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 Department of Justice. The act prohibits the commission from issuing a gambling license unless it is satisfied that the applicant, among other things, is a person of good character, honesty, and integrity. The act establishes criminal penalties for a violation of specific provisions.

This bill would modify definitions establishing certain classifications of employees of gambling establishments and specific requirements for their licenses. The bill would authorize, rather than require, the commission to deny a license to an applicant for specific reasons, including, among others, conviction of a felony or being less than 21 years of age. The bill would prohibit requiring a key employee to be on the premises of a gambling establishment while the establishment is open to the public, if certain conditions are met. The bill would also specify that the commission is prohibited from issuing a gambling license unless it is satisfied that the applicant is a person of good moral character, honesty, and integrity. The bill would state the Legislatures intent to provide comprehensive reforms to the Gambling Control Act by this measure.

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 Department of Justice. A person who willfully violates any of the provisions of the Gambling Control Act for which a penalty is not expressly provided is guilty of a misdemeanor. The act establishes criminal penalties for a violation of specific provisions.

This bill would declare the intent of the Legislature to enact legislation that adopts modify definitions establishing certain classifications of employees of gambling establishments and specific requirements for their licenses. The bill would authorize, rather than require, the commission to deny a license to an applicant for specific reasons, including, among others, conviction of a felony or being less than 21 years of age. The bill would prohibit requiring a key employee to be on the premises of a gambling establishment while the establishment is open to the public, if certain conditions are met. The bill would state the Legislatures intent to provide comprehensive reforms to the Gambling Control Act relating to the licensing of gambling establishments in the state, streamlines the licensing process, and allows additional resources to be devoted to regulation and oversight of the gambling industry. by this measure.

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 Department of Justice. A person who willfully violates any of the provisions of the Gambling Control Act for which a penalty is not expressly provided is guilty of a misdemeanor.

This bill would declare the intent of the Legislature to enact legislation that adopts comprehensive reforms to the Gambling Control Act relating to the licensing of gambling establishments in the state, streamlines the licensing process, and allows additional resources to be devoted to regulation and oversight of the gambling industry.

 THIRD READING  

Bill No: AB 779

Author:

:

Vote:

SENATE GOVERNMENTAL ORG. COMMITTEE: 13-0, 7/11/17

AYES: Dodd, Berryhill, Bradford, Cannella, Gaines, Galgiani, Glazer, Hill, Hueso, Lara, Mendoza, Portantino, Vidak

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

ASSEMBLY FLOOR: 73-0, 5/31/17 - See last page for vote

SUBJECT:

SOURCE: Author

DIGEST: This bill modifies the definition of a “gambling enterprise employee” to no longer include an employee whose duties do not involve gaming activities, including, but not limited to, a cocktail server, bartender, janitorial worker, or other person engaged exclusively in preparing or serving food or beverages.

ANALYSIS:

Existing law:

1. Provides, under the Gambling Control Act (Act), for the licensure and regulation of various legalized gambling activities and establishments by the California Gambling Control Commission (CGCC) and the enforcement of those gambling activities by the Department of Justice (DOJ).
2. Prohibits the CGCC from issuing a gambling license unless it is satisfied that the applicant, among other things, is a person of good character, honesty, and integrity.
3. Defines a “gambling enterprise employee” to mean any natural person employed in the operation of a gambling enterprise including, without limitation, dealers, floor personnel, security employees, count room 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.
4. Defines a “key employee” to mean 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 DOJ for reasons consistent with the policies of the Act.

This bill:

1. Modifies the definition of a “gambling enterprise employee” to no longer include an employee whose duties do not involve gaming activities, including, but not limited to, a cocktail server, bartender, janitorial worker, or other person engaged exclusively in preparing or serving food or beverage.
2. Specifies that the CGCC is prohibited from issuing a gambling license unless it is satisfied that the applicant is a person of good moral character, honesty, and integrity.
3. Modifies the definition of a “key employee” to mean any natural person employed in the operation of a gambling enterprise in a supervisory capacity and empower to make discretionary decisions that regulate the gambling operations.
4. States the Legislature’s intent to provide comprehensive reforms to the Act relating to the licensing of gambling establishments, streamlining the licensing process, and allowing additional resources to be devoted to regulation and oversight of the gambling industry.

Background

Gambling Control Act. Prior to 1998, California's gambling industry was essentially unregulated. In 1984, the Legislature enacted the Gaming Registration Act, which required the Attorney General's office to provide uniform, minimum regulation of California card rooms. However, the scope of the Attorney General's authority was extremely limited and funding was inadequate. Recognizing the need for broader oversight of California's gambling industry, the Legislature enacted the Act in 1997.

