to ensure that gambling
activities take place only in suitable locations.
(f) Grant temporary licenses, permits, or approvals on appropriate
terms and conditions.
(g) Institute a civil action in any superior court against any
person subject to this chapter to restrain a violation of this
chapter. An action brought against a person pursuant to this section
does not preclude a criminal action or administrative proceeding
against that person by the Attorney General or any district attorney
or city attorney.
(h) Issue subpoenas to compel attendance of witnesses and
production of documents and other material things at a meeting or
hearing of the commission or its committees, including advisory
committees.
SEC. 22. Section 19823.5 of the Business and Professions Code is
amended and renumbered to read:
19825. The commission may require that any matter that the
commission is authorized or required to consider in a hearing or
meeting of an adjudicative nature regarding the denial, suspension,
or revocation of a license, permit, or a finding of suitability, be
heard and determined in accordance with Chapter 5 (commencing with
Section 11500) of Part 1 of Division 3 of Title 2 of the Government
Code.
SEC. 23. Section 19824A of the Business and Professions Code is
amended and renumbered to read:
19826. The division shall have all of the following
responsibilities:
(a) To investigate the qualifications of applicants before any
license, permit, or other approval is issued, and to investigate any
request to the commission for any approval that may be required
pursuant to this chapter. The division may recommend the denial or
the limitation, conditioning, or restriction of any license, permit,
or other approval.
(b) To monitor the conduct of all licensees and other persons
having a material involvement, directly or indirectly, with a
gambling operation or its holding company, for the purpose of
ensuring that licenses are not issued or held by, and that there is
no direct or indirect material involvement with, a gambling operation
or holding company by ineligible, unqualified, disqualified, or
unsuitable persons, or persons whose operations are conducted in a
manner that is inimical to the public health, safety, or welfare.
(c) To investigate suspected violations of this chapter or laws of
this state relating to gambling, including any activity prohibited
by Chapter 9 (commencing with Section 319) or Chapter 10 (commencing
with Section 330) of Title 9 of Part 1 of the Penal Code.
(d) To investigate complaints that are lodged against licensees,
or other persons associated with a gambling operation, by members of
the public.
(e) To initiate, where appropriate, disciplinary actions as
provided in this chapter. In connection with any disciplinary
action, the division may seek restriction, limitation, suspension, or
revocation of any license or approval, or the imposition of any fine
upon any person licensed or approved.
(f) To adopt regulations reasonably related to its functions and
duties as specified in this chapter.
(g) Approve the play of any controlled game, including placing
restrictions and limitations on how a controlled game may be played.
SEC. 24. Section 19825 of the Business and Professions Code is
amended and renumbered to read:
19827. (a) The division has all powers necessary and proper to
enable it to carry out fully and effectually the duties and
responsibilities of the division specified in this chapter. The
investigatory powers of the division include, but are not limited to,
all of the following:
(1) Upon approval of the director, and without notice or warrant,
the division may take any of the following actions:
(A) Visit, investigate, and place expert accountants, technicians,
and any other person, as it may deem necessary, in all areas of the
premises wherein controlled gambling is conducted for the purpose of
determining compliance with the rules and regulations adopted
pursuant to this chapter.
(B) Visit, inspect, and examine all premises where gambling
equipment is manufactured, sold, or distributed.
(C) Inspect all equipment and supplies in any gambling
establishment or in any premises where gambling equipment is
manufactured, sold, or distributed.
(D) Summarily seize, remove, and impound any equipment, supplies,
documents, or records from any licensed premises for the purpose of
examination and inspection. However, upon reasonable demand by the
licensee or the licensee's authorized representative, a copy of all
documents and records seized shall be made and left on the premises.
(E) Demand access to, and inspect, examine, photocopy, and audit
all papers, books, and records of an owner licensee on the gambling
premises in the presence of the licensee or his or her agent.
(2) Except as provided in paragraph (1), upon obtaining an
inspection warrant pursuant to Section 1822.60 of the Code of Civil
Procedure, the division may inspect and seize for inspection,
examination, or photocopying any property possessed, controlled,
bailed, or otherwise held by any applicant, licensee, or any
intermediary company, or holding company.
(3) The division may investigate, for purposes of prosecution, any
suspected criminal violation of this chapter. However, nothing in
this paragraph limits the powers conferred by any other provision of
law on agents of the division who are peace officers.
(4) The division may do both of the following:
(A) Issue subpoenas to require the attendance and testimony of
witnesses and the production of books, records, documents, and
physical materials.
(B) Administer oaths, examine witnesses under oath, take evidence,
and take depositions and affidavits or declarations.
Notwithstanding Section 11189 of the Government Code, the division,
without leave of court, may take the deposition of any applicant or
any licensee. Sections 11185 and 11191 of the Government Code do not
apply to a witness who is an applicant or a licensee.
(b) (1) Subdivision (a) shall not be construed to limit
warrantless inspections except as required by the California
Constitution or the United States Constitution.
(2) Subdivision (a) shall not be construed to prevent entries and
administrative inspections, including seizures of property, without a
warrant in the following circumstances:
(A) With the consent of the owner, operator, or agent in charge of
the premises.
(B) In situations presenting imminent danger to health and safety.
(C) In situations involving inspection of conveyances where there
is reasonable cause to believe that the mobility of the conveyance
makes it impractical to obtain a warrant, or in any other exceptional
or emergency circumstance where time or opportunity to apply for a
warrant is lacking.
(D) In accordance with this chapter.
(E) In all other situations where a warrant is not
constitutionally required.
SEC. 25. Section 19827 of the Business and Professions Code is
amended and renumbered to read:
19828. (a) Without limiting any privilege that is otherwise
available under law, any communication or publication from, or
concerning, an applicant, licensee, or registrant, in oral, written,
or any other form, is absolutely privileged and so shall not form a
basis for imposing liability for defamation or constitute a ground
for recovery in any civil action, under any of the following
circumstances:
(1) It was made or published by an agent or employee of the
division or commission in the proper discharge of official duties or
in the course of any proceeding under this chapter.
(2) It was required to be made or published to the division or
commission, or any of their agents or employees, by law, regulation,
or subpoena of the division or the commission.
(3) It was, in good faith, made or published to the division or
the commission for the purpose of causing, assisting, or aiding an
investigation conducted pursuant to this chapter.
(b) If any document or communication provided to the division or
the commission contains any information that is privileged pursuant
to Division 8 (commencing with Section 900) of the Evidence Code, or
any other provision of law, that privilege is not waived or lost
because the document or communication is disclosed to the division or
the commission or to any of their agents or employees.
(c) The division, the commission, and their agents and employees
shall not release or disclose any information, documents, or
communications provided by an applicant, licensee, or other person,
that are privileged pursuant to Division 8 (commencing with Section
900) of the Evidence Code, or any other provision of law, without the
prior written consent of the holder of the privilege, or pursuant to
lawful court order after timely notice of the proceedings has been
given to the holder of the privilege. An application to a court for
an order requiring the division or the commission to release any
information declared by law to be confidential shall be made only
upon motion made in writing on not less than 10 business days' notice
to the division or the commission, and to all persons who may be
affected by the entry of the order.
SEC. 26. Section 19828 of the Business and Professions Code is
amended and renumbered to read:
19829. Every district attorney, and every state and local law
enforcement agency, shall furnish to the division, on forms prepared
by the division, all information obtained during the course of any
substantial investigation or prosecution of any person, as determined
by the division, if it appears that a violation of any law related
to gambling has occurred, including any violation of Chapter 9
(commencing with Section 319) or Chapter 10 (commencing with Section
330) of Title 9 of Part 1 of the Penal Code.
SEC. 27. Section 19829 of the Business and Professions Code is
amended and renumbered to read:
19830. There is an investigative account within the Gambling
Control Fund. All funds received for the purpose of paying expenses
incurred by the division for investigation of an application for a
license or approval under this chapter shall be deposited in the
account. Expenses may be advanced from the investigative account to
the division by the director.
SEC. 28. Section 19830A of the Business and Professions Code is
amended and renumbered to read:
19840. The commission may adopt regulations for the
administration and enforcement of this chapter. To the extent
appropriate, regulations of the commission and the division shall
take into consideration the operational differences of large and
small establishments.
SEC. 29. Section 19834A of the Business and Professions Code is
amended and renumbered to read:
19841. The regulations adopted by the commission shall do all of
the following:
(a) With respect to applications, registrations, investigations,
and fees, the regulations shall include, but not be limited to,
provisions that do all of the following:
(1) Prescribe the method and form of application and registration.
(2) Prescribe the information to be furnished by any applicant,
licensee, or registrant concerning, as appropriate, the person's
personal history, habits, character, associates, criminal record,
business activities, organizational structure, and financial affairs,
past or present.
(3) Prescribe the information to be furnished by an owner licensee
relating to the licensee's gambling employees.
(4) Require fingerprinting or other methods of identification of
an applicant, licensee, or employee of a licensee.
(5) Prescribe the manner and method of collection and payment of
fees and issuance of licenses.
(b) Provide for the approval of game rules and equipment by the
division to ensure fairness to the public and compliance with state
laws.
(c) Implement the provisions of this chapter relating to licensing
and other approvals.
(d) Require owner licensees to report and keep records of
transactions, including transactions as determined by the division,
involving cash or credit. The regulations may include, without
limitation, regulations requiring owner licensees to file with the
division reports similar to those required by Sections 5313 and 5314
of Title 31 of the United States Code, and by Sections 103.22 and
103.23 of Title 31 of the Code of Federal Regulations, and any
successor provisions thereto, from financial institutions, as defined
in Section 5312 of Title 31 of the United States Code and Section
103.11 of Title 31 of the Code of Federal Regulations, and any
successor provisions.
