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Bill Text
Bill Information
Bill Start
Amended
IN
Assembly
August 18, 2016 |
Amended
IN
Assembly
June 27, 2016 |
Amended
IN
Assembly
June 09, 2016 |
Amended
IN
Assembly
April 20, 2016 |
Assembly Bill | No. 2863 |
Introduced by Assembly Members Gray and Jones-Sawyer |
February 19, 2016 |
LEGISLATIVE COUNSEL'S DIGEST
Digest Key
Vote: 2/3 Appropriation: YES Fiscal Committee: YES Local Program: YESBill Text
The people of the State of California do enact as follows:
SECTION 1.
Section 19619.8 is added to the Business and Professions Code, to read:19619.8.
The moneys collected each fiscal year pursuant to subdivisions (a) and (b) of Section 19990.519 shall be deposited as follows:SEC. 2.
Chapter 5.2 (commencing with Section 19990.101) is added to Division 8 of the Business and Professions Code, to read:CHAPTER 5.2. The Internet Poker Consumer Protection Act of 2016
Article 1. Title and Legislative Declarations
19990.101.
This chapter shall be known and may be cited as the Internet Poker Consumer Protection Act of 2016.19990.102.
The Legislature hereby finds and declares all of the following:Article 2. Definitions
19990.201.
For the purposes of this chapter, the following words have the following meanings:(i)
(j)
(k)
(l)
(m)
(n)
(o)
(p)
(q)
(r)
(s)
(t)
(u)
(v)
(w)
(x)
(y)
(z)
(aa)
(ab)
(ac)
(ad)
(ae)
(af)
(ag)
(ah)
(ai)
(aj)
(ak)
(al)
(am)
(an)
(ao)
(ap)
(aq)
(ar)
(G)Receives compensation as part of an affiliate marketing program from bringing players or potential players to a licensed operator’s authorized poker Web site.
(as)
(at)
(au)
(av)
(aw)
(ax)
(ay)
(az)
Article 3. Intrastate Internet Poker in California
19990.301.
Under the federal Unlawful Internet Gambling Enforcement Act of 2006, California is permitted to authorize games played via the Internet as long as all players and the online wagering is located within the jurisdiction of the state and the games are not played by minors.19990.302.
Notwithstanding any other law, a person who is 21 years of age or older and located within California is hereby permitted to participate as a registered player in an authorized Internet poker game provided by a licensed operator on an authorized poker Web site.19990.303.
(a) A person shall not do any of the following:(3)As a player located in this state, play any game provided on the Internet that is not authorized by the state
pursuant to this chapter.
19990.304.
This chapter does not limit or restrict activities or conduct permitted pursuant to Chapter 5 (commencing with Section 19800) or IGRA.19990.305.
This chapter does not authorize any game offered in Nevada or New Jersey other than poker.19990.306.
A person shall not do either of the following:19990.307.
This chapter does not apply to play-for-fun or play-for-free games.
Article
4. Licensing of Operators and Operators, Service Providers Providers, and Marketing Affiliates
19990.401.
(a) (1) Within 270 days after the effective date of this chapter, the commission, and any other state agency with a duty pursuant to this chapter, shall, in consultation with the department and tribes, adopt 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) to implement this chapter, and to facilitate the operation of authorized poker Web sites and expedite the state’s receipt of revenues in compliance with this chapter. The initial adoption, amendment, or repeal of a regulation authorized by this section is deemed to address an emergency, for purposes of Sections 11346.1 and 11349.6 of the Government Code, and the commission and those other state agencies are hereby exempted for that purpose from the requirements of subdivision (b) of Section 11346.1 of the Government Code. After the initial adoption, amendment, or repeal of an emergency regulation pursuant to this section, the commission and those other state agencies shall not request approval from the Office of Administrative Law to readopt the regulation as an emergency regulation pursuant to Section 11346.1 of the Government Code, but shall promulgate permanent regulations in accordance with all applicable law.19990.402.
(a) Authorized Internet poker games may be offered only by entities licensed pursuant to this chapter. An eligible entity seeking to offer authorized Internet poker games shall apply to the department for a determination of suitability. If the department determines the applicant is suitable to receive a license, the applicant shall then apply to the commission for an operator license. The applicant shall pay an application processing fee sufficient to cover the reasonable costs associated with the determination of suitability and the issuance of the license.19990.403.
(a) A licensee’s employees in direct contact with registered players shall be physically present in the state.19990.404.