The Act provides CGCC with jurisdiction over the operation of gambling establishments in California. The Act requires every owner, lessee, or employee of a gambling establishment to obtain and maintain a valid state gambling license and assigns CGCC the responsibility of assuring that gambling licenses are not issued to, or held by, unqualified or disqualified persons, or by persons whose operations are conducted in a manner that is harmful to the public health, safety, or welfare.

The Act directs CGCC to issue licenses only to those persons of good character, honesty, and integrity, whose prior activities, criminal record, reputation, habits, and associations do not pose a threat to the public interest of this state. The Bureau of Gambling Control (Bureau), within DOJ, conducts background and field investigations, and enforces the provisions of the Act in this regard.

Work permits. The Act requires that all individuals employed as gambling enterprise employees hold a valid work permit. The work permit is issued by the local jurisdiction. Should the city or county not have a work permit process in place, or where a locally issued work permit is not required, an application for a work permit shall be made to the CGCC.

The process to obtain a work permit varies depending on the city or county in which the application is submitted. In the event the work permit must be obtained from the state, the process entails a fingerprint scan and an ordinary criminal history background check performed by the Bureau. The work permit application process is streamlined and less stringent than the process to obtain a key employee license or any other state gambling license, which requires a deeper background investigation by the Bureau. According to the CGCC’s Web site, there are 356 individuals with an active work permit.

By changing the definition of “gambling enterprise employee”, AB 779 removes the work permit requirement specifically for waiters, waitresses, and secretaries or an employee whose duties do not involve gaming activities, including, but not limited to, a cocktail server, bartender, janitorial worker, or other person engaged in preparing or serving food or beverages.

Licensing Backlog. A significant backlog has existed within the licensing division of the Bureau, within DOJ. At its height, there were approximately 3,000 gaming license applications that needed to be investigated by the Bureau and ultimately approved or denied by the CGCC. The backlog is due to a combination of additional responsibilities being assumed by the Bureau through the Governor’s 2013 Reorganization Plan, a more complex investigation process, and an increase in the number of applicants.

In an attempt to begin reducing the backlog, the 2015-2016 State Budget included 20 full-time positions to the Bureau’s licensing division in an attempt to dramatically reduce the backlog. To date, the Bureau has filled 16 of 20 positions and expects to fulfill all 20 positions in the coming months.

The Bureau estimates that the current status of the backlog is approximately 2180 applications, with the majority of those being applications for Third Party Proposition Player Licenses. The majority of these applicants are eligible to receive a temporary license that allows them to work while their application is pending.

The rest of those applications include key employee licenses, state gambling licenses and work permits. It should be noted that work permits only account for 47 applications in the backlog.

Comments

Purpose of the bill. According to the author’s office, “the Act regulating card clubs in the state has been in effect for nearly 20 years. During that period of time both regulators and the industry have learned a variety of things which could be improved to result in stronger and more efficient regulation of the industry. It is important that provisions of the Act be updated, based on experience, to provide regulators with additional expertise and resources to improve field enforcement of the Act, while also addressing the significant backlog of license applications experienced under the Act.”

Related/Prior Legislation

AB 987 (Garcia, 2017) increases the membership of the Gaming Policy Advisory Committee from 10 to 12 members. (Senate Inactive File)

AB 1168 (Gipson, 2017) extends the gambling moratorium related to the expansion of cardrooms and of new cardroom licenses from January 1, 2020, to January 1, 2023. (Pending on the Senate Floor)

AB 2218 (Burke, 2016) would have extended a licensing exemption for the owners of the card room located at the old Hollywood Park Racetrack. (Vetoed by Governor Brown)

AB 903 (Garcia, 2015) would have permitted a person between 18 to 21 years of age to work in a gambling establishment in a classification that entails providing services on and off the gaming floor that are not involved in play of any controlled game. (Held on the Senate Inactive File)

AB 2526 (Hall, 2012) would have revised the definition of a "key employee" to any person employed in the operation of a gambling enterprise in a supervisory capacity or empowered to make discretionary decisions with regard to the gambling operations. (Held on the Senate Inactive File)

SB 730 (Florez, Chapter 438, Statutes of 2007) made various changes to the licensing and regulatory processes related to key employees for gambling establishments under the Act.