(e) Provide for the receipt of protests and written comments on an
application by public agencies, public officials, local governing
bodies, or residents of the location of the gambling establishment or
future gambling establishment.
(f) Provide for the disapproval of advertising by licensed
gambling establishments that is determined by the commission
division to be deceptive to the public.
Regulations adopted by the commission for advertising by licensed
gambling establishments shall be consistent with the advertising
regulations adopted by the California Horse Racing Board and the
Lottery Commission. Advertisement that appeals to children or
adolescents or that offers gambling as a means of becoming wealthy is
presumptively deceptive.
(g) Govern all of the following:
(1) The extension of credit.
(2) The cashing, deposit, and redemption of checks or other
negotiable instruments.
(3) The verification of identification in monetary transactions.
(h) Prescribe minimum procedures for adoption by owner licensees
to exercise effective control over their internal fiscal and gambling
affairs, which shall include, but not be limited to, provisions for
all of the following:
(1) The safeguarding of assets and revenues, including the
recording of cash and evidences of indebtedness.
(2) Prescribing the manner in which compensation from games and
gross revenue shall be computed and reported by an owner licensee.
(3) The provision of reliable records, accounts, and reports of
transactions, operations, and events, including reports to the
division.
(i) Provide for the adoption and use of internal audits, whether
by qualified internal auditors or by certified public accountants.
As used in this subdivision, "internal audit" means a type of control
that operates through the testing and evaluation of other controls
and that is also directed toward observing proper compliance with the
minimum standards of control prescribed in subdivision (h).
(j) Require periodic financial reports from each owner licensee.
(k) Specify standard forms for reporting financial conditions,
results of operations, and other relevant financial information.
(l) Formulate a uniform code of accounts and accounting
classifications to ensure consistency, comparability, and effective
disclosure of financial information.
(m) Prescribe intervals at which the information in subdivisions
(j) and (k) shall be furnished to the division.
(n) Require audits to be conducted, in accordance with generally
accepted auditing standards, of the financial statements of all owner
licensees whose annual gross revenues equal or exceed a specified
sum. However, nothing herein shall be construed to limit the
division's authority to require audits of any owner licensee.
Audits, compilations, and reviews provided for in this subdivision
shall be made by independent certified public accountants licensed to
practice in this state.
(o) Restrict, limit, or otherwise regulate any activity that is
related to the conduct of controlled gambling, consistent with the
purposes of this chapter.
(p) Define and limit the area, games, hours of operation, number
of tables, wagering limits, and equipment permitted, or the method of
operation of games and equipment, if the commission , upon the
recommendation of the division or otherwise, determines that
local regulation of these subjects is insufficient to protect the
health, safety, or welfare of residents in geographical areas
proximate to a gambling establishment.
(q) Prohibit gambling establishments from cashing checks drawn
against any federal, state, or county fund, including, but not
limited to, social security, unemployment insurance, disability
payments, or public assistance payments. However, a gambling
establishment shall not be prohibited from cashing any payroll checks
or checks for the delivery of goods or services that are drawn
against a federal, state, or county fund.
Gambling establishments shall send the division copies of all
dishonored or uncollectible checks at the end of each quarter.
(r) Provide for standards, specifications, and procedures
governing the manufacture, distribution, including the sale and
leasing, inspection, testing, location, operation, repair, and
storage of gambling equipment, and for the licensing of persons
engaged in the business of manufacturing, distributing, including the
sale and leasing, inspection, testing, repair, and storage of
gambling equipment.
SEC. 30. Section 19834.5A of the Business and Professions Code is
amended and renumbered to read:
19842. (a) The commission shall not prohibit, on a statewide
basis, the play of any game or restrict the manner in which any game
is played, unless the commission, in a proceeding pursuant to this
article, finds that the game, or the manner in which the game is
played, violates a law of the United States, a law of this state, or
a local ordinance.
(b) Nothing in this section shall be construed to limit the powers
of the commission in a proceeding against a licensee pursuant to
Article 10 (commencing with Section 19930).
(c) No regulation prohibiting a game or the manner in which a game
is played shall be deemed to be an emergency regulation.
SEC. 31. Section 19834.6A of the Business and Professions Code is
amended and renumbered to read:
19843. The commission shall not prohibit, on a statewide basis,
the placing of a wager on a controlled game by a person at a gaming
table, if the person is present at the table and actively
participating in the hand with a single-seated player upon whose hand
the wagers are placed.
SEC. 32. Section 19835A of the Business and Professions Code is
amended and renumbered to read:
19844. (a) The commission shall, by regulation, provide for the
formulation of a list of persons who are to be excluded or ejected
from any gambling establishment. The list may include any person
whose presence in the establishment is determined by the commission
to pose a threat to the interests of this state or to controlled
gambling, or both.
(b) In making the determination described in subdivision (a), the
commission may consider, but is not limited to considering, any of
the following:
(1) Prior conviction of a crime that is a felony in this state or
under the laws of the United States, a crime involving moral
turpitude, or a violation of the gambling laws of this or any other
state.
(2) The violation of, or conspiracy to violate, the provisions of
this chapter relating to the failure to disclose an interest in a
gambling establishment for which the person is required to obtain a
license, or the willful evasion of fees.
(3) A notorious or unsavory reputation that would adversely affect
public confidence and trust that the gambling industry is free from
criminal or corruptive elements.
(4) An order of exclusion or ejection from a racing enclosure
issued by the California Horse Racing Board.
(c) The commission shall distribute the list of persons who are to
be excluded or ejected from any gambling establishment to all owner
licensees and shall provide notice to any persons included on the
list.
(d) The commission shall adopt regulations establishing procedures
for hearing of petitions by persons who are ejected or excluded from
licensed premises pursuant to this section or pursuant to Section
19845.
(e) The commission may revoke, limit, condition, or suspend the
license of an owner, or fine an owner licensee, if that licensee
knowingly fails to exclude or eject from the gambling establishment
of that licensee any person included on the list of persons to be
excluded or ejected.
SEC. 33. Section 19835.5A of the Business and Professions Code is
amended and renumbered to read:
19845. (a) A licensee may remove from his or her licensed
premises any person who, while on the premises:
(1) Is a disorderly person, as defined by Section 647 of the Penal
Code.
(2) Interferes with a lawful gambling operation.
(3) Solicits or engages in any act of prostitution.
(4) Begs, is boisterous, or is otherwise offensive to other
persons.
(5) Commits any public offense.
(6) Is intoxicated.
(7) Is a person who the commission, pursuant to regulation, has
determined should be excluded from licensed gambling establishments
in the public interest.
(b) Nothing in this section shall be deemed, expressly or
impliedly, to preclude a licensee from exercising the right to deny
access to or to remove any person from its premises or property for
any reason the licensee deems appropriate.
SEC. 34. Section 19836A of the Business and Professions Code is
repealed.
SEC. 35. Section 19840 of the Business and Professions Code is
amended and renumbered to read:
19850. Every person who, either as owner, lessee, or employee,
whether for hire or not, either solely or in conjunction with others,
deals, operates, carries on, conducts, maintains, or exposes for
play any controlled game in this state, or who receives, directly or
indirectly, any compensation or reward, or any percentage or share of
the money or property played, for keeping, running, or carrying on
any controlled game in this state, shall apply for and obtain from
the commission, and shall thereafter maintain, a valid state gambling
license, key employee license, or work permit, as specified in this
chapter. In any criminal prosecution for violation of this section,
the punishment shall be as provided in Section 337j of the Penal
Code.
SEC. 36. Section 19840.5 of the Business and Professions Code is
amended and renumbered to read:
19851. (a) The owner of a gambling enterprise shall apply for and
obtain a state gambling license.
(b) Other persons who also obtain a state gambling license, or key
employee license, as required by this chapter, shall not receive a
separate license certificate, but the license of every such person
shall be endorsed on the license that is issued to the owner of the
gambling enterprise.
SEC. 37. Section 19841A of the Business and Professions Code is
amended and renumbered to read:
19852. An owner of a gambling enterprise that is not a natural
person shall not be eligible for a state gambling license unless each
of the following persons individually applies for and obtains a
state gambling license:
(a) If the owner is a corporation, then each officer, director,
and shareholder, other than a holding or intermediary company, of the
owner. The foregoing does not apply to an owner that is either a
publicly traded racing association or a qualified racing association.
(b) If the owner is a publicly traded racing association, then
each officer, director, and owner, other than an institutional
investor, of five percent or more of the outstanding shares of the
publicly traded corporation.
(c) If the owner is a qualified racing association, then each
officer, director, and shareholder, other than an institutional
investor, of the subsidiary corporation and any owner, other than an
institutional investor, of five percent or more of the outstanding
shares of the publicly traded corporation.
(d) If the owner is a partnership, then every general and limited
partner of, and every trustee or person, other than a holding or
intermediary company, having or acquiring a direct or beneficial
interest in, that partnership owner.
(e) If the owner is a trust, then the trustee and, in the
discretion of the commission, any beneficiary and the trustor of the
trust.
(f) If the owner is a business organization other than a
corporation, partnership, or trust, then all those persons as the
commission may require, consistent with this chapter.
(g) Each person who receives, or is to receive, any percentage
share of the revenue earned by the owner from gambling activities.