(a) An entity seeking to act as a service provider shall apply to the department for a determination of suitability. If the department determines the applicant is suitable to receive a license, the applicant shall then apply to the commission for a service provider license, and obtain a service provider license, before providing goods or services to a licensed operator in connection with the operation of an authorized poker Web site. The commission may impose limitations and conditions upon the issuance of the service provider license or the utilization of the applicant’s assets acquired before the enactment of the act that added this section, or both, with respect to its operations in the state.(A)A member of the board of directors of, the chief executive officer of, or a shareholder holding more than 10 percent of the shares of the applicant, or its corporate affiliate, has held a similar or equivalent position with an organization that knowingly and willfully accepted a bet, or engaged in a financial transaction related to that bet, after December 31, 2006, from a person located in the United States on any form of Internet gambling, including, but not limited to, poker, that was not affirmatively authorized by the law of the United States, or of the state in which the bet or related financial transaction was initiated, or that was otherwise legal.
(B)A member of the board of directors of, the chief executive officer of, or a shareholder holding more than 10 percent of the shares of the applicant, or its corporate affiliate, has held a similar or equivalent position with an organization that knowingly facilitated or otherwise provided services with respect to bets, or engaged in a financial transaction related to those bets, after December 31, 2006, involving persons located in the United States, and acted with knowledge of the fact that those bets or financial transactions were not affirmatively authorized by the law of the United States, or of the state in which the bet or related financial transaction was initiated, or that was otherwise legal.
(C)The acceptance of the bet or wager, the engagement in the transaction, or the facilitation of the wager or financial transaction occurred within a reasonable time period in order to cease those activities in the United States.
(D)The person described in subparagraph (B) of paragraph (1) is no longer affiliated with the applicant.
(g)(1) Except as provided in paragraph (2), an applicant for a service provider license shall not be granted a license until
January 1, 2021, if the applicant, or its corporate or marketing affiliate, accepted a bet or wager on any form of Internet gambling, or engaged in a transaction related to those bets or wagers, and both of the following conditions are met:
(A)The bet or wager was accepted between December 31, 2006, and December 31, 2011, from a person located in the United States.
(B)The applicant did not have a license or authority pursuant to comparable federal or state law in a jurisdiction where the bet or wager was made or the facilitation of the wager or financial transaction occurred.
(2)If an applicant for a service provider license meets the description in paragraph (1), the applicant, if he or she otherwise meets the qualifications and suitability criteria under this chapter, shall pay a one-time fee in the amount of twenty million dollars ($20,000,000), to be deposited into the General Fund, to
obtain a service provider license before January 1, 2021.
19990.405.
(a) A person seeking to act as a marketing affiliate shall apply to the commission for a marketing affiliate license or registration, and obtain a marketing affiliate license or registration, before providing the services of a marketing affiliate to a licensed operator in connection with the operation of an authorized poker Web site.19990.405.19990.406.
(a) The department shall issue a finding that a license applicant is suitable to obtain a license only if, based on all of the information and documents submitted, the department is satisfied that each of the persons subject to a determination of suitability pursuant to this article is both of the following:19990.406.19990.407.
(a) This chapter does not restrict the authority of a tribe that is a licensed operator or that owns a tribal enterprise that is a licensed operator to conduct suitability reviews of its service providers.Article 5. Requirements for the Operation of an Authorized Poker Web Site
19990.501.
(a) A licensed operator shall ensure that registered players are eligible to play authorized Internet poker games and implement appropriate data security standards to prevent access by a person whose age and location have not been verified in accordance with this chapter.(3)The licensed operator shall verify that the name and physical billing address on the check or credit card offered for payment by the person seeking to be a registered player matches the name and address
listed in the database.
(4)
19990.502.
A licensed operator shall offer only authorized Internet poker games and process bets in accordance with the specified game and betting rules established by the licensed operator and approved by the department pursuant to Section 19990.503.19990.503.
(a) In order to propose a game for play, a licensed operator shall provide the department with both of the following via electronic means or via mail:19990.504.
(a) A licensed operator shall ensure that games are fair.19990.505.
(a) A licensed operator shall register players and establish registered player accounts prior to play.19990.506.
(a) A licensed operator shall provide a means for registered players to put funds into a registered player account and transfer funds out of that account.19990.507.
Prior to completing the registration process, a licensed operator shall explain in a conspicuous fashion to the person who is registering the privacy policies of the authorized poker Web site, and the person shall assent to the following policies:19990.508.
A licensed operator may require that a registered player, or a person registering as a player, agree to a Terms of Use Registered Player’s Agreement.19990.509.
