Bill Text: CA SB549 | 2015-2016 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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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-Amended.html

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BILL NUMBER: SB 549	AMENDED
	BILL TEXT

	AMENDED IN SENATE  APRIL 28, 2015

INTRODUCED BY   Senator Hall
    (   Coauthor:   Senator   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, as amended, 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 raffle conducted by an eligible
organization, as defined, for the purpose of directly supporting
specified beneficial or charitable purposes in California, or
financially supporting another private, nonprofit, eligible
organization, as defined, that performs those purposes if, among
other requirements, each ticket sold contains a unique and matching
identifier, 50% of the 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. This bill would define an eligible
organization as a private, nonprofit organization established by, or
affiliated with, a team from specified sports organizations that has
been qualified to conduct business in California for at least one
year prior to conducting a raffle and is exempt from taxation
pursuant to specified provisions of federal and California law.
   The bill would require, if an eligible organization conducts a
raffle for purposes of financially supporting another private,
nonprofit, eligible organization, the eligible organization
conducting the raffle to distribute to the other eligible
organization all proceeds not paid out to the winners within 15 days
of conducting the raffle. The bill would require an eligible
organization to disclose to all ticket purchasers the designated
private, nonprofit organization for which the raffle is being
conducted.
    This bill would also prohibit an eligible organization from
conducting a raffle  , 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. This bill would authorize the
department to issue regulations to enforce these provisions, to
assess  an  annual registration  fee of $10
  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, with specified
exemptions,   registrants  and conduct specified
proceedings in compliance with the Administrative Procedure Act. The
bill would repeal its provisions on December 31, 2020.
   Vote: 2/3. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 320.6 is added to the Penal Code, to read:
   320.6.  (a) Notwithstanding Section 320.5, this section shall
apply to an eligible organization, as defined in subdivision (c).
   (b) A raffle conducted by an eligible organization, as defined in
subdivision (c), for the purpose of directly supporting beneficial or
charitable purposes or financially supporting another private,
nonprofit eligible organization, as defined in subdivision (c) of
Section 320.5, that performs beneficial or charitable purposes may be
conducted in accordance with this section.
   (c) For purposes of this section, "eligible organization" means a
private, nonprofit organization established by, or affiliated with, a
team from the Major League Baseball, National Hockey League,
National Basketball Association, National Football League, Women's
National Basketball Association, or Major League Soccer, or a
private, nonprofit organization established by the Professional
Golfers Association, Ladies Professional Golfers Association, or
National Association for Stock Car Auto Racing that has been
qualified to conduct business in California for at least one year
prior to conducting a raffle, is qualified for an exemption under
Section  501(3)(c)   501(c)(3)  of the
Internal Revenue Code, and is exempt from taxation pursuant to
Section 23701a, 23701b, 23701d, 23701e, 23701f, 23701g, 23701k,
 23701l,   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) 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  is  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) 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
 registers annually with   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: 
   (A) 
    (i)  The name and address of the eligible organization.

   (B) 
    (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.

   (C) 
    (iii)  The name and title of a responsible fiduciary of
the organization. 
   (2) 
    (B)  The department may require an eligible organization
to pay  an   a minimum  annual
registration fee of  ten dollars ($10)   two
thousand five hundred dollars ($2,500)  to cover the reasonable
costs of the department to administer and enforce this section.
 The department may, by regulation, adjust the annual
registration fee as needed to ensure that revenues will fully offset,
but do not exceed, the reasonable costs incurred by the department
pursuant to this section. The fee shall be deposited by the
department into the General Fund.  
   (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.  
   (3) 
    (6)  The department shall receive moneys for the costs
incurred pursuant to this section subject to an appropriation by the
Legislature. 
   (4) 
    (7)  The department shall adopt regulations necessary to
effectuate this section, including emergency regulations, pursuant
to the Administrative Procedure Act (Chapter 3.5 (commencing with
Section 11340) of Part 1 of Division 3 of Title 2 of the Government
Code). 
   (5) 
    (8)    The department shall maintain an
automated database of all registrants.  Each 
    (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.  The  
   (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.   section, and may charge a
registrant the direct costs associated with an audit  
conducted pursuant to this paragraph.  
   (6) 
    (12)     (A)    Once
registered, an eligible organization  must  
shall  file annually thereafter with the department a report
that includes the following: 
   (A) 
    (i)  The aggregate gross receipts from the operation of
raffles. 
   (B) 
    (ii)  The aggregate direct costs incurred by the
eligible organization from the operation of raffles. 
   (C) 
    (iii)  The charitable or beneficial purposes for which
proceeds of the raffles were used, or identify the eligible recipient
organization to which proceeds were directed, and the amount of
those proceeds. 
   (B) Failure to submit the annual report to the department as
required in this paragraph shall be grounds for denial of an annual
registration. 
   (7) 
    (13)  The department shall annually furnish to
registrants a form to collect this information. 
   (8) The registration and reporting provisions of this section do
not apply to any religious corporation sole or other religious
corporation or organization that holds property for religious
purposes, to a cemetery corporation regulated under Chapter 19
(commencing with Section 9600) of Division 3 of the Business and
Professions Code, or to any committee as defined in Section 82013 of
the Government Code that is required to and does file any statement
pursuant to the provisions of Article 2 (commencing with Section
84200) of Chapter 4 of Title 9 of the Government Code, or to a
charitable corporation organized and operated primarily as a
religious organization, educational institution, hospital, or a
health care service plan licensed pursuant to Section 1349 of the
Health and Safety Code. 
   (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,
2020, and as of that date is repealed, unless a later enacted
statute, that is enacted before December 31, 2020, deletes or extends
that date.