(h) Every employee, agent, guardian, personal representative,
lender, or holder of indebtedness of the owner who, in the judgment
of the commission, has the power to exercise a significant influence
over the gambling operation.
SEC. 38. Section 19842A of the Business and Professions Code is
amended and renumbered to read:
19853. (a) The commission, by regulation or order, may require
that the following persons register with the commission, apply for a
finding of suitability as defined in subdivision (i) of 19805, or
apply for a gambling license:
(1) Any person who furnishes any services or any property to a
gambling enterprise under any arrangement whereby that person
receives payments based on earnings, profits, or receipts from
controlled gambling.
(2) Any person who owns an interest in the premises of a licensed
gambling establishment or in real property used by a licensed
gambling establishment.
(3) Any person who does business on the premises of a licensed
gambling establishment.
(4) Any person who is an independent agent of, or does business
with, a gambling enterprise as a ticket purveyor, a tour operator,
the operator of a bus program, or the operator of any other type of
travel program or promotion operated with respect to a licensed
gambling establishment.
(5) Any person who provides any goods or services to a gambling
enterprise for compensation that the commission finds to be grossly
disproportionate to the value of the goods or services provided.
(6) Every person who, in the judgment of the commission, has the
power to exercise a significant influence over the gambling
operation.
(b) If a publicly traded corporation is engaged in activities
described in paragraphs (2), (3), and (4) of subdivision (a), as
determined by an investigation of the division or otherwise,
the commission may require the corporation and the following other
persons to apply for and obtain
a license or finding of suitability:
(1) Any officer or director.
(2) Any owner, other than an institutional investor, of five
percent or more of the outstanding shares of the corporation.
SEC. 39. Section 19844 of the Business and Professions Code is
amended and renumbered to read:
19854. (a) Every key employee shall apply for and obtain a key
employee license.
(b) Licenses issued to key employees shall be for specified
positions only, and those positions shall be enumerated in the
endorsement described in subdivision (b) of Section 19851.
(c) No person may be issued a key employee license unless the
person would qualify for a state gambling license.
(d) No person may be issued a key employee license unless the
person is a resident of this state.
SEC. 40. Section 19846 of the Business and Professions Code is
amended and renumbered to read:
19855. Except as otherwise provided by statute or regulation,
every person who, by statute or regulation, is required to hold a
state license shall obtain the license prior to engaging in the
activity or occupying the position with respect to which the license
is required. Every person who, by order of the commission, is
required to apply for a gambling license or a finding of suitability
shall file the application within 30 calendar days after receipt of
the order.
SEC. 41. Section 19847A of the Business and Professions Code is
amended and renumbered to read:
19856. (a) Any person who the commission determines is qualified
to receive a state license, having due consideration for the proper
protection of the health, safety, and general welfare of the
residents of the State of California and the declared policy of this
state, may be issued a license. The burden of proving his or her
qualifications to receive any license is on the applicant.
(b) An application to receive a license constitutes a request for
a determination of the applicant's general character, integrity, and
ability to participate in, engage in, or be associated with,
controlled gambling.
(c) In reviewing an application for any license, the commission
shall consider whether issuance of the license is inimical to public
health, safety, or welfare, and whether issuance of the license will
undermine public trust that the gambling operations with respect to
which the license would be issued are free from criminal and
dishonest elements and would be conducted honestly.
SEC. 42. Section 19848A of the Business and Professions Code is
amended and renumbered to read:
19857. No gambling license shall be issued unless, based on all
of the information and documents submitted, the commission is
satisfied that the applicant is all of the following:
(a) A person of good character, honesty, and integrity.
(b) A person whose prior activities, criminal record, if any,
reputation, habits, and associations do not pose a threat to the
public interest of this state, or to the effective regulation and
control of controlled gambling, or create or enhance the dangers of
unsuitable, unfair, or illegal practices, methods, and activities in
the conduct of controlled gambling or in the carrying on of the
business and financial arrangements incidental thereto.
(c) A person that is in all other respects qualified to be
licensed as provided in this chapter.
SEC. 43. Section 19848.5 of the Business and Professions Code is
amended and renumbered to read:
19858. (a) Except as provided in subdivision (b), a person shall
be deemed to be unsuitable to hold a state gambling license to own a
gambling establishment if the person, or any partner, officer,
director, or shareholder of the person, has any financial interest in
any business or organization that is engaged in any form of gambling
prohibited by Section 330 of the Penal Code, whether within or
without this state.
(b) Subdivision (a) does not apply to a publicly traded racing
association, a qualified racing association, or any person who is
licensed pursuant to subdivision (b) or (c) of Section 19852.
SEC. 44. Section 19850A of the Business and Professions Code is
amended and renumbered to read:
19859. The commission shall deny a license to any applicant who
is disqualified for any of the following reasons:
(a) Failure of the applicant to clearly establish eligibility and
qualification in accordance with this chapter.
(b) Failure of the applicant to provide information,
documentation, and assurances required by this chapter or requested
by the director, or failure of the applicant to reveal any fact
material to qualification, or the supplying of information that is
untrue or misleading as to a material fact pertaining to the
qualification criteria.
(c) Conviction of a felony, including a conviction by a federal
court or a court in another state for a crime that would constitute a
felony if committed in California.
(d) Conviction of the applicant for any misdemeanor involving
dishonesty or moral turpitude within the 10-year period immediately
preceding the submission of the application, unless the applicant has
been granted relief pursuant to Section 1203.4, 1203.4a, or 1203.45
of the Penal Code; provided, however, that the granting of relief
pursuant to Section 1203.4, 1203.4a, or 1203.45 of the Penal Code
shall not constitute a limitation on the discretion of the commission
under Section 19856 or affect the applicant's burden under Section
19857.
(e) Association of the applicant with criminal profiteering
activity or organized crime, as defined by Section 186.2 of the Penal
Code.
(f) Contumacious defiance by the applicant of any legislative
investigatory body, or other official investigatory body of any state
or of the United States, when that body is engaged in the
investigation of crimes relating to gambling; official corruption
related to gambling activities; or criminal profiteering activity or
organized crime, as defined by Section 186.2 of the Penal Code.
(g) The applicant is less than 21 years of age.
SEC. 45. Section 19851A of the Business and Professions Code is
amended and renumbered to read:
19860. (a) The commission shall deny a gambling license with
respect to any gambling establishment that is located in a city,
county, or city and county that does not have an ordinance governing
all of the following matters:
(1) The hours of operation of gambling establishments.
(2) Patron security and safety in and around the gambling
establishments.
(3) The location of gambling establishments.
(4) Wagering limits in gambling establishments.
(5) The number of gambling tables in each gambling establishment
and in the jurisdiction.
(b) In any city, county, or city and county in which the local
gambling ordinance does not govern the matters specified in
subdivision (a), any amendment to the ordinance to govern those
matters is not subject to Section 19961, provided that a local
election is required to add these matters, and the ordinance only
provides for private clubs by vote of the people, and that the
ordinance is amended to contain these matters on or before July 1,
2000.
SEC. 46. Section 19851.5 of the Business and Professions Code is
amended and renumbered to read:
19861. Notwithstanding subdivision (i) of Section 19801, the
commission shall not deny a license to a gambling establishment
solely because it is not open to the public, provided that all of the
following are true: (a) the gambling establishment is situated in a
local jurisdiction that has an ordinance allowing only private
clubs, and the gambling establishment was in operation as a private
club under that ordinance on December 31, 1997, and met all
applicable state and local gaming registration requirements; (b) the
gambling establishment consists of no more than five gaming tables;
(c) videotaped recordings of the entrance to the gambling room or
rooms and all tables situated therein are made during all hours of
operation by means of closed circuit television cameras, and these
tapes are retained for a period of 30 days and are made available for
review by the division or commission upon request; and (d) the
gambling establishment is open to members of the private club and
their spouses in accordance with membership criteria in effect as of
December 31, 1997.
A gambling establishment meeting these criteria, in addition to
the other requirements of this chapter, may be licensed to operate as
a private club gambling establishment until November 30, 2003, or
until the ownership or operation of the gambling establishment
changes from the ownership or operation as of January 1, 1998,
whichever occurs first. Operation of the gambling establishments
after this date shall only be permitted if the local jurisdiction
approves an ordinance, pursuant to Sections 19961 and 19962,
authorizing the operation of gambling establishments that are open to
the public. The commission shall adopt regulations implementing
this section. Prior to the commission's issuance of a license to a
private club, the division shall ensure that the ownership of the
gambling establishment has remained constant since January 1, 1998,
and the operation of the gambling establishment has not been leased
to any third party.
SEC. 47. Section 19852A of the Business and Professions Code is
amended and renumbered to read:
19862. (a) In addition to other grounds stated in this chapter,
the commission may deny a gambling license for any of the following
reasons:
(1) If issuance of the license with respect to the proposed
gambling establishment or expansion would tend unduly to create law
enforcement problems in a city, county, or city and county other than
the city, county, or city and county that has regulatory
jurisdiction over the applicant's premises.
(2) If an applicant fails to conduct an economic feasibility study
that demonstrates to the satisfaction of the commission that the
proposed gambling establishment will be economically viable, and that
the owners have sufficient resources to make the gambling
establishment successful. The commission shall hold a public hearing
for the purpose of reviewing the feasibility study. All papers,
studies, projections, pro formas, and other materials filed with the
commission pursuant to an economic feasibility study are public
records and shall be disclosed to all interested parties.
