Bill Text: CA SB40 | 2011-2012 | Regular Session | Amended
Bill Title: Internet poker.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2012-01-31 - Returned to Secretary of Senate pursuant to Joint Rule 56. [SB40 Detail]
Download: California-2011-SB40-Amended.html
BILL NUMBER: SB 40 AMENDED
BILL TEXT
AMENDED IN SENATE JULY 6, 2011
AMENDED IN SENATE MAY 16, 2011
AMENDED IN SENATE MARCH 31, 2011
INTRODUCED BY Senator Correa
DECEMBER 6, 2010
An act to add Chapter 5.2 (commencing with Section 19990) to
Division 8 of the Business and Professions Code, relating to Internet
gambling, and declaring the urgency thereof, to take effect
immediately.
LEGISLATIVE COUNSEL'S DIGEST
SB 40, as amended, Correa. Internet poker.
The Gambling Control Act provides for the licensure of certain
individuals and establishments that conduct controlled games, as
defined, and for the regulation of these gambling activities by the
California Gambling Control Commission. Existing law provides for the
enforcement of those regulations by the Department of Justice. Any
violation of these provisions is punishable as a misdemeanor, as
specified.
This bill would establish a framework to authorize intrastate
Internet poker, as specified. The bill would require the
department commission to adopt emergency
regulations, in consultation with the California
Gambling Control Commission, department, providing for
the issuance of licenses to operate intrastate Internet poker Web
sites and governing the intrastate play of poker games on the
Internet , and would provide for licensed entities to
operate up to 5 intrastate Internet poker Web sites, as described
below . The bill would make it a misdemeanor for any person
or entity to offer or participate in any form of illegal Internet
gambling, as defined, or to knowingly process any
financial transaction arising out of participation in illegal
Internet gambling. The bill would authorize the seizure of any
money or property used in or derived from illegal Internet gambling,
as specified, and would provide for any money or property that has
been seized to be forfeited to the Internet Gambling Fund, as
established by this bill. By creating new crimes, this bill
would impose a state-mandated local program.
This bill would permit these Internet Web sites to conduct a live
online nonbanked, nonpercentage version of the card game poker within
the borders of the State of California under the same rules, and
with the same manner of compensation, as apply to poker games
currently conducted in licensed gambling establishments and tribal
class II gaming facilities. The bill would require the
department commission to issue up to 3
licenses to own and operate intrastate Internet poker Web
sites to eligible entities, as specified. The bill would
require the department to report to the Legislature within 3 years if
it has the capacity to regulate up to 2 additional Internet poker
Web sites, and would authorize the department to issue licenses for
up to 2 additional Internet poker Web sites upon subsequent
legislative authorization.
The bill would authorize the department
commission to assess fees on licensed entities in an amount
reasonably necessary to reimburse the department
commission for its costs in implementing and administering
these provisions, including a registration fee. The bill also would
require a licensed entity to pay a license fee equal to 10% of the
fees collected by the licensed entity from players participating in
poker games conducted on its Internet Web site. The bill would
provide for all fees to be remitted to the Internet Gambling Fund, as
established by this bill and administered by the Controller, subject
to annual appropriation by the Legislature.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
This bill would declare that it is to take effect immediately as
an urgency statute.
Vote: 2/3. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares all of the
following:
(a) Leading gaming consultants estimate that in 2005, United
States citizens illegally wagered four billion dollars
($4,000,000,000) online at off-shore, non-United States Internet
gambling Web sites, and that every week more than 1,000,000
California citizens play poker on the Internet.
(b) Currently, 2,300 Internet gambling Web sites operate outside
the United States, unregulated by any United States governmental
entity and in violation of United States laws. Questions often arise
about the honesty and the fairness of the games played on these
Internet Web sites, and about the true purpose for, and use of,
proceeds generated by these unregulated Internet Web sites.
(c) In 2006, Congress passed, and the President signed, the
Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA). While
UIGEA prohibits the use of banking instruments such as credit cards,
checks, or fund transfers for interstate Internet gambling, the
statute has not eliminated illegal, unregulated Internet gambling,
nor has it provided any increased protection for participants from
game operators and others who would impair the integrity of online
gambling activity.
(d) Congress included specific provisions in the UIGEA for
individual states to permit intrastate Internet gambling, provided
that state laws permitting and regulating that activity could impose
reasonable protections against participation by underage persons or
by persons located outside the boundaries of the states authorizing
that activity.
