Bill Text: CA SB549 | 2015-2016 | Regular Session | Chaptered
Bill Title: Charitable raffles.
Spectrum: Moderate Partisan Bill (Democrat 4-1)
Status: (Passed) 2015-10-05 - Chaptered by Secretary of State. Chapter 509, Statutes of 2015. [SB549 Detail]
Download: California-2015-SB549-Chaptered.html
BILL NUMBER: SB 549 CHAPTERED
BILL TEXT
CHAPTER 509
FILED WITH SECRETARY OF STATE OCTOBER 5, 2015
APPROVED BY GOVERNOR OCTOBER 5, 2015
PASSED THE SENATE SEPTEMBER 3, 2015
PASSED THE ASSEMBLY SEPTEMBER 2, 2015
AMENDED IN ASSEMBLY AUGUST 28, 2015
AMENDED IN ASSEMBLY JUNE 23, 2015
AMENDED IN SENATE JUNE 2, 2015
AMENDED IN SENATE APRIL 28, 2015
INTRODUCED BY Senator Hall
(Coauthors: Senators Mendoza and Stone)
(Coauthors: Assembly Members Gray and Jones-Sawyer)
FEBRUARY 26, 2015
An act to add and repeal Section 320.6 of the Penal Code, relating
to gaming.
LEGISLATIVE COUNSEL'S DIGEST
SB 549, Hall. Charitable raffles.
The California Constitution authorizes the Legislature to permit
private, nonprofit, eligible organizations to conduct raffles as a
funding mechanism to support beneficial and charitable works, if,
among other conditions, at least 90% of the gross receipts from the
raffle go directly to beneficial or charitable purposes in
California. The California Constitution further authorizes the
Legislature to amend the percentage of gross receipts required to be
dedicated to beneficial or charitable purposes by a statute passed by
a 2/3 vote of each house of the Legislature. Existing statutory law
implements those provisions and requires the Department of Justice to
administer and enforce those provisions.
This bill would authorize a major league sports raffle at a home
game conducted by an eligible organization, as defined, for the
purpose of directly supporting specified beneficial or charitable
purposes in California, or financially supporting another private,
nonprofit, eligible organization, as defined, that performs those
purposes if, among other requirements, each ticket sold contains a
unique and matching identifier, 50% of the gross receipts generated
from the sale of raffle tickets are used to benefit or provide
support for beneficial or charitable purposes, as defined, the other
50% is paid to the winner, and the winners of the prizes are
determined by a manual draw, as specified. The bill would authorize
an electronic device to be used to sell tickets. The bill would
prohibit the use of a random number generator for the manual draw or
sale of tickets. This bill would define an eligible organization as a
private, nonprofit organization established by, or affiliated with,
a team from specified sports organizations that has been qualified to
conduct business in California for at least one year before
conducting a raffle and is exempt from taxation pursuant to specified
provisions of federal and California law.
The bill would require, if an eligible organization conducts a
raffle for purposes of financially supporting another private,
nonprofit, eligible organization, the eligible organization
conducting the raffle to distribute to the other eligible
organization all proceeds not paid out to the winners within 15 days
of conducting the raffle. The bill would require an eligible
organization to disclose to all ticket purchasers the designated
private, nonprofit organization for which the raffle is being
conducted.
This bill would also prohibit an eligible organization from
conducting a raffle, and a manufacturer or distributor of
raffle-related products or services from conducting business with an
eligible organization for purposes of conducting a raffle pursuant to
these provisions, without first having obtained and thereafter
maintained a registration from the Department of Justice, as
specified. Once registered, the bill would require an eligible
organization to file annually thereafter with the department a report
that includes specified information for each of the eligible
organization's last 3 fiscal years, and would require the department
to make those reports available online, as provided. This bill would
require the department to adopt, on or before June 1, 2016,
regulations to enforce these provisions, would authorize the
department to assess annual registration fees, as specified, to be
deposited in the General Fund to cover the reasonable costs of
establishing and operating this registration system, and would
require the department to maintain a database of registrants and
conduct specified proceedings in compliance with the Administrative
Procedure Act. The bill would repeal its provisions on December 31,
2018.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 320.6 is added to the Penal Code, to read:
320.6. (a) Notwithstanding Section 320.5, this section shall
apply to an eligible organization, as defined in subdivision (c).
(b) A raffle conducted by an eligible organization, as defined in
subdivision (c), for the purpose of directly supporting beneficial or
charitable purposes or financially supporting another private,
nonprofit eligible organization, as defined in subdivision (c) of
Section 320.5, that performs beneficial or charitable purposes may be
conducted in accordance with this section.