(3) If issuance of the license is sought in respect to a new
gambling establishment, or the expansion of an existing gambling
establishment, that is to be located or is located near an existing
school, an existing building used primarily as a place of worship, an
existing playground or other area of juvenile congregation, an
existing hospital, convalescence facility, or near another similarly
unsuitable area, as determined by regulation of the commission, which
is located in a city, county, or city and county other than the
city, county, or city and county that has regulatory jurisdiction
over the applicant's gambling premises.
(b) For the purposes of this section, "expansion" means an
increase of 25 percent or more in the number of authorized gambling
tables in a gambling establishment, based on the number of gambling
tables for which a license was initially issued pursuant to this
chapter.
SEC. 48. Section 19852.1 of the Business and Professions Code is
amended and renumbered to read:
19863. A publicly traded racing association or a qualified racing
association shall be allowed to operate only one gaming
establishment, and the gaming establishment shall be located on the
same premises as the entity's racetrack.
SEC. 49. Section 19853A of the Business and Professions Code is
amended and renumbered to read:
19864. (a) Application for a state license or other commission
action shall be made on forms furnished by the commission.
(b) The application for a gambling license shall include all of
the following:
(1) The name of the proposed licensee.
(2) The name and location of the proposed gambling establishment.
(3) The gambling games proposed to be conducted.
(4) The names of all persons directly or indirectly interested in
the business and the nature of the interest.
(5) A description of the proposed gambling establishment and
operation.
(6) Any other information and details the commission may require
in order to discharge its duty properly.
SEC. 50. Section 19853.5 of the Business and Professions Code is
amended and renumbered to read:
19865. The division shall furnish to the applicant supplemental
forms, which the applicant shall complete and file with the division.
These supplemental forms shall require, but shall not be limited to
requiring, complete information and details with respect to the
applicant's personal history, habits, character, criminal record,
business activities, financial affairs, and business associates,
covering at least a 10-year period immediately preceding the date of
filing of the application. Each applicant shall submit two sets of
fingerprints, using "live scan" or other prevailing, accepted
technology, or on forms provided by the division. The division may
submit one fingerprint card to the United States Federal Bureau of
Investigation.
SEC. 51. Section 19854A of the Business and Professions Code is
amended and renumbered to read:
19866. An applicant for licensing or for any approval or consent
required by this chapter, shall make full and true disclosure of all
information to the division and the commission as necessary to carry
out the policies of this state relating to licensing, registration,
and control of gambling.
SEC. 52. Section 19855 of the Business and Professions Code is
amended and renumbered 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 director, will be adequate to pay the
anticipated costs and charges incurred in the investigation and
processing of the application. The director 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.
(b) During an investigation, the director may require an applicant
to deposit any additional sums as are required by the division 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
division. At the conclusion of the investigation, the director shall
provide the applicant a written, itemized accounting of the costs
and charges thereby incurred.
SEC. 53. Section 19856A of the Business and Professions Code is
amended and renumbered to read:
19868. (a) Within a reasonable time after the filing of an
application and any supplemental information the division may
require, and the deposit of any fee required pursuant to Section
19867, the division shall commence its investigation of the applicant
and, for that purpose, may conduct any proceedings it deems
necessary. To the extent practicable, all applications shall be
acted upon within 180 calendar days of the date of submission of a
completed application. If an investigation has not been concluded
within 180 days after the date of submission of a completed
application, the division shall inform the applicant in writing of
the status of the investigation and shall also provide the applicant
with an estimated date on which the investigation may reasonably be
expected to be concluded.
(b) If denial of the application is recommended, the director
shall prepare and file with the commission his or her written reasons
upon which the recommendation is based.
(1) Prior to filing his or her recommendation with the commission,
the director shall meet with the applicant, or the applicant's duly
authorized representative, and inform him or her generally of the
basis for any proposed recommendation that the application be denied,
restricted, or conditioned.
(2) Not less than 10 business days prior to the meeting of the
commission at which the application is to be considered, the division
shall deliver to the applicant a summary of the director's final
report and recommendation.
(3) This section neither requires the division to divulge to the
applicant any confidential information received from any law
enforcement agency or any information received from any person with
assurances that the information would be maintained confidential, and
nor to divulge any information that might reveal the identity of any
informer or jeopardize the safety of any person.
(c) A recommendation of denial of an application shall be without
prejudice to a new and different application filed in accordance with
applicable regulations.
SEC. 54. Section 19857A of the Business and Professions Code is
amended and renumbered to read:
19869. A request for withdrawal of any application may be made at
any time prior to final action upon the application by the director
by the filing of a written request to withdraw with the commission.
For the purposes of this section, final action by the division means
a final determination by the director regarding his or her
recommendation on the application to the commission. The commission
shall not grant the request unless the applicant has established that
withdrawal of the application would be consistent with the public
interest and the policies of this chapter. If a request for
withdrawal is denied, the division may go forward with its
investigation and make a recommendation to the commission upon the
application, and the commission may act upon the application as if no
request for withdrawal had been made. If a request for withdrawal
is granted with prejudice, the applicant thereafter shall be
ineligible to renew its application until the expiration of one year
from the date of the withdrawal. Unless the commission otherwise
directs, no fee or other payment relating to any application is
refundable by reason of withdrawal of an application.
SEC. 55. Section 19858A of the Business and Professions Code is
amended and renumbered to read:
19870. (a) The commission, after considering the recommendation
of the director and such any other
testimony and written comments as may be presented at the meeting, or
as may have been submitted in writing to the commission prior to the
meeting, may either deny the application or grant a license to an
applicant who it determines to be qualified to hold the license.
(b) When the commission grants an application for a license or
approval, the commission may limit or place restrictions thereon as
it may deem necessary in the public interest, consistent with the
policies described in this chapter.
(c) When an application is denied, the commission shall prepare
and file a detailed statement of its reasons for the denial.
(d) All proceedings at a meeting of the commission relating to a
license application shall be recorded stenographically or on
audiotape or videotape.
(e) A decision of the commission denying a license or approval, or
imposing any condition or restriction on the grant of a license or
approval may be reviewed by petition pursuant to Section 1085 of the
Code of Civil Procedure. Section 1094.5 of the Code of Civil
Procedure shall not apply to any judicial proceeding described in the
foregoing sentence, and the court may grant the petition only if the
court finds that the action of the commission was arbitrary and
capricious, or that the action exceeded the commission's
jurisdiction.
SEC. 56. Section 19858.5 of the Business and Professions Code is
amended and renumbered to read:
19871. (a) The commission meeting described in Section 19870
shall be conducted in accordance with regulations of the commission
and as follows:
(1) Oral evidence shall be taken only upon oath or affirmation.
(2) Each party shall have all of the following rights:
(A) To call and examine witnesses.
(B) To introduce exhibits relevant to the issues of the case.
(C) To cross-examine opposing witnesses on any matters relevant to
the issues, even though the matter was not covered on direct
examination.
(D) To impeach any witness, regardless of which party first called
the witness to testify.
(E) To offer rebuttal evidence.
(3) If the applicant does not testify in his or her own behalf, he
or she may be called and examined as if under cross-examination.
(4) The meeting need not be conducted according to technical rules
relating to evidence and witnesses. Any relevant evidence may be
considered, and is sufficient in itself to support a finding, if it
is the sort of evidence on which responsible persons are accustomed
to rely in the conduct of serious affairs, regardless of the
existence of any common law or statutory rule that might make
improper the admission of that evidence over objection in a civil
action.
(b) Nothing in this section confers upon an applicant a right to
discovery of the division's investigative reports or to require
disclosure of any document or information the disclosure of which is
otherwise prohibited by any other provision of this chapter.
SEC. 57. Section 19858.7A of the Business and Professions Code is
amended and renumbered to read:
19872. (a) No member of the commission may communicate ex parte,
directly or indirectly, with any applicant, or any agent,
representative, or person acting on behalf of an applicant, upon the
merits of an application for a license, permit, registration, or
approval while the application is pending disposition before the
division or the commission.
(b) No applicant, or any agent, representative, or person acting
on behalf of an applicant, and no person who has a direct or indirect
interest in the outcome of a proceeding to consider an application
for a license, permit, registration, or approval may communicate ex
parte, directly or indirectly, with any member of the commission,
upon the merits of the application while the application is pending
disposition before the division.
(c) No employee or agent of the division, applicant, or any agent,
representative, or person acting on behalf of an applicant, and no
person who has a direct or indirect interest in the outcome of a
proceeding to consider an application for a license, permit,
registration, or approval may communicate ex parte, directly or
indirectly, with any member of the commission, upon the merits of the
application, while the application is pending disposition before the
commission.
(d) The receipt by a member of the commission of an ex parte
communication prohibited by this section may provide the basis for
disqualification of that member or the denial of the application.
The commission shall adopt regulations to implement this subdivision.
(e) For the purposes of this subdivision, "ex parte" means a
communication without notice and opportunity for all parties to
participate in the communication.
(f) Nothing in this section precludes a communication made on the
record at a public hearing on a properly agendized matter.
SEC. 58. Section 19859 of the Business and Professions Code is
amended and renumbered to read:
19873. No license may be assigned or transferred either in whole
or in part.
SEC. 59. Section 19860A of the Business and Professions Code is
amended and renumbered to read:
19874. Subject to subdivision (b) of Section 19851, the
commission shall issue and deliver to the applicant a license
entitling the applicant to engage in the activity for which the
license is issued, together with an enumeration of any specific terms
and conditions of the license if both of the following conditions
have been met:
(a) The commission is satisfied that the applicant is eligible and
qualified to receive the license.