SB 8 (Lockyer, Chapter 867, Statutes of 1997) repealed the Gaming Regulation Act, and instead enacted the Gambling Control Act.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT: (Verified 8/21/17)

None received

OPPOSITION: (Verified 8/21/17)

None received

ASSEMBLY FLOOR: 73-0, 5/31/17

AYES: Acosta, Aguiar-Curry, Travis Allen, Arambula, Baker, Berman, Bigelow, Bloom, Bocanegra, Bonta, Brough, Burke, Caballero, Calderon, Cervantes, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Cunningham, Dababneh, Dahle, Daly, Flora, Fong, Frazier, Friedman, Gallagher, Cristina Garcia, Eduardo Garcia, Gipson, Gloria, Gomez, Gonzalez Fletcher, Gray, Grayson, Holden, Irwin, Jones-Sawyer, Kalra, Kiley, Lackey, Levine, Limón, Low, Maienschein, Mathis, McCarty, Medina, Mullin, Muratsuchi, Nazarian, Obernolte, O'Donnell, Quirk, Quirk-Silva, Reyes, Ridley-Thomas, Rodriguez, Rubio, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Voepel, Waldron, Weber, Wood, Rendon

NO VOTE RECORDED: Chen, Choi, Eggman, Harper, Mayes, Melendez, Patterson

Prepared by:

8/22/17 16:36:49

**** END ****

SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION

Senator Bill Dodd

Chair

2017 - 2018 Regular

Bill No: AB Hearing Date: 7/11/2017

SUBJECT:

DIGEST: This bill modifies the definition of a “gambling enterprise employee” to no longer include an employee whose duties do not involve gaming activities, including, but not limited to, a cocktail server, bartender, janitorial worker, or other person engaged exclusively in preparing or serving food or beverages.

ANALYSIS:

Existing law:

1. Provides, under the Gambling Control Act (Act), for the licensure and regulation of various legalized gambling activities and establishments by the California Gambling Control Commission (CGCC) and the enforcement of those gambling activities by the Department of Justice (DOJ).
2. Prohibits the CGCC from issuing a gambling license unless it is satisfied that the applicant, among other things, is a person of good character, honesty, and integrity.
3. Defines a “gambling enterprise employee” to mean any natural person employed in the operation of a gambling enterprise including, without limitation, dealers, floor personnel, security employees, count room 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.
4. Defines a “key employee” to mean 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 DOJ for reasons consistent with the policies of the Act.

This bill:

1. Modifies the definition of a “gambling enterprise employee” to no longer include an employee whose duties do not involve gaming activities, including, but not limited to, a cocktail server, bartender, janitorial worker, or other person engaged exclusively in preparing or serving food or beverage.
2. Specifies that the CGCC is prohibited from issuing a gambling license unless it is satisfied that the applicant is a person of good moral character, honesty, and integrity.
3. Modifies the definition of a “key employee” to mean any natural person employed in the operation of a gambling enterprise in a supervisory capacity and empower to make discretionary decisions that regulate the gambling operations.
4. States the Legislature’s intent to provide comprehensive reforms to the Act relating to the licensing of gambling establishments, streamlining the licensing process, and allowing additional resources to be devoted to regulation and oversight of the gambling industry.

Background

Purpose of the bill. According to the author’s office, “the Act regulating card clubs in the state has been in effect for nearly 20 years. During that period of time both regulators and the industry have learned a variety of things which could be improved to result in stronger and more efficient regulation of the industry. It is important that provisions of the Act be updated, based on experience, to provide regulators with additional expertise and resources to improve field enforcement of the Act, while also addressing the significant backlog of license applications experienced under the Act.”

Gambling Control Act. Prior to 1998, California's gambling industry was essentially unregulated. In 1984, the Legislature enacted the Gaming Registration Act, which required the Attorney General's office to provide uniform, minimum regulation of California card rooms. However, the scope of the Attorney General's authority was extremely limited and funding was inadequate. Recognizing the need for broader oversight of California's gambling industry, the Legislature enacted the Act in 1997.

The Act provides CGCC with jurisdiction over the operation of gambling establishments in California. The Act requires every owner, lessee, or employee of a gambling establishment to obtain and maintain a valid state gambling license and assigns CGCC the responsibility of assuring that gambling licenses are not issued to, or held by, unqualified or disqualified persons, or by persons whose operations are conducted in a manner that is harmful to the public health, safety, or welfare.

The Act directs CGCC to issue licenses only to those persons of good character, honesty, and integrity, whose prior activities, criminal record, reputation, habits, and associations do not pose a threat to the public interest of this state. The Bureau of Gambling Control (Bureau), within DOJ, conducts background and field investigations, and enforces the provisions of the Act in this regard.

Work Permits. The Act requires that all individuals employed as gambling enterprise employees hold a valid work permit. The work permit is issued by the local jurisdiction. Should the city or county not have a work permit process in place, or where a locally issued work permit is not required, an application for a work permit shall be made to the CGCC.

The process to obtain a work permit varies depending on the city or county in which the application is submitted. In the event the work permit must be obtained from the state, the process entails a fingerprint scan and an ordinary criminal history background check performed by the Bureau. The work permit application process is streamlined and less stringent than the process to obtain a key employee license or any other state gambling license, which requires a deeper background investigation by the Bureau. According to the CGCC’s Web site, there are 356 individuals with an active work permit.