(e) It is in the best interest of the state and its citizens to
permit operation of government-regulated intrastate Internet poker
wagering Web sites because only through that authorization and
regulation can Californians be ensured that the games they are
playing are honest, that winners are paid when and in amounts due,
and that the state and its citizens, rather than illegal off-shore
companies operating outside the reach of, and contrary to, state and
federal laws, will benefit from economic activity in the state.
Further, it is in the interest of the state to adopt a statutory
basis for the regulation of intrastate Internet poker adequate to
shield the state and players from organized crime and other
corrupting influences, ensure that intrastate Internet poker is
conducted fairly and honestly by both licensed entities and the
players, confirm the integrity of all activities conducted pursuant
to this act, and protect the public health, welfare, and safety of
all Californians.
(f) The California Constitution provides that "slot machines" can
only be played if located on Indian lands and offered by an Indian
tribe pursuant to a tribal-state gaming compact, and thus, the use of
the devices connected to the Internet for gambling would violate the
California Constitution unless those devices are solely used for the
conveyance of information related to the play of nonbanked,
nonpercentage poker games.
(g) The only practical and economically feasible way to ensure
that Internet poker conducted entirely within California's borders
receives governmental oversight adequate to ensure that the Internet
Web site offering the gaming remains honest, safe, and in compliance
with all applicable state and federal laws, and that the State of
California receives the economic benefits from that activity to which
the state is entitled, would be to limit that activity to
up to five intrastate Internet Web sites owned
and operated by entities formed under the laws of this state, or
otherwise qualified to do business in this state, and owned and
operated by business (1) persons or
entities licensed under the Gambling Control Act to own and operate
gambling establishments in this state as of January 1, 2011,
and , (2) the governments or wholly owned
subentities of federally recognized California tribal
governments. Because California law permits the operation of poker
and other nonbanking, nonpercentage card games, those tribal
governments are entitled under the federal Indian Gaming Regulatory
Act (IGRA), to operate poker and other nonbanking and nonpercentage
card games without having to enter into class III gaming compacts
with the State of California. California tribal
governments that have adopted a tribal gaming ordinance approved by
the National Indian Gaming Commission (NIGC) under the federal Indian
Gaming Regulatory Act (25 U.S.C. Sec. 2701 et seq.) (IGRA), (3) any
combination of persons or entities licensed under the Gambling
Control Act to own and operate gambling establishments in this state
or the governments or wholly owned subentities of federally
recognized California tribal governments that have adopted
a tribal gaming ordinance approved by the NIGC under IGRA, or (4)
any person or entity determined to be eligible for licensure under
the Gambling Control Act to own and operate a gambling establishment
in this state.
(h) There is statutory precedent for the state to authorize
existing entities to form associations or corporations to offer
simulcast wagering and advance deposit wagering over the Internet on
live horse racing meetings.
(i) Because the game of poker will be played live over the
Internet pursuant to this act, it is the intent of the Legislature
that similar authorization be given to California's existing poker
industry to form business entities that may be licensed to conduct
the live online play of poker under this act.
(j) There are 109 federally recognized tribal governments in
California and 91 California licensed gambling establishments. To
provide the broadest distribution of these Internet poker licenses
within a geographic area confined within the borders of this
state to comply with UIGEA , recognize the large number of
licensed gambling establishments and tribal governments
currently offering or authorized to offer the game of poker in
land-based operations, and maximize and expedite the receipt of
revenue to the State of California, the eligible
entities that include the greatest numbers of licensed gambling
establishments and federally recognized California tribal governments
shall be selected for licensure to own and operate intrastate
Internet poker Web sites pursuant to this act.
California, entities formed under the laws of this state, or
otherwise qualified to do business in this state, and owned and
operated by (1) persons or entities licensed under the Gambling
Control Act to own gambling establishments in this state, (2) the
governments or wholly owned subentities of federally recognized
California tribal governments that have adopted a tribal gaming
ordinance approved by the NIGC under IGRA, or (3) any combination of
persons or entities licensed under the Gambling Control Act to own ga
mbling establishments in this state, or the governments
or wholly owned subentities of federally recognized California tribal
governments that have adopted a tribal gaming ordinance approved by
the NIGC under IGRA, shall be presumed suitable for
immediate licensure under this chapter. All other applicants for
licensure under this chapter shall first complete a full background
investigation, in accordance with the Gambling Control Act and the
requirements of this chapter, and shall not be eligible to receive a
temporary or provisional license pending the completion of the
investigation. A person or entity that has accepted wagers from
persons in the United States on any form of Internet gaming that has
not been affirmatively authorized by the laws of this state or the
United States subsequent to the effective date of UIGEA, or is or has
been the holder of a direct or indirect financial interest in such a
person or entity, shall not be eligible for either a license to
operate an intrastate Internet poker Web site or to be found suitable
to provide goods or services to an entity licensed under this
chapter.
