Bill Text: CA SB40 | 2011-2012 | Regular Session | Amended

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

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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

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BILL NUMBER: SB 40	AMENDED
	BILL TEXT

	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,   and to
amend Section 330b of the Penal Code,   relating to Internet
gambling.



	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
to adopt regulations, in consultation with the California Gambling
Control Commission, governing the intrastate play of poker games on
the Internet, and would provide for  a licensed entity
  licensed   entities  to operate 
an   up to 5  intrastate Internet poker Web
 site  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 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 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 to assess fees on 
the licensed entity   licensed entities  in an
amount reasonably necessary to reimburse the department for its costs
in implementing and administering these provisions, including a
registration fee. The bill also would require the 
 a  licensed entity to pay a license fee equal to 
an unspecified percentage   10%  of the fees
collected by the licensed entity from players participating in poker
games conducted on its Internet Web site. By imposing this fee, the
bill would constitute a change in state statute that would result in
a taxpayer paying a higher tax within the meaning of Section 3 of
Article XIII A of the California Constitution, and thus would require
for passage the approval of 2/3 of the membership of each house of
the Legislature. The bill would provide for all fees to be remitted
to the Internet Gambling Fund,  which would be  
as established by this bill   and  administered by the
Controller  ,  subject to annual appropriation by the
Legislature. 
   Existing law, subject to exceptions, generally prohibits the
possession and use of a slot machine or device, as defined, and
prohibits certain other acts and transactions pertaining to slot
machines or devices. Existing law provides varying definitions of
slot machine or device for these purposes. Violations of these
provisions are punishable by varying misdemeanor penalties. 

   This bill would provide that personal, networked, or server
computers are not included within the term slot machine or device,
for purposes of these provisions, if operated pursuant to a valid
license or permit to operate an intrastate Internet poker Web site,
as defined. 
   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.
   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  a  government-regulated
intrastate Internet poker wagering Web  site  
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  a licensed entity   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 
the Internet Web site owned and operated by a licensed entity formed
under the laws of this state   up to five 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 entities licensed under the Gambling
Control Act to own and operate gambling establishments 
licensed to operate  in this state as of January 1, 2011,
and 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 on their Indian lands
 without having to enter into class III gaming compacts
with the State of California. 
   (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,
recognize the large number of establishments and tribal governments
offering or authorized to offer the game of poker in land-based
operations, and maximize 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. 

   (h) 
    (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. 
   (i) 
    (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. 
   (j) 
    (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) "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) "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.  
   (b) 
    (c)  "Gambling" has the same meaning as set forth in
subdivision (  l  ) of Section 19805. 
   (c) 
    (d)  "Gambling establishment" has the same meaning as
set forth in subdivision (o) of Section 19805. 
   (d) 
    (e)  "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. 
   (e) 
    (f)  "Illegal Internet gambling" means illegal gambling
conducted over the Internet. 
   (f) 
    (g)  "Internet" means the international computer network
of interoperable packet switched data networks. 
   (g) 
    (h)  "Intrastate" means within the geographical borders
of  the State of  California. 
   (h) 
    (i)  "Intrastate Internet poker" means any nonbanked,
nonpercentage poker game approved for play through use of the
Internet within the state by the department, and that is conducted in
accordance with this chapter. 
   (i) 
    (j)  "Licensed entity" means  a legal entity
formed under the laws of the State of California by gambling
establishments licensed to operate in this state as of January 1,
2011, and the governments of federally recognized California Indian
tribes eligible to operate poker games on their Indian lands, or
wholly owned subentities of those tribes,   an eligible
entity to which the department 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 within the geographical
boundaries of the State of California. 
   (j) 
    (k)  "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. 