(c) For purposes of this section, "eligible organization" means a
private, nonprofit organization established by, or affiliated with, a
team from the Major League Baseball, National Hockey League,
National Basketball Association, National Football League, Women's
National Basketball Association, or Major League Soccer, or a
private, nonprofit organization established by the Professional
Golfers' Association of America, Ladies Professional Golf
Association, or National Association for Stock Car Auto Racing that
has been qualified to conduct business in California for at least one
year before conducting a raffle, is qualified for an exemption under
Section 501(c)(3) of the Internal Revenue Code, and is exempt from
taxation pursuant to Section 23701a, 23701b, 23701d, 23701e, 23701f,
23701g, 23701k, 23701 l , 23701t, or 23701w of the Revenue
and Taxation Code.
(d) For purposes of this section, "raffle" means a scheme for the
distribution of prizes by chance among persons who have paid money
for paper tickets that provide the opportunity to win these prizes,
in which all of the following are true:
(1) Each ticket sold contains a unique and matching identifier.
(2) (A) Winners of the prizes are determined by a manual draw from
tickets described in paragraph (1) that have been sold for entry in
the manual draw.
(B) An electronic device may be used to sell tickets. The ticket
receipt issued by the electronic device to the purchaser may include
more than one unique and matching identifier, representative of and
matched to the number of tickets purchased in a single transaction.
(C) A random number generator is not used for the manual draw or
to sell tickets.
(D) The prize paid to the winner is comprised of one-half or 50
percent of the gross receipts generated from the sale of raffle
tickets for a raffle.
(3) The manual draw is conducted in California under the
supervision of a natural person who meets all of the following
requirements:
(A) The person is 18 years of age or older.
(B) The person is affiliated with the eligible organization
conducting the raffle.
(C) The person is registered with the Department of Justice
pursuant to paragraph (4) of subdivision (o).
(4) (A) Fifty percent of the gross receipts generated from the
sale of raffle tickets for any given manual draw are used by the
eligible organization conducting the raffle to benefit or provide
support for beneficial or charitable purposes, or used to benefit
another private, nonprofit organization, provided that an
organization receiving these funds is itself an eligible organization
as defined in subdivision (c) of Section 320.5. As used in this
section, "beneficial purposes" excludes purposes that are intended to
benefit officers, directors, or members, as defined by Section 5056
of the Corporations Code, of the eligible organization. Funds raised
by raffles conducted pursuant to this section shall not be used to
fund any beneficial, charitable, or other purpose outside of
California. This section does not preclude an eligible organization
from using funds from sources other than the sale of raffle tickets
to pay for the administration or other costs of conducting a raffle.
(B) An employee of an eligible organization who is a direct seller
of raffle tickets shall not be treated as an employee for purposes
of workers' compensation under Section 3351 of the Labor Code if the
following conditions are satisfied:
(i) Substantially all of the remuneration, whether or not paid in
cash, for the performance of the service of selling raffle tickets is
directly related to sales rather than to the number of hours worked.
(ii) The services performed by the person are performed pursuant
to a written contract between the seller and the eligible
organization and the contract provides that the person will not be
treated as an employee with respect to the selling of raffle tickets
for workers' compensation purposes.
(C) For purposes of this section, an employee selling raffle
tickets shall be deemed to be a direct seller as described in Section
650 of the Unemployment Insurance Code as long as he or she meets
the requirements of that section.
(e) A person who receives compensation in connection with the
operation of the raffle shall be an employee of the eligible
organization that is conducting the raffle, and in no event may
compensation be paid from revenues required to be dedicated to
beneficial or charitable purposes.
(f) A raffle ticket shall not be sold in exchange for Bitcoin or
any other cryptocurrency.
(g) A raffle otherwise permitted under this section shall not be
conducted by means of, or otherwise utilize, any gaming machine that
meets the definition of slot machine contained in Section 330a, 330b,
or 330.1.
(h) (1) A raffle otherwise permitted under this section shall not
be conducted, nor may tickets for a raffle be sold, within an
operating satellite wagering facility or racetrack inclosure licensed
pursuant to the Horse Racing Law (Chapter 4 (commencing with Section
19400) of Division 8 of the Business and Professions Code) or within
a gambling establishment licensed pursuant to the Gambling Control
Act (Chapter 5 (commencing with Section 19800) of Division 8 of the
Business and Professions Code).