(k) The purpose of this act is to provide persons over 21 years of
age who are physically present within the State of California and
desire to use the Internet to play poker games that are not
prohibited by California law, and in a manner consistent with
existing law, with a lawful, highly regulated means of doing so in
conformity with all applicable laws and regulations. Therefore,
nothing in this act, which authorizes the intrastate use of the
Internet to conduct poker games, shall be construed to expand the
term "gambling," as used in Article 13 (commencing with Section
19960) of Chapter 5 of Division 8 of the Business and Professions
Code.
(l) It is in the interest of the state and its citizens to
increase sources of nontax, nonstate revenue for tribal governments
to enhance their ability to provide services to their communities.
(m) By enacting this act, the Legislature is expressly authorizing
intrastate Internet poker within the State of California only in the
limited and regulated form provided herein. This express
authorization does not authorize any other form or type of gambling
over the Internet.
SEC. 2. Chapter 5.2 (commencing with Section 19990) is added to
Division 8 of the Business and Professions Code, to read:
CHAPTER 5.2. INTRASTATE INTERNET POKER
19990. The following terms shall have the following meanings:
(a) "Commission" means the California Gambling Control Commission.
(a)
(b) "Department" means the Department of Justice and
the entity within the department that is responsible for fulfilling
the obligations imposed upon the department by this chapter.
(b)
(c) "Eligible entity" means a business entity formed
under the laws of this state, or qualified to do business in this
state, that is owned by persons or entities licensed by the
California Gambling Control Commission to own gambling establishments
as of January 1, 2011, or by the government or governments of
federally recognized California Indian tribes, or the wholly owned
subentities of those tribes, or by any combination of those gambling
establishment licensees and California tribal governments or wholly
owned subentities of those tribes. owned by any of the
following:
(1) Persons or entities licensed under Chapter 5 (commencing with
Section 19800) to own gambling establishments.
(2) The governments or wholly owned subentities of federally
recognized California tribal governments that have adopted a tribal
gaming ordinance approved by the National Indian Gaming Commission
(NIGC) under the Indian Gaming Regulatory Act (25 U.S.C. Sec. 2701 et
seq.) (IGRA).
(3) Any combination of persons or entities licensed under Chapter
5 (commencing with Section 19800) to own and operate gambling
establishments in this state or the governments or wholly owned
subentities of federally recognized California tribal governments
that have adopted a tribal gaming ordinance approved by the NIGC
under IGRA.
(4) Any person or entity determined to be eligible for licensure
under Chapter 5 (commencing with Section 19800) to own and operate a
gambling establishment in this state.
(c)
(d) "Gambling" has the same meaning as set forth in
subdivision ( l ) of Section 19805.
(d)
(e) "Gambling establishment" has the same meaning as
set forth in subdivision (o) of Section 19805.
(e)
(f) "Illegal gambling" means participating in, or
engaging in conduct that materially aids, any form of gambling that
is not conducted pursuant to a tribal-state gaming compact or not
otherwise authorized by the laws of this state or the laws of the
United States.
(f)
(g) "Illegal Internet gambling" means illegal gambling
conducted over the Internet.
(g)
(h) "Internet" means the international computer network
of interoperable packet switched data networks.
(h)
(i) "Intrastate" means within the geographical borders
of the State of California.
(i)
(j) "Intrastate Internet poker" means any nonbanked,
nonpercentage poker game lawfully approved for play
through use of the Internet within the state by the
department commission , and that is conducted in
accordance with this chapter.
(j)
(k) "Licensed entity" means an eligible entity to which
the department commission has issued a
license pursuant to this chapter for the purpose of operating an
Internet Web site offering persons over 21 years of age who are
physically present within the State of California the opportunity to
play approved poker games on the Internet
intrastate Internet poker within the geographical boundaries of
the State of California.
(k)
(l) "Person" means an individual, partnership,
corporation, limited liability company, or other business entity,
including a federally recognized California Indian tribe or a
subentity of such a tribe that is wholly owned by the tribe.