By changing the definition of “gambling enterprise employee”, AB 779 would remove the work permit requirement specifically for waiters, waitresses, and secretaries or an employee whose duties do not involve gaming activities, including, but not limited to, a cocktail server, bartender, janitorial worker, or other person engaged in preparing or serving food or beverages.

Licensing Backlog. A significant backlog has existed within the licensing division of the Bureau, within DOJ. At its height, there were approximately 3,000 gaming license applications that needed to be investigated by the Bureau and ultimately approved or denied by the CGCC. The backlog is due to a combination of additional responsibilities being assumed by the Bureau through the Governor’s 2013 Reorganization Plan, a more complex investigation process, and an increase in the number of applicants.

In an attempt to begin reducing the backlog, the 2015-2016 State Budget included 20 full-time positions to the Bureau’s licensing division in an attempt to dramatically reduce the backlog. To date, the Bureau has filled 16 of 20 positions and expects to fulfill all 20 positions in the coming months.

The Bureau estimates that the current status of the backlog is approximately 2180 applications, with the majority of those being applications for Third Party Proposition Player Licenses. The majority of these applicants are eligible to receive a temporary license that allows them to work while their application is pending.

The rest of those applications include key employee licenses, state gambling licenses and work permits. It should be noted that work permits only account for 47 applications in the backlog.

Prior/Related Legislation

AB 987 (Garcia, 2017) would increase the membership of the Gaming Policy Advisory Committee from 10 to 12 members. (Pending on the Senate Floor)

AB 1168 (Gipson, 2017) would extend the gambling moratorium related to the expansion of cardrooms and of new cardroom licenses from January 1, 2020, to January 1, 2023. (Pending in the Senate Governmental Organization Committee)

AB 2218 (Burke, 2016) would have extended a licensing exemption for the owners of the card room located at the old Hollywood Park Racetrack. (Vetoed by Governor Brown)

AB 903 (Garcia, 2015) would have permitted a person between 18 to 21 years of age to work in a gambling establishment in a classification that entails providing services on and off the gaming floor that are not involved in play of any controlled game. (Held on the Senate inactive file)

AB 2526 (Hall, 2012) would have revised the definition of a "key employee" to any person employed in the operation of a gambling enterprise in a supervisory capacity or empowered to make discretionary decisions with regard to the gambling operations. (Held on the Senate inactive file)

SB 730 (Florez, Chapter 438, Statutes of 2007) made various changes to the licensing and regulatory processes related to key employees for gambling establishments under the Act.

SB 8 (Lockyer, Chapter 867, Statutes of 1997) repealed the Gaming Regulation Act, and instead enacted the Gambling Control Act.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

SUPPORT:

None received

OPPOSITION:

None received

ASSEMBLY THIRD READING

ATR Bill Id:AB 779

Author:(Burke)

As Amended Ver:April 20, 2017

Majority vote

SUMMARY: Makes changes to the definition of "gambling enterprise employee" within the Gambling Control Act (Act). Specifically, this bill:

1. Removes "waiters" and "waitresses", and "secretaries" from the definition of "gambling enterprise employee"
2. Further specifies a "gambling enterprise employee" shall not include an employee whose duties do not involve gaming activities, including, but not limited to, a cocktail server, bartender, janitorial worker, or other person engaged exclusively in preparing or serving food or beverages.
3. Specifies that the California Gambling Control Commission (CGCC) is prohibited from issuing a gambling license unless it is satisfied that the applicant is a person of good moral character, honesty, and integrity.
4. Provides intent language that the purpose of the bill is to provide comprehensive reforms to the Act relating to the licensing of gambling establishments, streamlining the licensing process, and allowing additional resources to be devoted to regulation and oversight of the gambling industry.

EXISTING LAW:

1. Existing law, the Act, provides for the licensure of certain individuals and gambling establishments involved in various gambling activities, and for the regulation of those activities, by the CGCC.
2. Provides for the enforcement of those gambling activities by Department of Justice (DOJ).
3. Prohibits the commission from issuing a gambling license unless it is satisfied that the applicant, among other things, is a person of good character, honesty, and integrity.
4. Defines "gambling enterprise employee" as any natural person employed in the operation of a gambling enterprise, including, without limitation, dealers, floor personnel, security employees, countroom personnel, cage personnel, collection personnel, surveillance personnel, data-processing personnel, appropriate maintenance personnel, waiters and waitresses, and secretaries, or any other natural person whose employment duties require or authorize access to restricted gambling establishment areas.
5. Requires a gambling enterprise employee – prior to employment – to obtain a valid work permit issued by the county, city, or city and county. Should the county, city, or city and county not have a work permit process in place, or where a locally issued work permit is not required, an application for a work permit shall be made to the CGCC.
6. Defines "Key employee" as any natural person employed in the operation of a gambling enterprise in a supervisory capacity or empowered to make discretionary decisions that regulate gambling operations, including, without limitation, pit bosses, shift bosses, credit executives, cashier operations supervisors, gambling operation managers and assistant managers, managers or supervisors of security employees, or any other natural person designated as a key employee by the department.
7. Requires every key employee to apply for and obtain a key employee license from the CGCC.