(2) A raffle shall not be operated or conducted in any manner over
the Internet, nor may raffle tickets be sold, traded, or redeemed
over the Internet. For purposes of this paragraph, an eligible
organization shall not be deemed to operate or conduct a raffle over
the Internet, or sell raffle tickets over the Internet, if the
eligible organization advertises its raffle on the Internet or
permits others to do so. Information that may be conveyed on an
Internet Web site pursuant to this paragraph includes, but is not
limited to, all of the following:
(A) Lists, descriptions, photographs, or videos of the raffle
prizes.
(B) Lists of the prize winners.
(C) The rules of the raffle.
(D) Frequently asked questions and their answers.
(E) Raffle entry forms, which may be downloaded from the Internet
Web site for manual completion by raffle ticket purchasers, but shall
not be submitted to the eligible organization through the Internet.
(F) Raffle contact information, including the eligible
organization's name, address, telephone number, facsimile number, or
email address.
(i) An individual, corporation, partnership, or other legal entity
shall not hold a financial interest in the conduct of a raffle,
except the eligible organization that is itself authorized to conduct
that raffle, and any private, nonprofit, eligible organizations
receiving financial support from that charitable organization
pursuant to subdivisions (b) and (d).
(j) (1) An eligible organization may conduct a major league sports
raffle only at a home game.
(2) An eligible organization shall not conduct more than one major
league sports raffle per home game.
(k) An employee shall not sell raffle tickets in any seating area
designated as a family section.
(l) An eligible organization shall disclose to all ticket
purchasers the designated private, nonprofit, eligible organization
for which the raffle is being conducted.
(m) An eligible organization that conducts a raffle to financially
support another private, nonprofit eligible organization, as defined
in subdivision (c) of Section 320.5, shall distribute all proceeds
not paid out to the winners of the prizes to the private, nonprofit
organization within 15 days of conducting the raffle, in accordance
with this section.
(n) Any raffle prize remaining unclaimed by a winner at the end of
the season for a team with an affiliated eligible organization that
conducted a raffle to financially support another private, nonprofit
eligible organization, as defined in subdivision (c) of Section
320.5, shall be donated within 30 days from the end of the season by
the eligible organization to the designated private, nonprofit
organization for which the raffle was conducted.
(o) (1) (A) An eligible organization shall not conduct a raffle
authorized under this section, unless it has a valid registration
issued by the Department of Justice. The department shall furnish a
registration form via the Internet or upon request to eligible
nonprofit organizations. The department shall, by regulation, collect
only the information necessary to carry out the provisions of this
section on this form. This information shall include, but is not
limited to, the following:
(i) The name and address of the eligible organization.
(ii) The federal tax identification number, the corporate number
issued by the Secretary of State, the organization number issued by
the Franchise Tax Board, or the California charitable trust
identification number of the eligible organization.
(iii) The name and title of a responsible fiduciary of the
organization.
(B) (i) The department may require an eligible organization to pay
a minimum annual registration fee of five thousand dollars ($5,000)
to cover the reasonable costs of the department to administer and
enforce this section.
(ii) An eligible organization shall pay, in addition to the annual
registration application fee, one hundred dollars ($100) for every
individual raffle conducted at an eligible location to cover the
reasonable costs of the department to administer and enforce this
section. This fee shall be submitted in conjunction with the annual
registration form.
(2) (A) A manufacturer or distributor of raffle-related products
or services shall not conduct business with an eligible organization
for purposes of conducting a raffle pursuant to this section unless
the manufacturer or distributor has a valid annual registration
issued by the department.
(B) The department may require a manufacturer or distributor of
raffle-related products or services to pay a minimum annual
registration fee of five thousand dollars ($5,000) to cover the
reasonable costs of the department to administer and enforce this
section.
(3) An eligible organization shall register the equipment used in
the sale and distribution of raffle tickets, and shall have the
equipment tested by an independent gaming testing lab.
(4) (A) A person affiliated with an eligible organization who
conducts the manual draw shall annually register with the department.
(B) The department may require a person affiliated with an
eligible organization who conducts the manual draw to pay a minimum
annual registration fee of ten dollars ($10) to cover the reasonable
costs of the department to administer and enforce this section.
(5) The department may, by regulation, adjust the annual
registration fees described in this section as needed to ensure that
revenues will fully offset, but not exceed, the reasonable costs
incurred by the department pursuant to this section. The fees shall
be deposited by the department into the General Fund.
(6) The department shall receive moneys for the costs incurred
pursuant to this section subject to an appropriation by the
Legislature.
(7) The department shall adopt, on or before June 1, 2016,
regulations necessary to effectuate this section, including emergency
regulations, pursuant to the Administrative Procedure Act (Chapter
3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title
2 of the Government Code).