(m) "Subcontractor" means any person providing goods or services
to a licensed entity in connection with the operation of intrastate
Internet poker.
(l)
(n) "Web site" means the unique Uniform Resource
Locator of a licensed entity through which the licensed entity is
authorized to operate intrastate Internet poker games.
19991. (a) No person or other entity may operate, for
consideration, poker games over the Internet in California unless
licensed to provide those games by the department
commission pursuant to this chapter and any regulations
adopted thereunder. Intrastate Internet poker is hereby authorized,
but only to the extent, and in the manner, prescribed in this
chapter.
(b) Any person or entity that offers or participates in illegal
Internet gambling, or knowingly processes any financial
transactions arising out of, or in connection with, participation in
illegal Internet gambling, is guilty of a misdemeanor, and shall be
punished by a fine of up to ten thousand dollars ($10,000) and
imprisonment in a county jail for up to one year.
(c) Any money, other representative of value, or real or personal
property used in, or derived from, illegal Internet gambling shall be
subject to seizure by the commission or by any peace officer. Upon a
finding by the court that the money, other representative of value,
or real or personal property was used in, or derived from, illegal
Internet gambling, that money or property shall be forfeited to the
Internet Gambling Fund established in Section 19998.
19992. (a) Within 90 days of the effective date of the act adding
this chapter, the department shall adopt regulations, in
consultation with the California Gambling Control Commission,
governing the intrastate play of poker games on the Internet to
provide persons over 21 years of age who are physically present in
California with the same protections enjoyed by persons playing in
gambling establishments or in tribally owned gaming facilities. The
department may issue licenses and promulgate regulations as it
determines may be necessary to implement the provisions of this
chapter, protect that gaming from criminal influences, and protect
the public health, welfare, and safety of the people of California,
but shall give priority in the adoption of regulations to the
licensing of the three categories of entities enumerated in paragraph
(1) of subdivision (b). However, persons licensed by the California
Gambling Control Commission to own or operate a gambling
establishment, the governments of California Indian tribes recognized
by the United States Department of the Interior, Bureau of Indian
Affairs, or the wholly owned subentities of those tribal governments
shall not be required to apply for or obtain licenses to own
interests in a licensed entity.
(b) The regulations adopted pursuant to subdivision (a) shall
provide both of the following:
(1) Procedures by which an entity may apply for a license to
operate an Internet Web site through which persons over 21 years of
age and physically present within the state may play intrastate
Internet poker, with the objective of facilitating the commencement
of operation of the licensed entity's authorized Internet Web site as
quickly as possible, thereby accelerating the receipt of revenues by
the state.
(2) Procedures by which persons over 21 years of age who are
physically present in the state may register to lawfully engage in
intrastate Internet poker games through an Internet Web site owned
and operated by a licensed entity.
19992. (a) Within 90 days of the effective date of
the act adding this chapter, the commission shall adopt emergency
regulations, in consultation with the department, providing for the
issuance of licenses to operate Internet Web sites for the operation
of intrastate Internet poker and governing the play of intrastate
Internet poker to provide persons over 21 years of age who are
physically present in California with the same protections enjoyed by
persons playing in gambling establishments or in tribally owned
gaming facilities. The commission may issue licenses and promulgate
regulations as it determines may be necessary to implement the
provisions of this chapter, protect that gaming from criminal
influences, and protect the public health, welfare, and safety of the
people of California. The regulations shall include the same
licensing criteria as apply to applicants for licensure under Chapter
5 (commencing with Section 19800) and regulations thereunder,
including the licensure of persons or entities with a direct or
indirect financial interest in an eligible entity.
(1) To avoid delays in implementing this chapter in order to
provide much needed revenues to meet the state's budget emergency,
the Legislature finds and declares that it is necessary to provide
the commission with a limited exception from the procedural
requirements normally applicable to the commission's rulemaking. The
commission shall adopt appropriate emergency regulations as soon as
possible, the initial regulatory action to be filed with the Office
of Administrative Law no later than 90 days after the effective date
of this chapter. Notwithstanding the adoption of appropriate
emergency regulations, the commission shall complete the normal
public notice and comment process, giving careful consideration to
the comments of all interested parties. It is the intent of the
Legislature to provide the commission with full authority and
sufficient flexibility to adopt all needed regulations. These
regulations may be adopted in a series of regulatory actions.