FISCAL EFFECT: Unknown. This bill is keyed non-fiscal by the Legislative Counsel.

COMMENTS:

Purpose of the bill: According to the author, "The Gambling Control Act regulating card clubs in the state has been in effect for nearly twenty years. During that period of time both regulators and the industry have learned a variety of things which could be improved to result in stronger and more efficient regulation of the industry. It is important that provisions of the Act be updated, based on experience, to provide regulators with additional expertise and resources to improve field enforcement of the Act, while also addressing the significant backlog of license applications experienced under the current Act."

Background: Prior to 1998, California's gambling industry was essentially unregulated. In 1984, the Legislature enacted the "Gaming Registration Act," which required the Attorney General's office to provide uniform, minimum regulation of California card rooms. However, the scope of the Attorney General's authority was extremely limited and funding was inadequate. Recognizing the need for broader oversight of California's gambling industry, the Legislature enacted the "Gambling Control Act" in 1997.

The Act provides CGCC with jurisdiction over the operation of gambling establishments in California. The Act requires every owner, lessee, or employee of a gambling establishment to obtain and maintain a valid state gambling license and assigns CGCC the responsibility of assuring that gambling licenses are not issued to, or held by, unqualified or disqualified persons, or by persons whose operations are conducted in a manner that is harmful to the public health, safety, or welfare. The Act directs CGCC to issue licenses only to those persons of good character, honesty and integrity, whose prior activities, criminal record, if any; reputation, habits and associations do not pose a threat to the public interest of this state. The Bureau of Gambling Control (Bureau), within the Department of Justice (DOJ), conducts background and field investigations and enforces the provisions of the Act in this regard.

Work Permits: The Act requires that all individuals employed as gambling enterprise employees hold a valid work permit. The work permit is issued by the local jurisdiction. Should the city or county not have a work permit process in place, or where a locally issued work permit is not required, an application for a work permit shall be made to the CGCC.

The process to obtain a work permit varies depending on the city or county in which the application is submitted. In the event the work permit must be obtained from the state, the process entails a fingerprint scan and an ordinary criminal history background check performed by the Bureau. The work permit application process is streamlined and less stringent than the process to obtain a key employee license or any other state gambling license, which requires a deeper background investigation by the Bureau.

By changing the definition of "gambling enterprise employee", this bill would remove the work permit requirement specifically for a waiters and waitresses, and secretaries. Furthermore, it removes the requirement for "any employee whose duties do not involve gaming activities, including, but not limited to, a cocktail server, bartender, janitorial worker, or other person engaged exclusively in preparing or serving food or beverages".

Licensing Backlog: A significant backlog has existed within the licensing division of the Bureau – reaching nearly 3,000 gaming license applications that need to be investigated by the Bureau and ultimately approved or denied by the CGCC. The backlog is due to a combination of additional responsibilities being assumed by the Bureau through the Governor's 2013 Reorganization Plan, a more complex investigation process, and an increase in the number of applicants.

In an attempt to begin reducing the backlog, the 2015-2016 State Budget included twenty full-time positions to the Bureau's licensing division. To date, the Bureau has Filled 15 of 20 positions – 1 Manager, 12 Associate Governmental Program Analysts (AGPA), and 2 Staff Services Analysts (SSA).

So far this fiscal year the Bureau has completed a large number of cases – 2,671 in total. However, they have received 2,449 new applications this year. This increase of new applications has prevented the Bureau from making a significant reduction in the number of cases that need to be completed, which leaves the current status of the backlog at 2,983 applications. The majority of the backlog consists of applications for Third Party Proposition Player Licenses (2,240), while the rest consists of applications for Key Employee Licenses, State Gambling Licenses and work permits. It is important to note that work permits only account for 44 applications within the backlog.

Support: Lucky Chances Casino, Capitol Casino, Seven Mile Casino, and Kings Casino write in support: "This measure seeks to remedy California law to help concentrate the regulatory resources of the CGCC and the Bureau on their oversight and enforcement efforts. The current stringent statutory mandates on employee licensing has created a significant backlog of applications, while taking away critical regulatory focus from oversight of the industry. For only 72 active Gambling Establishments, there are currently 686 Licensed (157 Interim) Key Employees and 426 licensed (56 temporary) work permittees, which require bi-annual licensing scrutiny by the regulatory authorities. The resources devoted to the initial licensing and renewal of these employees has caused a significant strain on the resources of the regulatory agencies. By changing the strict licensing mandates on employees, licensing resources can be focused on owners and chief officers of the gambling establishments. Furthermore, additional resources can be focused on the oversight of the gambling operations so that the State can ensure that the public is playing games conduced honesty and free from corruptive influences."