(b) All license fees required by statute and by regulations of the
commission have been paid.
SEC. 60. Section 19861 of the Business and Professions Code is
amended and renumbered to read:
19875. An owner's gambling license shall be posted at all times
in a conspicuous place in the area where gambling is conducted in the
establishment for which the license is issued until it is replaced
by a succeeding license.
SEC. 61. Section 19862A of the Business and Professions Code is
amended and renumbered to read:
19876. (a) Subject to the power of the commission to deny,
revoke, suspend, condition, or limit any license, as provided in this
chapter, a license shall be renewed annually by the commission from
the date of issuance, upon proper application for renewal and payment
of state license fees as required by statute or regulation.
(b) An application for renewal of a gambling license shall be
filed by the owner licensee with the commission no later than 120
calendar days prior to the expiration of the current license. The
commission shall act upon any application for renewal prior to the
date of expiration of the current license. Upon renewal of any owner
license, the commission shall issue an appropriate renewal
certificate or validating device or sticker.
(c) Unless the commission determines otherwise, renewal of an
owner's gambling license shall be deemed to effectuate the renewal of
every other gambling license endorsed thereon.
(d) In addition to the penalties provided by law, any owner
licensee who deals, operates, carries on, conducts, maintains, or
exposes for play any gambling game after the expiration date of the
gambling license is liable to the state for all license fees and
penalties that would have been due upon renewal.
(e) If an owner licensee fails to renew the gambling license as
provided in this chapter, the commission may order the immediate
closure of the premises and a cessation of all gambling activity
therein until the license is renewed.
SEC. 62. Section 19862.5 of the Business and Professions Code is
amended and renumbered to read:
19877. The failure of an owner licensee to file an application
for renewal before the date specified in this chapter may be deemed a
surrender of the license. A license has not been renewed within the
meaning of this section until all required renewal fees have been
paid.
SEC. 63. Section 19863A of the Business and Professions Code is
amended and renumbered to read:
19878. (a) Neither an owner licensee, nor a California affiliate
of an owner licensee, shall enter into, without prior approval of the
commission, any contract or agreement with
a person who is denied a license, or whose
license is suspended or revoked by the commission, or with any
business enterprise under the control of that person, after the date
of receipt of notice of the action by the commission
commission's action .
(b) An owner licensee or an affiliate of the owner licensee shall
not employ, without prior approval of the commission, any person in
any capacity for which he or she is required to be licensed, if the
person has been denied a license, or if his or her license has been
suspended or revoked after the date of receipt of notice of the
action by the commission. Neither an owner licensee, nor a
California affiliate of an owner licensee, without prior approval of
the commission, shall enter into any contract or agreement with a
person whose application has been withdrawn with prejudice, or with
any business enterprise under the control of that person, for the
period of time during which the person is prohibited from filing a
new application for licensure.
(c) (1) If an employee who is required to be licensed pursuant to
this chapter fails to apply for a license within the time specified
by regulation, is denied a license, or has his or her license revoked
by the commission, the employee shall be terminated in any capacity
in which he or she is required to be licensed and he or she shall not
be permitted to exercise a significant influence over the gambling
operation, or any part thereof, upon being notified of that action.
(2) If an employee who is required to be licensed pursuant to this
chapter has his or her license suspended, the employee shall be
suspended in any capacity in which he or she is required to be
licensed and shall not be permitted to exercise a significant
influence over the gambling operation, or any part thereof, during
the period of suspension, upon being notified of that action.
(3) If the owner licensee designates another employee to replace
the employee whose employment was terminated, the owner licensee
shall promptly notify the division and shall require the newly
designated employee to apply for a license.
(d) An owner licensee or an affiliate of the owner licensee shall
not pay to a person whose employment has been terminated pursuant to
subdivision (c) any remuneration for any service performed in any
capacity in which the person is required to be licensed except for
amounts due for services rendered before the date of receipt of
notice of the action by the commission
commission's action . Neither an owner licensee, nor an
affiliate thereof, during the period of suspension, shall pay to a
person whose employment has been suspended pursuant to subdivision
(c), any remuneration for any service performed in any capacity in
which the person is required to be licensed, except for amounts due
for services rendered before the date of receipt of notice of the
action by the commission commission's action
.
(e) Except as provided in subdivision (c), a contract or agreement
for the provision of services or property to an owner licensee or an
affiliate thereof, or for the conduct of any activity at a gambling
establishment, which is to be performed by a person required by this
chapter or by regulations adopted by the commission
pursuant to this chapter , to be licensed, shall
be terminated upon a suspension or revocation of the person's
license.
(f) In any case in which a contract or agreement for the provision
of services or property to an owner licensee or an affiliate
thereof, or for the conduct of any activity at a gambling
establishment, is to be performed by a person required by this
chapter or by regulations adopted by the commission to be licensed,
the contract shall be deemed to include a provision for its
termination without liability on the part of the owner licensee or
its duly registered holding company upon a suspension or revocation
of the person's license. In any action brought by the division or
commission to terminate a contract pursuant to subdivision (c) or
(e), it shall not be a defense that the agreement does not expressly
include the provision described in this subdivision, and the lack of
express inclusion of the provision in the agreement shall not be a
basis for enforcement of the contract by a party thereto.
SEC. 64. Section 19864A of the Business and Professions Code is
amended and renumbered to read:
19879. With regard to a person who has had his or her application
for a license denied by the commission, all of the following shall
apply:
(a) Except as provided in subdivision (c), the person shall not
be entitled to profit from his or her investment in any business
entity that has applied for or been granted a state license.
(b) The person shall not retain his or her interest in a business
entity described in subdivision (a) beyond that period prescribed by
the commission.
(c) The person shall not accept more for his or her interest in a
business entity described in subdivision (a) than he or she paid for
it, or the market value on the date of the denial of the license or
registration, whichever is higher.
(d) Nothing in this section shall be construed as a restriction or
limitation on the powers of the commission specified in this
chapter.
SEC. 65. Section 19870 of the Business and Professions Code is
amended and renumbered to read:
19880. In addition to the requirements of Section 19852, in
order to be eligible to receive a gambling license as the owner of a
gambling enterprise, a corporation shall comply with all of the
following requirements:
(a) Maintain an office of the corporation in the gambling
establishment.
(b) Comply with all of the requirements of the laws of this state
pertaining to corporations.
(c) Maintain, in the corporation's principal office in California
or in the gambling establishment, a ledger that meets both of the
following conditions:
(1) At all times reflects the ownership of record of every class
of security issued by the corporation.
(2) Is available for inspection by the division at all reasonable
times without notice.
(d) Register as a corporation with the division and supply the
following supplemental information to the division:
(1) The organization, financial structure, and nature of the
business to be operated, including the names, personal and criminal
history, and fingerprints of all officers, directors, and key
employees, and the names, addresses, and number of shares held by all
stockholders of record.
(2) The rights and privileges acquired by the holders of different
classes of authorized securities, including debentures.
(3) The terms on which securities are to be offered.
(4) The terms and conditions on all outstanding loans, mortgages,
trust deeds, pledges, or any other indebtedness or security device.
(5) The extent of the equity security holdings in the corporation
of all officers, directors, and underwriters, and their remuneration
as compensation for services, in the form of salary, wages, fees, or
otherwise.
(6) The amount of remuneration to persons other than directors and
officers in excess of fifty thousand dollars ($50,000) per annum.
(7) Bonus and profit-sharing arrangements.
(8) Management and service contracts.
(9) Options existing, or to be created, in respect of their
securities or other interests.
(10) Financial statements for at least three fiscal years
preceding the year of registration, or, if the corporation has not
been in existence for a period of three years, financial statements
from the date of its formation. All financial statements shall be
prepared in accordance with generally accepted accounting principles
and audited by a licensee of the California Board of Accountancy.
(11) Any further financial data that the division, with the
approval of the commission, may deem necessary or appropriate for
the protection of the state.
(12) An annual profit-and-loss statement and an annual balance
sheet, and a copy of its annual federal income tax return, within 30
calendar days after that return is filed with the Internal Revenue
Service.
SEC. 66. Section 19871A of the Business and Professions Code is
amended and renumbered to read:
19881. (a) No corporation is eligible to receive a license to own
a gambling enterprise unless the conduct of controlled gambling is
among the purposes stated in its articles of incorporation and the
articles of incorporation have been submitted to and approved by the
commission.
(b) The Secretary of State shall not accept for filing any
articles of incorporation of any corporation that include as a stated
purpose the conduct of controlled gambling, or any amendment
thereto, or any amendment that adds this purpose to articles of
incorporation already filed, unless the articles have, or amendment
has, been approved by the commission.
SEC. 67. Section 19872A of the Business and Professions Code is
amended and renumbered to read:
19882. (a) If at any time the commission denies a license to an
individual owner of any security issued by a corporation that applies
for or holds an owner license, the owner of the security shall
immediately offer the security to the issuing corporation for
purchase. The corporation shall purchase the security so offered,
for cash in an amount not greater than fair market value, within 30
calendar days after the date of the offer.
(b) Beginning upon the date when the division serves notice of the
denial upon the corporation, it is unlawful for the denied security
owner to do any of the following:
(1) Receive any dividend or interest upon any security described
in subdivision (a).
(2) Exercise, directly or through any trustee or nominee, any
voting right conferred by any security described in subdivision (a).
(3) Receive any remuneration in any form from the corporation for
services rendered or for any other purpose.
(c) Every security issued by a corporate owner licensee shall bear
a statement, on both sides of the certificate evidencing the
security, of the restrictions imposed by this section.