Subsequent regulatory actions may amend or repeal earlier regulatory
actions, as necessary, to reflect program experience and concerns of
the regulated public. However, any later amendment or repeal shall
not have the effect of amending or repealing the Legislative intent
under this chapter that emergency regulations be promulgated and
remain effective as provided in this chapter.
(2) The commission shall adopt emergency regulations concerning
intrastate Internet poker no later than 90 days after the effective
date of this chapter. The adoption, amendment, repeal, or readoption
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 is hereby exempted for this
purpose from the requirements of subdivision (b) of Section 11346.1
of the Government Code, but shall otherwise be subject to the review
and approval of the Office of Administrative Law.
(3) The emergency regulations adopted pursuant to this section
shall be effective initially for a period of 180 days from the date
the regulations are filed with the Secretary of State by the Office
of Administrative Law or upon any later date specified by the
commission in a written instrument filed with, or as part of, the
regulation. Notwithstanding subdivision (h) of Section 11346.1 of the
Government Code, the regulations may be readopted only once pursuant
to this section for a period of not more than 180 days. This
exemption from the rulemaking provisions of the Administrative
Procedure Act (Chapter 3.5 (commencing with Section 11340), Chapter 4
(commencing with Section 11370), Chapter 4.5 (commencing with
Section 11400), and Chapter 5 (commencing with Section 11500) of Part
1 of Division 3 of Title 2 of the Government Code) applies only to
regulations that are submitted to the Office of Administrative Law no
later than 24 months after the effective date of this chapter.
(b) Notwithstanding any other provision of this chapter, persons
or entities licensed under Chapter 5 (commencing with Section 19800)
to own gambling establishments in this state and the governments or
wholly owned subentities of federally recognized California tribal
governments that have adopted a tribal gaming ordinance approved by
the NIGC under IGRA shall not be required to apply for or obtain
licenses to own interests in a licensed entity. Any licensed entity
consisting of persons or entities licensed under Chapter 5
(commencing with Section 19800) to own gambling establishments in
this state and the governments or wholly owned subentities of
federally recognized California tribal governments that have adopted
a tribal gaming ordinance approved by the NIGC under IGRA shall be
presumed suitable for licensing. All other applicants for licensure
under this chapter shall first complete a full background
investigation, in accordance with Chapter 5 (commencing with Section
19800) and the requirements of this chapter, and shall not be
eligible to receive a temporary or provisional license pending the
completion of the investigation. A person or entity that has accepted
wagers from persons in the United States on any form of Internet
gaming that has not been affirmatively authorized by the laws of this
state or the United States subsequent to the effective date of the
federal Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA),
or is or has been the holder of a direct or indirect financial
interest in such a person or entity, shall not be eligible for either
a license to operate an intrastate Internet poker Web site or to be
found suitable to provide goods or services to an entity licensed
under this chapter.
(c) The regulations adopted pursuant to subdivision (a) shall
provide all of the following:
(1) Procedures by which (A) an eligible entity may apply for and
receive a license to operate an Internet Web site through which
persons over 21 years of age and physically present within the state
may play intrastate Internet poker, and (B) subcontractors may apply
for and be found suitable in accordance with the suitability
requirements of Chapter 5 (commencing with Section 19800) and
ensuring that all financial arrangements between a licensed entity
and any subcontractor are on an arms-length, commercially reasonable
basis. A subcontractor licensed by a governmental jurisdiction within
the United States shall be presumed suitable for the issuance of a
temporary license by the commission under this chapter pending
completion of a full background investigation and issuance of a
permanent license, with the objective of facilitating the
commencement of operation of licensed entities authorized intrastate
Internet poker Web sites at the earliest possible date, thereby
accelerating the receipt of revenues by the state and helping to
alleviate the state's current budget crisis. The commission may
engage the services of a nationally recognized gaming test laboratory
for the purpose of validating software and equipment pending the
development of the commission's own validating and testing
capability. A subcontractor shall not receive more than 12 percent of
the gross revenues for services provided to an intrastate Internet
poker Web site.
(2) Procedures by which persons over 21 years of age who are
physically present in the state may register to lawfully engage in
intrastate Internet poker games through Internet Web sites owned and
operated by licensed entities.
(d) Each license issued under this chapter shall permit the
operation of a single intrastate Internet poker Web site.
(e) No person shall have an ownership interest in more than one
license issued under this chapter.
(c)
(f) The intrastate Internet poker games shall be
honestly and fairly run.