Prior/Related Legislation: AB 1033 (Garcia), of the current legislative session. Allows a person between 18 and 21 years of age to work in a gambling establishment in a classification that entails providing services on and off the gaming floor that are not involved in play of any controlled game. (Pending in Senate Governmental Organization Committee)

AB 1188 (Gipson) of 2015. Would have revised the definition of "key employee" to mean any natural person employed in the operation of a gambling enterprise in a supervisory capacity or empowered to make discretionary decisions with regard to gambling operations. (Substantially amended on Senate Floor)

AB 2218 (Burke) of 2016. Would have extended a licensing exemption for the owners of the card room located at the old Hollywood Park Racetrack. Additionally, extends the time after receipt of an order by the Gambling Control Commission (CGCC) within which a person must apply for a gambling license or a finding of suitability. (Vetoed by Governor)

AB 903 (Garcia) of 2015. Would have permitted a person between 18 and 21 years of age to work in a gambling establishment in a classification that entails providing services on and off the gaming floor that are not involved in play of any controlled game. (Died on Senate inactive file)

AB 2526 (Hall) of 2012. Would have revised the definition of a "key employee" to any person employed in the operation of a gambling enterprise in a supervisory capacity or empowered to make discretionary decisions with regard to the gambling operations. (Died on Senate inactive file)

SB 1678 (Florez) of 2008. Would have added to the definition of "license" any other license issued by the CGCC pursuant to the Gambling Control Act or by a regulation adopted pursuant to that Act. Gutted and amended in the Assembly. Held in Assembly Rules Committee.

SB 730 (Florez), Chapter 438, Statutes of 2007. Makes various changes to the licensing and regulatory processes related to key employees for gambling establishments under the Gambling Control Act (Act).

AB 1753 (Governmental Organization Committee), Chapter 546, Statutes of 2005. Deletes the residency requirement for key employees of California card rooms. Revises the penalties for violations of California's gambling related laws.

SB 8 (Lockyer), Chapter 867, Statutes of 1997. Repealed the Gaming Regulation Act, and instead enacted the Gambling Control Act, which provided for DOJ to investigate and enforce controlled gambling in the state. It also establishes CGCC to regulate gambling in this state to issue, suspend, or revoke gambling licenses.

Analysis Prepared by: Kenton Stanhope / G.O. / (916) 319-2531 FN: 0000460

Date of Hearing: May 17, 2017

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez Fletcher, Chair

ABPCA Bill Id:AB 779

Author:(Burke) – As Amended Ver:April 20, 2017

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill modifies the definition of “gambling enterprise employee” within the Gambling Control Act by excluding from that definition any employee not involved in gaming activities, such as janitorial workers or those engaged exclusively in preparing or serving food and beverages.

FISCAL EFFECT:

No new state costs.

COMMENTS:

1. Background. The Gambling Control Act requires all individuals employed as gambling enterprise employees to hold a valid work permit. The process to obtain a work permit varies depending on the city or county in which the application is submitted. In the event the work permit must be obtained from the state, the process entails a fingerprint scan and an ordinary criminal history background check performed by the Department of Justice’s Bureau of Gambling Control (Bureau). The work permit application process is streamlined and less stringent than the process to obtain a key employee license or any other state gambling license, which requires a deeper background investigation by the Bureau.
2. Bureau’s Backlog. Significant backlog has existed within the licensing division of the Bureau – reaching nearly 3,000 gaming license applications that need to be investigated by the Bureau. The backlog is due to a combination of additional responsibilities being assumed by the Bureau through the Governor’s 2013 Reorganization Plan, a more complex investigation process, and an increase in the number of applicants. In an attempt to begin reducing the backlog, the 2015-2016 State Budget included twenty full-time positions to the Bureau’s licensing division.
3. Purpose. According to the author, AB 779 will update the Gambling Control Act, which has been in effect for nearly 20 years. Supporters of the bill note that outdated employee licensing process has created a significant backlog of applications. This bill, by removing some licensing requirements related to employees not involved in gaming activities, hopes to make regulation more efficient while reducing the Bureau’s current backlog.