SEC. 68. Section 19873 of the Business and Professions Code is
amended and renumbered to read:
19883. (a) To the extent required by this chapter, officers and
directors, shareholders, lenders, holders of evidence of
indebtedness, underwriters, agents, or employees of a corporate owner
licensee shall be licensed individually. The corporation shall
require these persons to apply for a gambling license, and shall
notify the division of every change of corporate officers, directors,
or key employees within 10 business days after the change. An
officer, director, or key employee who is required to apply for a
license shall apply for the license within 30 calendar days after he
or she becomes an officer, director, or key employee.
(b) The corporation shall immediately remove any officer or
director required to apply for a license from any office or
directorship if any of the following apply to that officer or
director:
(1) He or she fails to apply for the license within 30 calendar
days after becoming an officer or director.
(2) He or she is denied a license.
(3) His or her license is revoked.
(c) If the license of any officer or director is suspended, the
corporation, immediately and for the duration of the suspension,
shall suspend that officer or director.
(d) If any shareholder who is required to apply for a gambling
license fails to apply for the license within the time required, the
shareholder shall be deemed to have been denied a license for
purposes of subdivision (b) of Section 19882.
(e) If any person, other than an officer, director, or
shareholder, who is required to apply for a gambling license fails to
do so, the failure may be deemed to be a failure of the corporate
owner licensee to require the application.
SEC. 69. Section 19880 of the Business and Professions Code is
amended and renumbered to read:
19890. In addition to the requirements of Section 19852, in
order to be eligible to receive a gambling license to own a gambling
enterprise, a limited partnership shall comply with all of the
following requirements:
(a) Be formed under the laws of this state.
(b) Maintain an office of the limited partnership in the gambling
establishment.
(c) Comply with all of the requirements of the laws of this state
pertaining to limited partnerships.
(d) Maintain a ledger in the principal office of the limited
partnership in California that shall meet both of the following
conditions:
(1) At all times reflects the ownership of all interests in the
limited partnership.
(2) Be available for inspection by the division at all reasonable
times without notice.
(e) Register with the division and supply the following
supplemental information to the division:
(1) The organization, financial structure, and nature of the
business to be operated, including the names, personal history, and
fingerprints of all general partners and key employees, and the name,
address, and interest of each limited partner.
(2) The rights, privileges, and relative priorities of limited
partners as to the return of contributions to capital, and the right
to receive income.
(3) The terms on which limited partnership interests are to be
offered.
(4) The terms and conditions on all outstanding loans, mortgages,
trust deeds, pledges, or any other indebtedness or security device.
(5) The extent of the holding in the limited partnership of all
underwriters, and their remuneration as compensation for services, in
the form of salary, wages, fees, or otherwise.
(6) The remuneration to persons other than general partners in
excess of fifty thousand dollars ($50,000) per annum.
(7) Bonus and profit-sharing arrangements.
(8) Management and service contracts.
(9) Options existing or to be created.
(10) Financial statements for at least three fiscal years
preceding the year of registration, or, if the limited partnership
has not been in existence for a period of three years, financial
statements from the date of its formation. All financial statements
shall be prepared in accordance with generally accepted accounting
principles and audited by a licensee of the California Board of
Accountancy in accordance with generally accepted auditing standards.
(11) Any further financial data that the division reasonably deems
necessary or appropriate for the protection of the state.
(12) An annual profit and loss statement and an annual balance
sheet, and a copy of its annual federal income tax return, within 30
calendar days after the return is filed with the Internal Revenue
Service.
SEC. 70. Section 19881 of the Business and Professions Code is
amended and renumbered to read:
19891. No limited partnership is eligible to receive a license to
own a gambling enterprise unless the conduct of gambling is among
the purposes stated in the certificate of limited partnership.
SEC. 71. Section 19882A of the Business and Professions Code is
amended and renumbered to read:
19892. (a) The purported sale, assignment, transfer, pledge, or
other disposition of any interest in a limited partnership that holds
a gambling license, or the grant of an option to purchase the
interest, is void unless approved in advance by the commission.
(b) If at any time the commission denies a license to an
individual owner of any interest described in subdivision (a), the
commission shall immediately notify the partnership of that fact.
The limited partnership, within 30 calendar days from the date it
receives the notice from the commission, shall return to the denied
owner of the interest, in cash, the amount of his or her capital
account as reflected on the books of the partnership.
(c) Beginning upon the date when the commission serves a notice of
denial upon the limited partnership, it is unlawful for the denied
owner of the interest to do any of the following:
(1) Receive any share of the revenue or interest upon the limited
partnership interest.
(2) Exercise, directly or through any trustee or nominee, any
voting right conferred by that interest.
(3) Receive any remuneration in any form from the limited
partnership, for services rendered or for any other purpose.
(d) Every certificate of limited partnership of any limited
partnership holding a gambling license shall contain a statement of
the restrictions imposed by this section.
SEC. 72. Section 19883A of the Business and Professions Code is
amended and renumbered to read:
19893. To the extent required by this chapter, general partners,
limited partners, lenders, holders of evidence of indebtedness,
underwriters, agents, or employees of a limited partnership that
holds or applies for a license to own a gambling enterprise shall be
licensed individually. The limited partnership shall require these
persons to apply for and obtain a gambling license. A person who is
required to be licensed by this section as a general or limited
partner shall not hold that position until he or she secures the
required approval of the commission. A person who is required to be
licensed pursuant to a decision of the commission shall apply for a
license within 30 days after the commission requests him or her to do
so.
SEC. 73. Section 19900A of the Business and Professions Code is
amended and renumbered to read:
19900. (a) Except as may be provided by regulation of the
commission division , the following
security interests shall not be enforced without the prior approval
of the commission and compliance with regulations adopted pursuant to
subdivision (b):
(1) In a security issued by a corporation that is a holder of a
gambling license in this state.
(2) In a security issued by a holding company that is not a
publicly traded corporation.
(3) In a security issued by a partnership that is a holder of a
gambling license in this state.
(b) The commission division shall
adopt regulations establishing the procedure for the enforcement of a
security interest. Any remedy provided by the regulations for the
enforcement of the security interest is in addition to any other
remedy provided by law.
SEC. 74. Section 19901A of the Business and Professions Code is
amended and renumbered to read:
19901. It is unlawful for any person to sell, purchase, lease,
hypothecate, borrow or loan money, or create a voting trust agreement
or any other agreement of any sort to, or with, any licensee in
connection with any controlled gambling operation licensed under this
chapter or with respect to any portion of the gambling operation,
except in accordance with the regulations of the commission.
SEC. 75. Section 19902A of the Business and Professions Code is
amended and renumbered to read:
19902. When any person contracts to sell or lease any property or
interest in property, real or personal, under circumstances that
require the approval or licensing of the purchaser or lessee by the
commission pursuant to subdivision (a) of Section 19853, the
contract shall not specify a closing date for the transaction that is
earlier than the expiration of 90 calendar days after the submission
of the completed application for approval for licensing. Any
provision of a contract that specifies an earlier closing date is
void for all purposes, but the invalidity does not affect the
validity of any other provision of the contract.
SEC. 76. Section 19903A of the Business and Professions Code is
amended and renumbered to read:
19903. When any person contracts to sell or lease any property or
interest in property, real or personal, under circumstances that
require the approval or licensing of the purchaser or lessee by the
commission pursuant to subdivision (a) of Section 19853, the
contract shall contain a provision satisfactory to the commission
regarding responsibility for the payment of any fees due pursuant to
any subsequent deficiency determinations made under this chapter that
shall encompass any period of time before the closing date of the
transaction.
SEC. 77. Section 19904A of the Business and Professions Code is
amended and renumbered to read:
19904. The purported sale, assignment, transfer, pledge, or other
disposition of any security issued by a corporation that holds a
gambling license, or the grant of an option to purchase that
security, is void unless approved in advance by the commission.
SEC. 78. Section 19905A of the Business and Professions Code is
amended and renumbered to read:
19905. Every owner licensee that is involved in a transaction for
the extension or redemption of credit by the licensee, or for the
payment, receipt, or transfer of coin, currency, or other monetary
instruments, as specified by the commission, in an amount,
denomination, or amount and denomination, or under circumstances
prescribed by regulations, and any other participant in the
transaction, as specified by the commission, shall, if required by
regulation, make and retain a record of, or file with the division a
report on, the transaction, at the time and in the manner prescribed
by regulations.
SEC. 79. Section 19906A of the Business and Professions Code is
repealed.
SEC. 80. Section 19910.4 of the Business and Professions Code is
amended and renumbered to read:
19911. No person under the age of 21 years shall be eligible for
a work permit and no permit shall be issued to a person under the age
of 21 years.
SEC. 81. Section 19910.5A of the Business and Professions Code is
amended and renumbered to read:
19912. (a) (1) A person shall not be employed as a gambling
enterprise employee, or serve as an independent agent, except as
provided in paragraph (2), unless he or she is the holder of one of
the following:
(A) A valid work permit issued in accordance with the applicable
ordinance or regulations of the county, city, or city and county in
which his or her duties are performed.
(B) A work permit issued by the commission pursuant to regulations
adopted by the commission for the issuance and renewal of work
permits. A work permit issued by the commission shall be valid for
two years.
(2) An independent agent is not required to hold a work permit if
he or she is not a resident of this state and has registered with the
division in accordance with regulations.