(8) The department shall maintain an automated database of all
registrants.
(9) A local law enforcement agency shall notify the department of
any arrests or investigation that may result in an administrative or
criminal action against a registrant.
(10) The department may investigate all suspected violations of
this section or any regulation adopted pursuant to this section, or
any activity that the registrant has engaged in that is not in the
best interests of the public's health, safety, or general welfare as
it pertains to charitable raffles.
(11) The department may audit the records and other documents of
a registrant to ensure compliance with this section, and may charge a
registrant the direct costs associated with an audit conducted
pursuant to this paragraph.
(12) (A) Once registered, an eligible organization shall file
annually thereafter with the department a report that includes all of
the following information for each of the eligible organization's
last three fiscal years:
(i) The aggregate gross receipts from the operation of raffles.
(ii) The aggregate direct costs incurred by the eligible
organization from the operation of raffles.
(iii) The charitable or beneficial purposes for which proceeds of
the raffles were used.
(iv) The aggregate distributions of proceeds from the operation of
raffles made to directly support beneficial or charitable purposes,
other than beneficial or charitable purposes undertaken by the
eligible organization, or eligible recipient organizations, under
subdivision (c) of Section 320.5.
(v) The aggregate distributions of proceeds from the operation of
raffles made to raffle winners.
(vi) The aggregate distributions of proceeds from the operation of
raffles made to any other organizations, or for any other purposes,
other than those included in clauses (ii), (iv), and (v).
(vii) A schedule of distributions of proceeds from the operation
of raffles, by individual raffle, made to eligible recipient
organizations under subdivision (c) of Section 320.5 that are not
affiliated with the eligible organization.
(viii) A schedule of distributions of proceeds from the operation
of raffles, by individual raffle, made to eligible recipient
organizations under subdivision (c) of Section 320.5 that are
affiliated with the eligible organization.
(ix) A schedule of distributions of proceeds from the operation of
raffles, by individual raffle, made to any other organization not
included under clause (vii) or (viii), or for beneficial or
charitable purposes undertaken by the eligible organization.
(x) The aggregate gross receipts from activities other than the
operation of raffles.
(xi) The aggregate costs incurred by the eligible organization
from activities other than the operation of raffles.
(xii) The aggregate distributions of funds other than proceeds
from the operation of raffles made to directly support beneficial or
charitable purposes or eligible recipient organizations under
subdivision (c) of Section 320.5.
(xiii) The aggregate distributions of funds other than proceeds
from the operation of raffles for purposes other than those listed in
clauses (xi) and (xii).
(xiv) A schedule of distributions of funds other than proceeds
from the operation of raffles made to eligible recipient
organizations under subdivision (c) of Section 320.5 that are not
affiliated with the eligible organization.
(xv) A schedule of distributions of funds other than proceeds from
the operation of raffles made to any other organization not included
under clause (xiv), or for beneficial or charitable purposes
undertaken by the eligible organization.
(B) Failure to submit the annual report to the department as
required in this paragraph shall be grounds for denial of an annual
registration.
(C) The department shall make the reports required by this
paragraph available to the public via the online search portal of the
Attorney General's Registry of Charitable Trusts maintained pursuant
to Section 12584 of the Government Code.
(13) The department shall annually furnish to registrants a form
to collect this information.
(p) The department may take legal action against a registrant if
it determines that the registrant has violated this section or a
regulation adopted pursuant to this section, or that the registrant
has engaged in any conduct that is not in the best interests of the
public's health, safety, or general welfare. An action taken pursuant
to this subdivision does not prohibit the commencement of an
administrative or criminal action by the Attorney General, a district
attorney, city attorney, or county counsel.
(q) An action and hearing conducted to deny, revoke, or suspend a
registry, or other administrative action taken against a registrant,
shall be conducted pursuant to the Administrative Procedure Act
(Chapters 4.5 (commencing with Section 11400) and 5 (commencing with
Section 11500) of Part 1 of Division 3 of Title 2 of the Government
Code). The department may seek civil remedies, including imposing
fines, for violations of this section, and may seek recovery of the
costs incurred in investigating or prosecuting an action against a
registrant or applicant in accordance with those procedures specified
in Section 125.3 of the Business and Professions Code. A proceeding
conducted under this subdivision is subject to judicial review
pursuant to Section 1094.5 of the Code of Civil Procedure. A
violation of this section shall not constitute a crime.
(r) This section shall remain in effect only until December 31,
2018, and as of that date is repealed, unless a later enacted
statute, that is enacted before December 31, 2018, deletes or extends
that date.