(d)
(g) A licensed entity may offer intrastate Internet
poker games pursuant to this chapter only on a network approved by
the department commission containing an
Internet Web site that is registered
with the department commission
to offer that service. A licensed entity shall not offer, for
consideration, any form of Internet poker game independent of that
network.
(e)
(h) A person desiring to play intrastate Internet poker
shall register with a licensed entity by presenting documentation,
upon logging on to the licensed entity's intrastate Internet poker
Web site, that the person is at least 21 years of age and is
physically present within the state. After verifying the validity of
the proffered documentation and confirming the person's physical
presence within this state, the person may be permitted to play any
intrastate Internet poker game provided by the licensed entity,
subject to the licensed entity's right , in its sole and
absolute discretion and without liability, to exclude from
participation in intrastate Internet poker games any person
reasonably determined to be unsuitable to participate in those games,
or whose participation would be contrary to requests concerning
self-exclusion or limits on losses, amounts wagered, or playing time.
(f)
(i) A licensed entity's intrastate Internet poker Web
site shall use the services of an independent third party licensed by
the department commission to perform
identification, physical presence in the state, and age verification
services for persons registering to play intrastate Internet poker
games.
(g)
(j) A licensed entity's intrastate Internet poker Web
site shall use personal identification numbers and other technology
so that only the registered person has access to his or her wagering
account, and that games can be played only from within the
geographical borders of the state.
(h)
(k) A licensed entity shall provide for withdrawals
from the wagering account only by check, made payable to the account
holder and sent to the address of the account holder in the state, or
by an electronic transfer to an account held by the verified account
holder at a financial institution located within the state. The
account holder also may withdraw funds from the wagering account at a
licensed gambling establishment or tribal gaming facility
participating in a licensed entity by presenting valid identification
and verifiable personal and account information.
(i)
(l) A licensed entity's intrastate Internet poker Web
site shall provide information on problem gambling, including a
problem gambling hotline telephone number that a person may call to
seek information and assistance for a potential gambling addiction,
and shall offer responsible gambling services, such as
self-exclusion, limits on losses, amounts wagered, and playing time,
and other services as the department
commission reasonably may determine are appropriate.
(j)
(m) A licensed entity shall allow the
department commission access to its operating
premises at any time and without notice to visit, investigate, and
place expert accountants and other persons it deems necessary to
ensure strict compliance with its regulations concerning game
integrity, credit authorization, account access, and other security
provisions, if those activities do not interfere with the normal
lawful functioning of the licensed entity's operations. To
maximize the commission's ability to exercise its regulatory
authority at minimum cost, a licensed entity's operating
premises shall be located within the geographical limits of this
state.
(k)
(n) A licensed entity shall offer, at the time of
registration, the option to place a limitation on the amount of funds
that may be transferred into a wagering account within any 24-hour
period. The licensed entity shall adopt procedures to ensure that the
player may not deposit more funds into the account than the amount
specified. If, after the wagering account is opened, a person wishes
to increase the amount of funds that may be transferred, the licensed
entity may increase the amount after obtaining and verifying the
validity of identification and personal information. However, that
increase shall not be effective until at least 48 hours after the
change is requested.
( l )
(o) A licensed entity shall conduct intrastate Internet
poker games in the same manner as those games are lawfully
conducted in licensed gambling establishments or tribally owned
gaming facilities in the state, except that the games shall be
played with computers, rather than with tangible cards and chips, and
the virtual cards shall be shuffled and dealt by the licensed entity'
s computer system, rather than by a natural person. Only nonbanked,
nonpercentage poker games lawfully approved for play
within the state by the department commission
may be offered for play on a licensed entity's intrastate
Internet Web site. A licensed entity's intrastate Internet Web site
may collect fees from players in authorized poker games pursuant to
the same player fee collection methods approved by the
department commission under state law for use
within nontribal licensed gambling establishments in California.
(m) The department
(p) The commission shall assess
fees on licensed entities in the amounts reasonably necessary to
reimburse the department commission for
its costs in implementing and administering this chapter, protecting
that gaming from criminal influences, and protecting the public
health, welfare, and safety of the people of California.
19992.5. (a) There shall be authorized up to five
an unlimited number of Internet Web sites to
conduct a live online nonbanked, nonpercentage version of the card
game poker pursuant to this chapter within the borders of the State
of California under the same rules, and with the same manner of
compensation, as apply to poker games currently conducted in licensed
gambling establishments and tribal class II gaming facilities.