Analysis Prepared by: Luke Reidenbach / APPR. / (916) 319-2081

Date of Hearing: April 27, 2017

ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION

Adam Gray, Chair

ABPCA Bill Id:AB 779 (

Author:Burke) – As Amended Ver:March 23, 2017

SUBJECT: Gambling establishments

SUMMARY: Makes changes to the definition of “gambling enterprise employee” within the Gambling Control Act (Act). Specifically, this bill:

1. Removes “waiters” and “waitresses”, and “secretaries” from the definition of “gambling enterprise employee”
2. Further specifies a “gambling enterprise employee” shall not include an employee whose duties do not involve gaming activities, including, but not limited to, a cocktail server, bartender, janitorial worker, or other person engaged exclusively in preparing or serving food or beverages.
3. Specifies that the California Gambling Control Commission (CGCC) is prohibited from issuing a gambling license unless it is satisfied that the applicant is a person of good moral character, honesty, and integrity.
4. Provides intent language that the purpose of the bill is to provide comprehensive reforms to the Act relating to the licensing of gambling establishments, streamlining the licensing process, and allowing additional resources to be devoted to regulation and oversight of the gambling industry.

EXISTING LAW:

1. Existing law, the Act, provides for the licensure of certain individuals and gambling establishments involved in various gambling activities, and for the regulation of those activities, by the CGCC.
2. Provides for the enforcement of those gambling activities by Department of Justice (DOJ).
3. Prohibits the commission from issuing a gambling license unless it is satisfied that the applicant, among other things, is a person of good character, honesty, and integrity.
4. Defines “gambling enterprise employee” as any natural person employed in the operation of a gambling enterprise, including, without limitation, dealers, floor personnel, security employees, countroom personnel, cage personnel, collection personnel, surveillance personnel, data-processing personnel, appropriate maintenance personnel, waiters and waitresses, and secretaries, or any other natural person whose employment duties require or authorize access to restricted gambling establishment areas.
5. Requires a gambling enterprise employee –prior to employment –to obtain a valid work permit issued by the county, city, or city and county. Should the county, city, or city and county not have a work permit process in place, or where a locally issued work permit is not required, an application for a work permit shall be made to the CGCC.
6. Defines “Key employee” as any natural person employed in the operation of a gambling enterprise in a supervisory capacity or empowered to make discretionary decisions that regulate gambling operations, including, without limitation, pit bosses, shift bosses, credit executives, cashier operations supervisors, gambling operation managers and assistant managers, managers or supervisors of security employees, or any other natural person designated as a key employee by the department.
7. Requires every key employee to apply for and obtain a key employee license from the CGCC.

FISCAL EFFECT: Unknown

COMMENTS:

Purpose of the bill: According to the author, “The Gambling Control Act regulating card clubs in the state has been in effect for nearly twenty years. During that period of time both regulators and the industry have learned a variety of things which could be improved to result in stronger and more efficient regulation of the industry. It is important that provisions of the Act be updated, based on experience, to provide regulators with additional expertise and resources to improve field enforcement of the Act, while also addressing the significant backlog of license applications experienced under the current Act.”

Background: Prior to 1998, California's gambling industry was essentially unregulated. In 1984, the Legislature enacted the "Gaming Registration Act," which required the Attorney General's office to provide uniform, minimum regulation of California card rooms. However, the scope of the Attorney General's authority was extremely limited and funding was inadequate. Recognizing the need for broader oversight of California's gambling industry, the Legislature enacted the "Gambling Control Act” in 1997.

The Act provides CGCC with jurisdiction over the operation of gambling establishments in California. The Act requires every owner, lessee, or employee of a gambling establishment to obtain and maintain a valid state gambling license and assigns CGCC the responsibility of assuring that gambling licenses are not issued to, or held by, unqualified or disqualified persons, or by persons whose operations are conducted in a manner that is harmful to the public health, safety, or welfare. The Act directs CGCC to issue licenses only to those persons of good character, honesty and integrity, whose prior activities, criminal record, if any; reputation, habits and associations do not pose a threat to the public interest of this state. The Bureau of Gambling Control (Bureau), within the Department of Justice (DOJ), conducts background and field investigations and enforces the provisions of the Act in this regard.

Work Permits: The Act requires that all individuals employed as gambling enterprise employees hold a valid work permit. The work permit is issued by the local jurisdiction. Should the city or county not have a work permit process in place, or where a locally issued work permit is not required, an application for a work permit shall be made to the CGCC.

The process to obtain a work permit varies depending on the city or county in which the application is submitted. In the event the work permit must be obtained from the state, the process entails a fingerprint scan and an ordinary criminal history background check performed by the Bureau. The work permit application process is streamlined and less stringent than the process to obtain a key employee license or any other state gambling license, which requires a deeper background investigation by the Bureau.

By changing the definition of “gambling enterprise employee”, AB 779 would remove the work permit requirement specifically for a waiters and waitresses, and secretaries. Furthermore, it removes the requirement for “any employee whose duties do not involve gaming activities, including, but not limited to, a cocktail server, bartender, janitorial worker, or other person engaged exclusively in preparing or serving food or beverages”.