(b) A work permit shall not be issued by any city, county, or city
and county to any person who would be disqualified from holding a
state gambling license for the reasons specified in subdivisions (a)
to (g), inclusive, of Section 19859.
(c) The division may object to the issuance of a work permit by a
city, county, or city and county for any cause deemed reasonable by
the division, and if the division objects to issuance of a work
permit, the work permit shall be denied.
(1) The commission shall adopt regulations specifying particular
grounds for objection to issuance of, or refusal to issue, a work
permit.
(2) The ordinance of any city, county, or city and county relating
to issuance of work permits shall permit the division to object to
the issuance of any permit.
(3) Any person whose application for a work permit has been denied
because of an objection by the division may apply to the commission
for an evidentiary hearing in accordance with regulations.
(d) Application for a work permit for use in any jurisdiction
where a locally issued work permit is not required by the licensing
authority of a city, county, or city and county shall be made to the
commission, and may be granted or denied for any cause deemed
reasonable by the commission. If the commission denies the
application, it shall include in its notice of denial a statement of
facts upon which it relied in denying the application. Upon receipt
of an application for a work permit, the commission may issue a
temporary work permit for a period not to exceed 120 days, pending
completion of the background investigation by the division and
official action by the commission with respect to the work permit
application.
(e) An order of the commission denying an application for a work
permit, including an order declining to issue a work permit following
review pursuant to paragraph (3) of subdivision (c), may be reviewed
in accordance with subdivision (e) of Section 19870.
SEC. 82. Section 19911A of the Business and Professions Code is
amended and renumbered to read:
19913. (a) The commission may issue an order summarily suspending
a person's work permit, whether issued by a city, county, or city
and county, or by the commission, upon a finding that the suspension
is necessary for the immediate preservation of the public peace,
health, safety, or general welfare. The order is effective when
served upon the holder of the permit.
(b) The order of summary suspension shall state facts upon which
the finding of necessity for the suspension is based. For the
purposes of this section, the order of summary suspension shall be
deemed an accusation.
(c) An order of summary suspension shall be signed by at least
three members of the commission.
(d) The person whose work permit is summarily suspended has a
right to a hearing to commence not more than 30 calendar days from
the date of service of the suspension.
SEC. 83. Section 19912A of the Business and Professions Code is
amended and renumbered to read:
19914. (a) The commission may revoke a work permit or, if issued
by the licensing authority of a city, county, or city and county,
notify the authority to revoke it, and the licensing authority shall
revoke it, if the commission finds, after a hearing, that a gambling
enterprise employee or independent agent has failed to disclose,
misstated, or otherwise misled the division or the commission with
respect to any fact contained in any application for a work permit,
or if the commission finds that the employee or independent agent,
subsequent to being issued a work permit, has done any of the
following:
(1) Committed, attempted, or conspired to do any acts prohibited
by this chapter.
(2) Engaged in any dishonest, fraudulent, or unfairly deceptive
activities in connection with controlled gambling, or knowingly
possessed or permitted to remain in or upon any premises any cards,
dice, mechanical devices, or any other cheating device.
(3) Concealed or refused to disclose any material fact in any
investigation by the division.
(4) Committed, attempted, or conspired to commit, any embezzlement
or larceny against a gambling licensee or upon the premises of a
gambling establishment.
(5) Been convicted in any jurisdiction of any offense involving or
relating to gambling.
(6) Accepted employment without prior commission approval in a
position for which he or she could be required to be licensed under
this chapter after having been denied a license or after failing to
apply for licensing when requested to do so by the commission.
(7) Been refused the issuance of any license, permit, or approval
to engage in or be involved with gambling or parimutuel wagering in
any jurisdiction, or had the license, permit, or approval revoked or
suspended.
(8) Been prohibited under color of governmental authority from
being present upon the premises of any licensed gambling
establishment or any establishment where parimutuel wagering is
conducted, for any reason relating to improper gambling activities or
any illegal act.
(9) Been convicted of any felony.
(b) The commission shall revoke a work permit if it finds, after
hearing, that the holder thereof would be disqualified from holding a
state gambling license for the reasons specified in subdivision (f)
or (g) of Section 19859.
(c) Nothing in this section shall be construed to limit any powers
of the commission with respect to licensing.
SEC. 84. Section 19913A of the Business and Professions Code is
amended and renumbered to read:
19915. The fee for a work permit issued by the commission shall
be not less than twenty-five dollars ($25) or more than two hundred
fifty dollars ($250).
SEC. 85. Section 19915A of the Business and Professions Code is
amended and renumbered to read:
19920. It is the policy of the State of California to require
that all establishments wherein controlled gambling is conducted in
this state be operated in a manner suitable to protect the public
health, safety, and general welfare of the residents of the state.
The responsibility for the employment and maintenance of suitable
methods of operation rests with the owner licensee, and willful or
persistent use or toleration of methods of operation deemed
unsuitable by the commission or by local government shall constitute
grounds for license revocation or other disciplinary action.
SEC. 86. Section 19915.5 of the Business and Professions Code is
amended and renumbered to read:
19921. No person under the age of 21 years shall be permitted to
enter upon the premises of a licensed gambling establishment, or any
part thereof, except the following:
(a) An area, physically separated from any gambling area, for the
exclusive purpose of dining. For purposes of this subdivision, any
place wherein food or beverages are dispensed primarily by vending
machines shall not constitute a place for dining.
(b) Restrooms.
(c) A supervised room, as defined by regulation, that is
physically separated from any gambling area and used primarily for
the purpose of entertainment or recreation.
Any area of a gambling establishment to which a person under the
age of 21 years may have access under this subdivision shall have an
entrance that shall not require the entrants to enter upon or pass
through the gambling floor. All persons under the age of 21 years
shall be restricted to the entrance specified in this subdivision.
SEC. 87. Section 19916 of the Business and Professions Code is
amended and renumbered to read:
19922. No owner licensee shall operate a gambling enterprise in
violation of any provision of this chapter or any regulation adopted
pursuant to this chapter.
SEC. 88. Section 19917 of the Business and Professions Code is
amended and renumbered to read:
19923. No owner licensee shall operate a gambling enterprise in
violation of any governing local ordinance.
SEC. 89. Section 19918A of the Business and Professions Code is
amended and renumbered to read:
19924. Each owner licensee shall maintain security controls over
the gambling premises and all operations therein related to gambling,
and those security controls are subject to the approval of the
commission.
SEC. 90. The heading of Article 9.5 (commencing with Section
19920A) of Chapter 5 of Division 8 of the Business and Professions
Code is repealed.
SEC. 91. The heading of Article 10 (commencing with Section 19930)
is added to Chapter 5 of Division 8 of the Business and Professions
Code, to read:
Article 10. Disciplinary Actions
SEC. 92. Section 19920A of the Business and Professions Code is
amended and renumbered to read:
19930. (a) The division shall make appropriate investigations as
follows:
(1) Determine whether there has been any violation of this chapter
or any regulations adopted thereunder.
(2) Determine any facts, conditions, practices, or matters that it
may deem necessary or proper to aid in the enforcement of this
chapter or any regulation adopted thereunder.
(3) To aid in adopting regulations.
(4) To secure information as a basis for recommending legislation
relating to this chapter.
(b) If, after any investigation, the division is satisfied that a
license, permit, finding of suitability, or approval should be
suspended or revoked, it shall file an accusation with the commission
in accordance with Chapter 5 (commencing with Section 11500) of Part
1 of Division 3 of Title 2 of the Government Code.
(c) In addition to any action that the commission may take against
a license, permit, finding of suitability, or approval, the
commission may also require the payment of fines or penalties.
However, no fine imposed shall exceed twenty thousand dollars
($20,000) for each separate violation of any provision of this
chapter or any regulation adopted thereunder.
SEC. 93. Section 19921A of the Business and Professions Code is
amended and renumbered to read:
19931. (a) The division may issue any emergency orders against an
owner licensee or any person involved in a transaction requiring
prior approval that the division deems reasonably necessary for the
immediate preservation of the public peace, health, safety, or
general welfare.
(b) The emergency order shall set forth the grounds upon which it
is based, including a statement of facts constituting the alleged
emergency necessitating the action.
(c) The emergency order is effective immediately upon issuance and
service upon the owner licensee or any agent of the licensee
registered with the division for receipt of service, or, in cases
involving prior approval, upon issuance and service upon the person
or entity involved, or upon an agent of that person or entity
authorized to accept service of process in this state. The emergency
order may suspend, limit, condition, or take other action in
relation to the license of one or more persons in an operation
without affecting other individual licensees, registrants, or the
licensed gambling establishment. The emergency order remains
effective until further order of the commission or final disposition
of any proceeding conducted pursuant to subdivision (d).
(d) Within two calendar days after issuance of an emergency order,
the division shall file an accusation with the commission against
the person or entity involved. Thereafter, the person or entity
against whom the emergency order has been issued and served is
entitled to a hearing which, if so requested, shall commence within
10 business days of the date of the request if a gambling operation
is closed by the order, and in all other cases, within 30 calendar
days of the date of the request. On application of the division, and
for good cause shown, a court may extend the time within which a
hearing is required to be commenced, upon those terms and conditions
that the court deems equitable.
SEC. 94. Section 19922 of the Business and Professions Code is
amended and renumbered to read:
19932. (a) Any person aggrieved by a final decision or order of
the commission that limits, conditions, suspends, or revokes any
previously granted license or approval, made after hearing by the
commission, may petition the Superior Court for the County of
Sacramento for judicial review pursuant to Section 1094.5 of the Code
of Civil Procedure and Section 11523 of the Government Code.
