AB 888: Charitable raffles.

The California Constitution authorizes the Legislature to permit private, nonprofit 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.

Existing statutory law, until December 31, 2018, authorizes 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, 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. Existing law authorizes a loan from the General Fund to the Major League Sporting Event Raffle Fund to address departmental workload related to the Department of Justices initial implementation of enforcement activities relating to these provisions and requires the loan to be repaid to the General Fund by no later than December 31, 2018.

This bill would extend the operation of those provisions until January 1, 2024. The bill would also extend the date by which the loan from the General Fund to the Major League Sporting Event Raffle Fund must be repaid to the General Fund to no later than December 31, 2023. By extending the operation of provisions that revise the percentage of gross receipts required to go to beneficial or charitable purposes pursuant to the California Constitution, this bill would require a ²/₃ vote of each house.

Existing law requires an eligible organization to annually file a report for each of the eligible organizations last 3 fiscal years that includes specified information, including, among other things, the aggregate gross receipts from the operation of raffles and the charitable or beneficial purposes for which proceeds of the raffles were used. Existing law requires the department to make these reports available to the public pursuant to the online search portal of the Attorney Generals Registry of Charitable Trusts. Under existing law, the failure to submit these reports is grounds for denial of an annual registration.

This bill would instead require an eligible organization to file with the department and post on a specified Internet Web site, each season or year, a report that includes, among other things, the total number of raffles conducted for the season or year, the gross receipts generated from the sale of raffle tickets for the season or year, and for each raffle, each eligible recipient organization, and the amount each eligible recipient organization received. The bill would instead require the department to post the reports on its Internet Web site, but not on the online search portal of the Attorney Generals Registry of Charitable Trusts. The bill would further authorize the imposition of penalties for the failure to submit these reports, as specified.

Existing law authorizes the department to require the payment of fees to cover the reasonable costs of the department in administering and enforcing the above-described provisions, including a minimum annual registration fee of $5,000 to be paid by an eligible organization and a fee of $100 for every individual raffle conducted by the eligible organization at an eligible location, a minimum annual registration fee of $10 to be paid by a person affiliated with the eligible organization who conducts the manual raffle draw, and a minimum annual registration fee of $5,000 to be paid by a manufacturer or distributor of raffle-related products or services. Existing law authorizes the department to audit the records and other documents of a registrant to ensure compliance and authorizes the department to charge a registrant the direct costs associated with that audit.

This bill would increase the departments authority to assess fees for those purposes by doubling the amounts specified above. The bill would provide that the department is entitled to reimbursement from a registrant for all actual, reasonable, and direct costs of an audit, as specified.

This bill would declare that it is to take effect immediately as an urgency statute.