   (k) 
    (l)  "Web site" means the unique Uniform Resource
Locator of  the   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  or other card  games over the
Internet in California unless licensed to provide those games by the
department 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 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 department or any peace officer. Upon a
finding by the Superior 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  a licensed   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  the   a  licensed entity.
   (c) The intrastate Internet poker games shall be honestly and
fairly run.
   (d)  The   A  licensed entity may offer
intrastate Internet poker games pursuant to this chapter only on a
network approved by the department containing an Internet Web site
that is registered with the department to offer that service.
 The   A  licensed entity shall not offer,
for consideration, any form of Internet poker game independent of
that network.
   (e) A person desiring to play intrastate Internet poker shall
register with  the   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 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)  The   A    licensed entity'
s intrastate Internet poker Web site shall use the services of an
independent third party licensed by the department to perform
identification, physical presence in the state, and age verification
services for persons registering to play intrastate Internet poker
games.
   (g)  The   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)  The   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  the
  a  licensed entity by presenting valid
identification and verifiable personal and account information.
   (i)  The   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 reasonably may
determine are appropriate.
   (j)  The   A  licensed entity shall
allow the department 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.
   (k)  The   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  )  The   A  licensed
entity shall conduct intrastate Internet poker games in the same
manner as those games are 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
approved for play within the state by the department may be offered
for play on  the   a  licensed entity's
intrastate Internet Web site.  The   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 under state law for use
within nontribal licensed gambling establishments in California.
   (m) The department shall assess fees on  the licensed
entity   licensed entities  in the  amount
  amounts  reasonably necessary to reimburse the
department 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 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 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 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. 
   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 seeking to
be licensed to offer intrastate Internet poker games shall apply to
the department for licensure to engage in that activity. The
department shall charge the entity a registration fee sufficient to
cover all costs associated with the issuance of the license,
including any necessary background investigation.
   19994.  In addition to any licensing or other administrative fees
that the department may assess as reimbursement for the costs of
implementing this chapter,  the   a 
licensed entity shall pay to the state a license fee equal 
to ____ percent   to 10 percent  of the fees
collected by the licensed entity from players participating in poker
games conducted on its Internet Web site.
   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.
   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 author 
 ize 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
 the licensed entity, and any other fees paid by the licensed
entity,   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.
   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.    Section 330b of the Penal Code is
amended to read:
   330b.  (a) It is unlawful for any person to manufacture, repair,
own, store, possess, sell, rent, lease, let on shares, lend or give
away, transport, or expose for sale or lease, or to offer to repair,
sell, rent, lease, let on shares, lend or give away, or permit the
operation, placement, maintenance, or keeping of, in any place, room,
space, or building owned, leased, or occupied, managed, or
controlled by that person, any slot machine or device, as defined in
this section.
   It is unlawful for any person to make or to permit the making of
an agreement with another person regarding any slot machine or
device, by which the user of the slot machine or device, as a result
of the element of hazard or chance or other unpredictable outcome,
may become entitled to receive money, credit, allowance, or other
thing of value or additional chance or right to use the slot machine
or device, or to receive any check, slug, token, or memorandum
entitling the holder to receive money, credit, allowance, or other
thing of value.
   (b) The limitations of subdivision (a), insofar as they relate to
owning, storing, possessing, or transporting any slot machine or
device, do                                            not apply to
any slot machine or device located upon or being transported by any
vessel regularly operated and engaged in interstate or foreign
commerce, so long as the slot machine or device is located in a
locked compartment of the vessel, is not accessible for use, and is
not used or operated within the territorial jurisdiction of this
state.
   (c) The limitations of subdivision (a) do not apply to a
manufacturer's business activities that are conducted in accordance
with the terms of a license issued by a tribal gaming agency pursuant
to the tribal-state gaming compacts entered into in accordance with
the Indian Gaming Regulatory Act (18 U.S.C. Sec. 1166 to 1168,
inclusive, and 25 U.S.C. Sec. 2701 et seq.).
   (d) For purposes of this section, "slot machine or device" means a
machine, apparatus, or device that is adapted, or may readily be
converted, for use in a way that, as a result of the insertion of any
piece of money or coin or other object, or by any other means, the
machine or device is caused to operate or may be operated, and by
reason of any element of hazard or chance or of other outcome of
operation unpredictable by him or her, the user may receive or become
entitled to receive any piece of money, credit, allowance, or thing
of value, or additional chance or right to use the slot machine or
device, or any check, slug, token, or memorandum, whether of value or
otherwise, which may be exchanged for any money, credit, allowance,
or thing of value, or which may be given in trade, irrespective of
whether it may, apart from any element of hazard or chance or
unpredictable outcome of operation, also sell, deliver, or present
some merchandise, indication of weight, entertainment, or other thing
of value.
   (e) Any person who violates this section is guilty of a
misdemeanor.
   (1) A first violation of this section shall be punishable by a
fine of not less than five hundred dollars ($500) nor more than one
thousand dollars ($1,000), or by imprisonment in a county jail not
exceeding six months, or by both that fine and imprisonment.
   (2) A second offense shall be punishable by a fine of not less
than one thousand dollars ($1,000) nor more than ten thousand dollars
($10,000), or by imprisonment in a county jail not exceeding six
months, or by both that fine and imprisonment.
   (3) A third or subsequent offense shall be punishable by a fine of
not less than ten thousand dollars ($10,000) nor more than
twenty-five thousand dollars ($25,000), or by imprisonment in a
county jail not exceeding one year, or by both that fine and
imprisonment.
   (4) If the offense involved more than one machine or more than one
location, an additional fine of not less than one thousand dollars
($1,000) nor more than five thousand dollars ($5,000) shall be
imposed per machine and per location.
   (f) Pinball and other amusement machines or devices, which are
predominantly games of skill, whether affording the opportunity of
additional chances or free plays or not, are not included within the
term slot machine or device, as defined in this section.
   (g) Personal, networked, or server computers are not included
within the term "slot machine or device," as defined in this section
or Section 330.1, or as used in subdivision (f) of Section 19 of
Article IV of the California Constitution or Section 330a of this
code, if operated pursuant to a license or permit in compliance with
Chapter 5.2 (commencing with Section 19990) of Division 8 of the
Business and Professions Code, solely for the purpose of, or in
connection with, allowing participation in nonbanked, nonpercentage
poker games authorized and regulated pursuant to Chapter 5.2
(commencing with Section 19990) of Division 8 of the Business and
Professions Code, and not for the purpose of participating in any
other form of gaming activity. 
   SEC. 4.   SEC. 3.   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.