A licensed operator may suspend or revoke the account of a registered player for any of the following reasons:19990.510.
Upon registration, and each time a registered player logs into an authorized poker Web site, the licensed operator shall permit a registered player to adjust his or her play settings to:19990.511.
A licensed operator shall offer customer support that shall be available to registered players 24 hours per day, 365 days per year.19990.512.
(a) A licensed operator shall protect the privacy of registered players and their personally identifiable information.19990.513.
A licensed operator shall establish a book of accounts and regularly audit all of its financial records and reports, which shall, at a minimum, include all of the following:19990.514.
(a) A licensed operator shall make all financial records established and maintained pursuant to Section 19990.513, including, but not limited to, all books, records, documents, financial information, and financial reports, available on an electronic basis, as required by the commission, the department, or other state agencies so that those state agencies can fulfill their responsibilities under this chapter. A state agency may request specific printed hard copies of records for good cause.19990.515.
A licensed operator shall do all of the following:19990.516.
(a) A licensed operator may charge registered players to play in authorized Internet poker games.19990.517.
A licensed operator may do any of the following:19990.518.
There are three categories of application fees, regulatory fees, and license deposits, as follows:19990.519.
(a) In support of the application for a license pursuant to this chapter, prior to offering games or accepting bets on its authorized poker Web site, the licensed operator shall remit to the Treasurer a one-time license deposit in the amount of twelve million five hundred thousand dollars ($12,500,000), to be deposited into the General Fund, subject to Section 19619.8, and six million two hundred fifty thousand dollars ($6,250,000) of the one-time license deposit shall be credited against the duty imposed on the licensed operator’s gross gaming revenues pursuant to subdivision (b). Upon depletion of the credit amount, the commission shall notify the licensed operator to commence with the annual payments to the state in accordance with subdivision (b).(2)The rate percent assessed per year on a licensed operator pursuant to this subdivision shall be based upon the annual cumulative total of gross gaming revenues for all licensed operators during the calendar year as follows:
(A)If annual gross gaming revenues are less
than or equal to one hundred fifty million dollars ($150,000,000), the rate percent is 8.847 percent.
(B)If annual gross gaming revenues are more than one hundred fifty million dollars (150,000,000) and less than or equal to two hundred fifty million dollars ($250,000,000), the rate percent is 10 percent.
(C)If annual gross gaming revenues are more than two hundred fifty million dollars ($250,000,000) and less than or equal to three hundred fifty million dollars ($350,000,000), the rate percent is 12.5 percent.
(D)If annual gross gaming revenues are more than three hundred fifty million dollars ($350,000,000), the rate percent is 15 percent.
(3)(A) By January 31 of each calendar year, the commission shall, based on financial information submitted to it by licensed operators, determine the applicable rate percent for the preceding calendar year consistent with paragraph (2) and notify each licensed operator of that rate percent.
(B)
(4)
(5)
19990.520.
(a) The licensed operator shall facilitate the collection of personal income taxes from registered players by the Franchise Tax Board and shall be responsible for providing current and accurate documentation on a timely basis to all state agencies, as provided in this chapter.19990.521.
(a) A licensee shall act expeditiously to cure any violation of this chapter, or any regulation adopted pursuant to this chapter, in the offer or administration of authorized Internet poker games that interferes with its obligations to the state or registered players under this chapter.19990.522.
(a) (1) A license issued pursuant to this chapter is not transferable.19990.523.
All facilities, software, including downloadable programs, and any other property, both tangible and intangible, used by the licensed operator in offering authorized Internet poker games for play on an authorized poker Web site shall be the property of the licensed operator or its licensed service providers, and shall be subject to the review of the department and the approval of the commission.19990.524.
If any dispute arises between the state and a licensee, either the commission or a licensee may file an action in the superior court of any county in which the commission has an office for an interpretation of the rights and responsibilities of the state and the licensee pursuant to this chapter.19990.525.
(a) (1) The department or commission may contract with other public or private entities, including, but not limited to, state, tribal, and international regulatory agencies, for the provision of services related to a responsibility imposed on the department or commission by this chapter if all of the following are satisfied:19990.526.
(a) Until January 1, 2019, a licensed service provider shall not, for any purpose, use any list of customers or database containing customer information that was accrued or created prior to the effective date of the regulations described in subdivision (a) of Section 19990.401.Article 6. Employee Work Permits
19990.601.
(a) Except as provided in Section 19990.602, a licensee shall submit an application and applicable fees to the department and apply to the commission for an employee work permit on behalf of each employee.19990.602.