(b) The department shall issue up to three
commission shall issue licenses to own and operate intrastate
Internet poker Web sites pursuant to this chapter to eligible
entities consisting of any of the following:
(1) Licensed gambling establishments and federally recognized
California tribal governments.
(2) Federally recognized California tribal governments.
(3) Licensed gambling establishments.
(c) The department shall select the eligible entities that include
the greatest numbers of individual entities as specified in
subdivision (b).
(d) Notwithstanding Section 10231.5 of the Government Code, within
three years of commencing the play of live online Internet poker
pursuant to this chapter, the department shall report to the
Legislature if it has the capacity to regulate up to two additional
Internet poker Web sites. The department may issue licenses for up to
two additional Internet poker Web sites upon subsequent legislative
authorization.
(1) Persons or entities licensed under Chapter 5 (commencing with
Section 19800) to own gambling establishments.
(2) The governments or wholly owned subentities of federally
recognized California tribal governments that have adopted a tribal
gaming ordinance approved by the NIGC under IGRA.
(3) Any combination of persons or entities licensed under Chapter
5 (commencing with Section 19800) to own and operate gambling
establishments in this state or the governments or wholly owned
subentities of federally recognized California tribal governments
that have adopted a tribal gaming ordinance approved by the NIGC
under IGRA.
(4) Any person or entity determined to be eligible for licensure
under Chapter 5 (commencing with Section 19800) to own and operate a
gambling establishment in this state.
19993. After the regulations required by subdivision (a) of
Section 19992 are adopted 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), an entity
, an eligible entity seeking to be licensed to offer
intrastate Internet poker games shall apply to the
department commission for licensure to engage in
that activity. The department shall charge the entity a
registration fee sufficient The commission shall
charge the eligible entity a nonrefundable registration fee of five
million dollars ($5,000,000) to cover all costs associated with
the issuance of the license, including any necessary background
investigation. Any remaining amount shall be credited toward the
licensed entity's license fees payable under Section 19994.
19994. (a) In addition to any licensing or
other administrative fees that the department
commission may assess as reimbursement for the costs of
implementing this chapter, a licensed entity shall pay to the state a
license fee equal to 10 percent of the fees collected by the
licensed entity from players participating in poker games conducted
on its Internet Web site. site, payable
quarterly in arrears.
(b) An eligible entity that applies for licensure within 30 days
after the effective date of the emergency regulations promulgated
pursuant to Section 19992 of this chapter and receives a license
shall pay an initial deposit of fifty million dollars ($50,000,000)
on or before the date that the licensed entity's Internet Web site
becomes operational for real money poker games, which shall be a
credit against future license fees payable under subdivision (a). If
more than five eligible entities apply for licensure within that
30-day period, then additional eligible entities shall be permitted
to apply for licensure following the 30-day period; however, an
eligible entity that applies for licensure more than 30 days after
the effective date of the emergency regulations promulgated pursuant
to Section 19992 of this chapter and receives a license shall pay an
initial deposit of one hundred million dollars ($100,000,000) on or
before the date that the licensed entity's Internet Web site becomes
operational for real money poker games, which shall be a credit
against future license fees payable under subdivision (a).
(c) Notwithstanding subdivision (b), each licensed entity shall
have until July 1, 2012, to activate its license by making its
Internet Web site operational for ongoing real money poker games. If
the total amount of initial deposits paid by licensed entities to the
state as of July 1, 2012, is less than two hundred fifty million
dollars ($250,000,000), then the initial deposits paid by all
licensed entities as of July 1, 2012, shall be increased equally so
that the total amount of the initial deposits paid to the state
equals two hundred fifty million dollars ($250,000,000). A licensed
entity shall pay the full amount of any increased initial deposit
within 60 days following receipt of notice by the commission of the
amount owed. If a licensed entity is required to increase its initial
deposit in excess of fifty million dollars ($50,000,000) pursuant to
this subdivision, the commission shall not, as of July 1, 2012,
issue any additional licenses under this chapter until July 1, 2016,
in order to allow the licensed entity an opportunity to reasonably
recoup the initial deposit.
