BILL ANALYSIS
AB 54
Page 1
Date of Hearing: March 5, 2001
ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
Herb Wesson, Chair
AB 54 (Wesson) - As Introduced: December 4, 2001
SUBJECT : Card Clubs
SUMMARY : Narrows the definition of what constitutes a "banking
game" or "banked game." Specifically, this bill deletes the
requirement that the bank's participation must dwarf the funds
of all other participants in the game.
EXISTING LAW :
1)Defines "banking game" or "banked game" as used in the
Gambling Control Act and the Penal Code as referring to a game
in which the house, a player, or other entity is a participant
in the game, taking on all winners, and collecting from all
losers. The bank is actually involved in the play, and serves
as the ultimate source and repository of funds, dwarfing that
of all other participants in the game.
2)Establishes the Gambling Control Commission and grants it
jurisdiction over the operation of card clubs and of all
persons having an interest in the operation of card clubs.
Creates the Division of Gambling Control within the Department
of Justice to investigate and enforce controlled gaming
activities in the state.
3)Defines a "controlled game" as any game of chance, including
any gambling device, played for currency or any other thing of
value that is not prohibited and made unlawful by statute or
local ordinance
4)Specifies that any person who conducts any game of faro,
monte, roulette, lansquenet, rouge et noire, rondo, tan,
fan-tan, seven-and-a-half, twenty-one, hokey-pokey, or any
banking or percentage game played with cards, dice, or any
device, is guilty of a misdemeanor.
FISCAL EFFECT : None: state mandated local program; contains a
crimes and infractions disclaimer.
COMMENTS :
AB 54
Page 2
1. Purpose of the bill . This bill is a clean-up to AB 1416
(Wesson, Ch. 1023, Statutes of 2000). In the Governor's signing
message on AB 1416, he stated that the bill included "language
that may be inconsistent with authoritative decisional law and,
according to the Attorney General, will require further clean-up
legislation to ensure it cannot be interpreted incorrectly. I
have been assured by the author of this bill that such cleanup
legislation will be introduced early in the next session."
In particular, the Attorney General noted that "the condition
that the bank serve as the "ultimate source and repository of
funds, dwarfing that of all other participants in the game"
incorrectly suggests that the character of a game as a "banking
game" is dependent on the size of the bank in comparison with
the resources of the other participants, rather than the
possibility?that a participant with any amount of capital may
function as a bank at all. The inclusion of this
language?prevents us from rendering an unqualified opinion that
the bill is not unconstitutional."
Accordingly, this bill seeks to address the concerns of the
Governor and the Attorney General. The author has indicated
that the provisions of the bill may need to be further refined
based on negotiations that continue between the Attorney General
and representatives of the card club industry.
2. Background . Since the mid-to-late 1800's, California has
prohibited gambling on specified
games such as the games of twenty-one and roulette. Rather than
continue to amend the law to include games that were later
deemed prohibited, the Legislature subsequently prohibited
"banking" or "percentage" games played with cards, dice, or any
device. Neither of these terms was defined in statute, however,
and the public, law enforcement agencies, and the card club
industry have generally had to rely on case law to determine the
type of games legally allowed in this state. Banking games had
come to be defined as games whereby the house or bank is a
participant in the game, taking all comers, paying all winners,
and collecting from all losers. A percentage game generally is
described as any game of chance from which the house collects
money calculated as a portion of wagers made or sums won in
play, exclusive of charges or fees for use of space and
facilities. Consequently, all non-prohibited card games, such
as various forms of poker have been permitted, subject to
AB 54
Page 3
regulation by the state and local governments.
However, two recent California Appellate court decisions (Oliver
v. County of Los Angeles [1998] and Kelly v. First Astri
Corporation [1999]) found that certain card games could be
deemed to be a prohibited banked game if the rules of the card
game allow, or potentially allow, the house or another player to
operate as a bank during the play of the game.
These decisions, in addition to the State Supreme Court's
holding in Hotel Employees and Restaurant Employees
International Union v. Governor Gray Davis and Cortes v.
Governor Gray Davis (Proposition 5), cast some doubt on the
California card club industry's ability to use player-dealers in
the popular California and Asian card games (e.g., Pai Gow) that
have been legally played in this state since the early to
mid-1980's.
Several legislative attempts were made during the 1999-2000
Legislative Session to clarify this issue by defining what
constitutes a banked game. AB 1417 (Wesson) was vetoed in 1999
based on the Governor's concerns that the bill lacked adequate
licensing and oversight provisions for persons or business
entities that perform the functions of the player bank
(proposition players). That concern was addressed by a second
attempt that year to define a banked game in AB 1409 (Wesson).
However, that bill was also vetoed based on the Governor's
desire to allow Proposition 1A to be considered on the March
2000 ballot before addressing any further gaming issues.
3. AB 1416 . Last year, the Governor finally approved the
Legislature's third attempt to deal with the player-dealer issue
when he signed AB 1416. AB 1416 exempted from the banking game
prohibition those games with rules that feature a player-dealer
position that continuously and systematically rotates amongst
each of the participants in the game. The person occupying the
player-dealer position may only win or lose a fixed and limited
wager during the play of the game, and a player, the house, or
another entity is precluded from maintaining or operating as the
bank during the course of the game. AB 1416 additionally
authorized a licensed card club to contract with a third party
for the purpose of providing proposition player services,
provided all contracts between such a business and a card club
were pre-approved by the Division of Gambling Control within the
Department of Justice. The Gambling Control Commission was
AB 54
Page 4
authorized in AB 1416 to require licensure of any person or
entity that provides proposition player services, and to perform
background checks, audits, and other investigatory services as
needed. AB 1416 also extended the current moratorium on
ordinances on new card club authorization and expansion until
2007.
REGISTERED SUPPORT / OPPOSITION :
Support
California Commerce Club
Opposition
Artichoke Joe's
Oaks Card Club
California Grand Casino
Analysis Prepared by : George Wiley / G. O. / (916) 319-2531