Licensing Backlog: A significant backlog has existed within the licensing division of the Bureau – reaching nearly 3,000 gaming license applications that need to be investigated by the Bureau and ultimately approved or denied by the CGCC. The backlog is due to a combination of additional responsibilities being assumed by the Bureau through the Governor’s 2013 Reorganization Plan, a more complex investigation process, and an increase in the number of applicants.

In an attempt to begin reducing the backlog, the 2015-2016 State Budget included twenty full-time positions to the Bureau’s licensing division. To date, the Bureau has Filled 15 of 20 positions – 1 Manager, 12 Associate Governmental Program Analysts (AGPA), and 2 Staff Services Analysts (SSA).

So far this fiscal year the Bureau has completed a large number of cases – 2,671 in total.  However, they have received 2,449 new applications this year.  This increase of new applications has prevented the Bureau from making a significant reduction in the number of cases that need to be completed, which leaves the current status of the backlog at 2,983 applications. The majority of the backlog consists of applications for Third Party Proposition Player Licenses (2,240), while the rest consists of applications for Key Employee Licenses, State Gambling Licenses and work permits.  It is important to note that work permits only account for 44 applications within the backlog. 

Support: Lucky Chances Casino, Capitol Casino, Seven Mile Casino, and Kings Casino write in support: “This measure seeks to remedy California law to help concentrate the regulatory resources of the CGCC and the Bureau on their oversight and enforcement efforts. The current stringent statutory mandates on employee licensing has created a significant backlog of applications, while taking away critical regulatory focus from oversight of the industry. For only 72 active Gambling Establishments, there are currently 686 Licensed (157 Interim) Key Employees and 426 licensed (56 temporary) work permittees, which require bi-annual licensing scrutiny by the regulatory authorities. The resources devoted to the initial licensing and renewal of these employees has caused a significant strain on the resources of the regulatory agencies. By changing the strict licensing mandates on employees, licensing resources can be focused on owners and chief officers of the gambling establishments. Furthermore, additional resources can be focused on the oversight of the gambling operations so that the State can ensure that the public is playing games conduced honesty and free from corruptive influences.”

Prior/Related Legislation: AB 1033 (Garcia), 2016/2017 Legislative Session. Allows a person between 18 and 21 years of age to work in a gambling establishment in a classification that entails providing services on and off the gaming floor that are not involved in play of any controlled game. (Pending in Assembly Appropriations Committee)

AB 1188 (Gipson), 2015/2016 Session. Would have revised the definition of “key employee” to mean any natural person employed in the operation of a gambling enterprise in a supervisory capacity or empowered to make discretionary decisions with regard to gambling operations. (Gut and amended on Senate Floor)

AB 2218 (Burke), 2015/2016 Legislative Session. Would have extended a licensing exemption for the owners of the card room located at the old Hollywood Park Racetrack. Additionally, extends the time after receipt of an order by the Gambling Control Commission (CGCC) within which a person must apply for a gambling license or a finding of suitability. (Vetoed by Governor)

AB 903 (Garcia), 2015/2016 Legislative Session. Would have permitted a person between 18 and 21 years of age to work in a gambling establishment in a classification that entails providing services on and off the gaming floor that are not involved in play of any controlled game. (Died on Senate inactive file)

AB 2526 (Hall), 2011/2012 Legislative Session. Would have revised the definition of a "key employee" to any person employed in the operation of a gambling enterprise in a supervisory capacity or empowered to make discretionary decisions with regard to the gambling operations. (Died on Senate inactive file)

SB 1678 (Florez), 2007/2008 Legislative Session. Would have added to the definition of "license" any other license issued by the CGCC pursuant to the Gambling Control Act or by a regulation adopted pursuant to that Act. Gutted and amended in the Assembly. Held in Assembly Rules Committee.

SB 730 (Florez), Chapter 438, Statutes of 2007. Makes various changes to the licensing and regulatory processes related to key employees for gambling establishments under the Gambling Control Act (Act).

AB 1753 (Governmental Organization Committee), Chapter 546, Statutes of 2005. Deletes the residency requirement for key employees of California card rooms. Revises the penalties for violations of California's gambling related laws.

SB 8 (Lockyer), Chapter 867, Statutes of 1997. Repealed the Gaming Regulation Act, and instead enacted the Gambling Control Act, which provided for DOJ to investigate and enforce controlled gambling in the state. It also establishes CGCC to regulate gambling in this state to issue, suspend, or revoke gambling licenses.

REGISTERED SUPPORT / OPPOSITION:

Support

Capitol Casino

Kings Casino

Lucky Chances Casino

Seven Mile Casino

Opposition

None on file

Analysis Prepared by: Kenton Stanhope / G.O. / (916) 319-2531