(a) A tribe that is a licensed operator, or that owns a tribal enterprise that is a licensed operator, may elect to participate in the tribal gaming regulatory authority process prescribed by this section for the issuance of employee work permits. If the tribe does not elect to participate in the tribal gaming regulatory authority process as provided in this section, then the process specified in this section regarding submission and action by the tribal gaming regulatory authority on the application for employee work permit shall not apply, and the other provisions of this chapter shall instead govern.19990.603.
An applicant for an employee work permit is disqualified if the applicant is described by any of the following:19990.604.
(a) If a licensed operator has any owners, officers, or directors who are not employees, it shall ensure that each of those persons obtains an employee work permit before having any role or decisionmaking authority regarding the licensed operator’s gaming operations.19990.605.
The commission, the department, and, if applicable, the tribal gaming regulatory authority, shall establish application processing fees to be paid by a licensee for the reasonable cost of determinations of suitability for, and issuance of, employee work permit applications. The commission shall establish processes for the revocation or suspension of an employee work permit, and to withdraw an application for an employee work permit.19990.606.
A19990.607.
(a) (1) AArticle 7. Protection of Registered Players
19990.701.
A licensed operator shall use its best efforts to protect registered players. Subject to the approval of the department, and consistent with uniform standards established by the department by regulation, each licensed operator shall establish administrative procedures to resolve registered player complaints.19990.702.
(a) If a registered player has a complaint against a licensed operator, the exclusive remedy shall be to register the complaint with the department.Article 8. Financial Provisions for State Regulation and Unlawful Gambling Enforcement
19990.801.
The Treasurer shall transfer all amounts received pursuant to subdivision (a) of Section 19990.402, subdivision (e) of Section 19990.403, subdivision (b) of Section 19990.404, subdivisions (b) and (d) of Section 19990.405, subdivision (c) of Section 19990.519, and Section 19990.605 to the Controller for deposit in the Internet Poker Fund, which is created in the State Treasury, to be administered by the department. Notwithstanding Section 13340 of the Government Code, all moneys in the fund are continuously appropriated to the department and the commission, without regard to fiscal years, in the amounts necessary for the department and the commission to perform their duties under this chapter.19990.802.
(a) The Unlawful Gambling Enforcement Fund is hereby established within the General Fund for purposes of ensuring adequate resources for law enforcement charged with enforcing the prohibitions and protections of this chapter. The Unlawful Gambling Enforcement Fund shall be funded by depositing:(3)____ percent of the duties paid by licensed operators pursuant to subdivision (b) of Section 19990.519, after any distribution required by Section 19619.8.
(4)
19990.803.
(a) (1) Except as provided in subdivision (f) of Section 19990.501, a person who engages or conspires to engage in activities prohibited by this chapter, or in connection with the use of an Internet access device, engages in activities prohibited by Section 321, 322, 323, 324, 326, 330, 330a, 330b, 330c, 330.1, 330.4, or 331 of the Penal Code, is liable for a civil penalty(6)
19990.804.
(a) Any money, other representative of value, or real or personal property used in, or derived from, the play of a game provided on the Internet that is not authorized by the state pursuant to this chapter is subject to seizure by the department or by a peace officer.Article 9. Preemption of Local Regulation
19990.901.
A city, county, or city and county shall not regulate, tax, or enter into a contract with respect to any matter related to this chapter. This section does not prohibit or limit the investigation and prosecution of any violation of this chapter.Article 10. Reports to the Legislature
19990.1001.
Notwithstanding Section 10231.5 of the Government Code, within one year of the operative date of this chapter, and annually thereafter, the commission, in consultation with the department, the Treasurer, and the Franchise Tax Board, shall issue a report to the Legislature describing the state’s efforts to meet the policy goals articulated in this chapter. The report shall be submitted in compliance with Section 9795 of the Government Code.19990.1002.
(a) At least four years after the issue date of any license pursuant to this chapter, but no later than five years after that date, the Bureau of State Audits shall issue a report to the Legislature detailing the implementation of this chapter.
Article
11. Partial Severability and Repeal of Chapter
19990.1101.
(a) Except as provided in subdivision (b), the provisions of this chapter are severable. If any provision of this chapter, other than those listed in subdivision (b), or its application, is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.(B)Prohibiting persons or entities who
have been convicted in a court of competent jurisdiction of a felony consisting of either having accepted a bet over the Internet in violation of United States or California law, or having aided or abetted that unlawful activity, from being licensed under this chapter.
(C)
This chapter shall remain in effect only until January 1, 2024, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2024, deletes or extends that date.