(d) If the implementation of this chapter is temporarily,
preliminarily, or permanently enjoined by the order of a court of
competent jurisdiction, all license fees paid shall be refunded
pending entry of a final and nonappealable judgment concerning the
validity of the implementation of this chapter. If implementation of
this chapter is validated, each licensed entity to which fees were
refunded shall remit to the state the full amount of those fees as a
condition precedent to offering real money poker games on its
Internet Web site. For purposes of ensuring that license fees are
refunded by the state as required by this subdivision, the state
hereby waives its sovereign immunity from suit for this limited
purpose and consents to the jurisdiction of the Superior Court for
the County of Sacramento.
19995. In the event that any federal statute now in effect or
hereafter enacted either affirmatively authorizes, or repeals
existing prohibitions against, the interstate or international play
on the Internet of house-banked or percentage games of chance, or
games such as poker in which there is an element of chance but a
player's skill predominates over the element of chance in determining
the outcome of the game, and the federal statute allows a state to
be excluded from application of that statute, the Governor and the
Legislature shall take any action necessary to opt out of the
application of that statute to persons physically present within the
geographical borders of the state. Failure to take that action
within the time allowed under the federal statute shall
entitle any licensee that requests a refund of its license fee to
receive a refund of that portion of its license fee on which an
unused credit remains.
19996. Nothing in this chapter shall be interpreted to authorize
the play of intrastate Internet poker in a manner that circumvents
the limitation on gambling establishments, or the limitation on
gambling tables, pursuant to Chapter 5 (commencing with Section
19800), and related state and local laws, or to authorize the
operation of public or private facilities the primary purpose of
which is the online play for consideration of poker or other forms of
gaming.
19997. If a court of competent jurisdiction determines that the
enactment or implementation of this chapter entitles any California
Indian tribe that is a party to a class III tribal-state gaming
compact with the state to terminate or reduce payments to the Indian
Gaming Revenue Sharing Trust Fund required by the compact on the
ground that the state has breached the compact by enacting or
implementing this chapter, all funds then on deposit in the Indian
Gaming Revenue Trust Fund shall continue to be distributed quarterly
in equal shares to all federally recognized California Indian tribes
entitled to receive disbursements from the fund until all funds on
deposit in the fund have been disbursed.
19998. (a) The state's percentage of player fees collected by
licensed entities, and any other fees paid by licensed entities,
shall be remitted to the Controller for deposit in the Internet
Gambling Fund, which is hereby created in the State Treasury. The
fund shall be administered by the Controller for the purposes of this
chapter, subject to annual appropriation by the Legislature.
(b) On or before March 31 of each year, each state agency with
responsibilities imposed under this chapter shall submit a revenue
needs request to fulfill those duties for the next fiscal year to the
Senate Committee on Budget and Fiscal Review, the Assembly Committee
on Budget, the Senate and Assembly Committees on Governmental
Organization, and the Department of Finance. Each submission of
revenue needs shall specify the justification for those costs.
(c) On or before March 31 of each year, the State Department of
Alcohol and Drug Programs, Office of Problem Gambling shall submit a
revenue needs request for programs to address problem gambling that
results from the offering of authorized games for the next fiscal
year to the Senate Committee on Budget and Fiscal Review, the
Assembly Committee on Budget, the Senate and Assembly Committees on
Governmental Organization, the Senate and Assembly Committees on
Human Services, and the Department of Finance. Each submission of
revenue needs shall specify the justification for those costs.
(d) All remaining proceeds not allocated pursuant to subdivisions
(b) and (c) shall remain in the Internet Gambling Fund, subject to
appropriation by the Legislature for purposes related to this chapter
or for those other purposes as the Legislature may deem
appropriate .
19999. 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.
SEC. 3. Fees collected by the state in connection
with this act are General Fund revenues for purposes of Section 3.94
of the Budget Act of 2011.
SEC. 4. The provisions of this act are severable.
If any provision of this act 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.
SEC. 3. SEC. 5. No reimbursement is
required by this act pursuant to Section 6 of Article XIII B of the
California Constitution because the only costs that may be incurred
by a local agency or school district will be incurred because this
act creates a new crime or infraction, eliminates a crime or
infraction, or changes the penalty for a crime or infraction, within
the meaning of Section 17556 of the Government Code, or changes the
definition of a crime within the meaning of Section 6 of Article XIII
B of the California Constitution.
SEC. 4. SEC. 6. This act is an
urgency statute necessary for the immediate preservation of the
public peace, health, or safety within the meaning of Article IV of
the Constitution and shall go into immediate effect. The facts
constituting the necessity are:
In order to ensure that California is able to provide consumer
gaming protections from illegal operators, it is necessary for this
act to take effect immediately.