Notwithstanding any other provision of law, the standard set forth in
paragraph (1) of subdivision (h) of Section 1094.5 of the Code of
Civil Procedure shall apply for obtaining a stay of the operation of
a final decision or order of the commission. In every case where it
is claimed that the findings are not supported by the evidence,
abuse of discretion is established if the court determines that the
findings are not supported by substantial evidence in light of the
whole record.
(b) The court may summarily deny the petition, or the court may
issue an alternative writ directing the commission to certify the
whole record of the division in the case to the court within a time
specified. No new or additional evidence shall be introduced in the
court, but, if an alternative writ issues, the cause shall be heard
on the whole record of the division as certified by the commission.
(c) In determining the cause following issuance of an alternative
writ, the court shall enter judgment affirming, modifying, or
reversing the order of the commission, or the court may remand the
case for further proceedings before, or reconsideration by, the
commission.
(d) Except as otherwise provided in Section 19870 and subdivision
(e) in Section 19912, this section provides the exclusive means to
review adjudicatory decisions of the commission.
SEC. 95. The heading of Article 10 (commencing with Section 19930)
of Chapter 5 of Division 8 of the Business and Professions Code is
repealed.
SEC. 96. The heading of Article 11 (commencing with Section 19940)
is added to Chapter 5 of Division 8 of the Business and Professions
Code, to read:
Article 11. Penalties
SEC. 97. Section 19930 of the Business and Professions Code is
amended and renumbered to read:
19940. Any person included on the list of persons to be excluded
or ejected from a gambling establishment pursuant to this chapter is
guilty of a misdemeanor if he or she thereafter knowingly enters the
premises of a licensed gambling establishment.
SEC. 98. Section 19932 of the Business and Professions Code is
amended and renumbered to read:
19941. (a) A person under the age of 21 years shall not do any of
the following:
(1) Play, be allowed to play, place wagers at, or collect winnings
from, whether personally or through an agent, any gambling game.
(2) Loiter, or be permitted to loiter, in or about any room
wherein any gambling game is operated or conducted.
(3) Be employed as an employee in a licensed gambling
establishment except in a parking lot, coffee shop, restaurant,
business office, or other similar room, as determined by regulations,
wherein no gambling activity or activity directly associated with
gambling takes place.
(4) Present or offer to any licensee, or to an agent of a
licensee, any written, printed, or photostatic evidence of age and
identity that is false, fraudulent, or not actually his or her own
for the purpose of doing any of the things described in paragraphs
(1) to (3), inclusive.
(b) Any licensee or employee in a gambling establishment who
violates or permits the violation of this section, and any person
under 21 years of age who violates this section, is guilty of a
misdemeanor.
(c) Proof that a licensee, or agent or employee of a licensee,
demanded, was shown, and acted in reliance upon bona fide evidence of
age and identity shall be a defense to any criminal prosecution
under this section or to any proceeding for the suspension or
revocation of any license or work permit based thereon. For the
purposes of this section, "bona fide evidence of age and identity"
means a document issued by a federal, state, county, or municipal
government, or subdivision or agency thereof, including, but not
limited to, a motor vehicle operator's license or an identification
card issued to a member of the armed forces, that contains the name,
date of birth, description, and picture of the person.
SEC. 99. Section 19933 of the Business and Professions Code is
amended and renumbered to read:
19942. (a) Any person who willfully fails to report, pay, or
truthfully account for and pay over any license fee imposed by this
chapter, or who willfully attempts in any manner to evade or defeat
the license fee or payment thereof, shall be punished by imprisonment
in a county jail, by a fine of not more than five thousand dollars
($5,000), or by both that imprisonment and fine.
(b) Any person who willfully violates any of the provisions of
this chapter for which a penalty is not expressly provided, is guilty
of a misdemeanor.
SEC. 100. Section 19933.5A of the Business and Professions Code is
amended and renumbered to read:
19943. (a) Except as specified in subdivision (c), this section
applies to any person or business that is engaged in controlled
gambling, whether or not licensed to do so.
(b) Any person or business described in subdivision (a), with
actual knowledge of the requirements of regulations adopted by the
commission pursuant to subdivision (d) of Section 19841, that
knowingly and willfully fails to comply with the requirements of
those regulations shall be liable for a monetary penalty. The
commission may impose a monetary penalty for each violation.
However, in the first proceeding that is initiated pursuant to this
subdivision, the penalties for all violations shall not exceed a
total sum of ten thousand dollars ($10,000). If a penalty was
imposed in a prior proceeding before the commission, the penalties
for all violations shall not exceed a total sum of twenty-five
thousand dollars ($25,000). If a penalty was imposed in two or more
prior proceedings before the commission, the penalties for all
violations shall not exceed a total sum of one hundred thousand
dollars ($100,000).
(c) This section does not apply to any case where the person is
criminally prosecuted in federal or state court for conduct related
to a violation of Section 14162 of the Penal Code.
SEC. 101. Section 19934 of the Business and Professions Code is
amended and renumbered to read:
19944. Any person who willfully resists, prevents, impedes, or
interferes with the division or the commission or any of their agents
or employees in the performance of duties pursuant to this chapter
is guilty of a misdemeanor, punishable by imprisonment in a county
jail for not more than six months, by a fine not exceeding one
thousand dollars ($1,000), or by both that imprisonment and fine.
SEC. 102. The heading of Article 11 (commencing with Section
19940) of Chapter 5 of Division 8 of the Business and Professions
Code is repealed.
SEC. 103. The heading of Article 12 (commencing with Section
19950) is added to Chapter 5 of Division 8 of the Business and
Professions Code, to read:
Article 12. Revenues
SEC. 104. Section 19940 of the Business and Professions Code is
amended and renumbered to read:
19950. (a) All fines and penalties collected pursuant to this
chapter shall be deposited in a special account in the General Fund,
and, upon appropriation, may be expended by the Department of
Justice to offset costs incurred pursuant to this chapter.
(b) Except as otherwise provided in subdivision (a), all fees and
revenue collected pursuant to this chapter shall be deposited in the
Gambling Control Fund, which is hereby created in the State Treasury.
The funds deposited in the Gambling Control Fund shall be
available, upon appropriation by the Legislature, for expenditure by
the division and commission exclusively for the support of the
division and commission in carrying out their duties and
responsibilities under this chapter.
SEC. 105. Section 19941 of the Business and Professions Code is
amended and renumbered to read:
19951. (a) Every application for a license or approval shall be
accompanied by a nonrefundable fee of five hundred dollars ($500).
(b) The fee for the initial issuance or renewal of a state
gambling license, including all licenses issued to key employees and
other persons whose names are endorsed upon the license, shall be
assessed against the gambling license issued to the owner of the
gambling enterprise. The fee for initial issuance of a state
gambling license shall be an amount determined by the division
pursuant to the schedule in subdivision (c). The fee for the renewal
of a state gambling license shall be determined pursuant to the
schedule in subdivision (c) or the schedule in subdivision (d),
whichever amount is greater.
(c) The schedule based on the number of tables is as follows:
(1) For a license authorizing one to five tables, inclusive, at
which games are played, two hundred fifty dollars ($250) for each
table.
(2) For a license authorizing six to eight tables, inclusive, at
which games are played, four hundred fifty dollars ($450) for each
table.
(3) For a license authorizing 9 to 14 tables, inclusive, at which
games are played, one thousand fifty dollars ($1,050) for each table.
(4) For a license authorizing 15 to 25 tables, inclusive, at which
games are played, two thousand one hundred fifty dollars ($2,150)
for each table.
(5) For a license authorizing 26 to 70 tables, inclusive, at which
games are played, three thousand two hundred dollars ($3,200) for
each table.
(6) For a license authorizing 71 or more tables at which games are
played, three thousand seven hundred dollars ($3,700) for each
table.
(d) Without regard to the number of tables at which games may be
played pursuant to a gambling license, if, at the time of any license
renewal, it is determined that the gross revenues of an owner
licensee during the licensee's previous fiscal year fell within the
following ranges, the annual fee for renewal of the license shall be
as follows:
(1) For a gross revenue of two hundred thousand dollars ($200,000)
to four hundred ninety-nine thousand nine hundred ninety-nine
dollars ($499,999), inclusive, the amount specified by the division
pursuant to paragraph (2) of subdivision (c).
(2) For a gross revenue of five hundred thousand dollars
($500,000) to one million nine hundred ninety-nine thousand nine
hundred ninety-nine dollars ($1,999,999), inclusive, the amount
specified by the division pursuant to paragraph (3) of subdivision
(c).
(3) For a gross revenue of two million dollars ($2,000,000) to
nine million nine hundred ninety-nine thousand nine hundred
ninety-nine dollars ($9,999,999), inclusive, the amount specified by
the division pursuant to paragraph (4) of subdivision (c).
(4) For a gross revenue of ten million dollars ($10,000,000) or
more, the amount specified by the division pursuant to paragraph (5)
of subdivision (c).
(e) The commission may provide for payment of the annual gambling
license fee on an annual or installment basis.
(f) For the purposes of this section, each table at which a game
is played constitutes a single game table.
SEC. 106. Section 19942A of the Business and Professions Code is
amended and renumbered to read:
19952. The commission, by regulation, shall establish fees for
special licenses authorizing irregular operation of tables in excess
of the total number of tables otherwise authorized to a licensed
gambling establishment, for tournaments and other special events.
SEC. 107. Section 19944 of the Business and Professions Code is
amended and renumbered to read:
19953.