BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 317| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 445-6614 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: AB 317 Author: Floyd (D) Amended: 9/3/99 in Senate Vote: 21 SENATE GOVERNMENTAL ORG. COMMITTEE : 10-0, 8/24/99 AYES: Baca, Burton, Chesbro, Dunn, Hughes, Johannessen, Karnette, Knight, Lewis, Perata NOT VOTING: O'Connell, Johnson SENATE APPROPRIATIONS COMMITTEE : 10-0, 9/3/99 (Roll Call Not Available) ASSEMBLY FLOOR : 71-3, 6/1/99 - See last page for vote SUBJECT : Gambling Control Act: gambling establishments SOURCE : Author DIGEST : This bill authorizes the player-pool banked twenty-one in licensed California card clubs. This bill allows card clubs to play other controlled games (i.e., Pai Gown, Pan, Super Pan 9) as either player-pool banked or player banked, as specified. (See Analysis for specifics.) ANALYSIS : Existing Law 1.Specifies that any person who conducts any game of faro, monte, roulette, lasquenet, rouge et noire, rondo, tan, CONTINUED AB 317 Page 2 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. 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. 3.Creates the Division of Gambling Control within the department of Justice to investigate and enforce controlled gambling activities in California. 4.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. 5.Provides that no local jurisdiction may adopt a new ordinance authorizing gambling, and no local jurisdiction may amend an existing ordinance to expand gambling, until January 1, 2001, or in the case of Alameda, Contra Costa, Los Angeles, San Mateo, and Santa Clara counties, until January 1, 2003. 6.Provides that after January 1, 2003, (a) no city, county, or city and county may issue a gambling license with respect to a gambling establishment unless one of the three specified conditions is satisfied, including that a majority of the voters has approved a measure permitting gambling, and (b) any amendment to a gambling ordinance which results in an expansion of gaming, as defined, shall not be valid unless submitted to and adopted by a majority of the voters of the city, county, or city and county. This bill: 1.Defines a "house-banked game" as any game in which the licensed owner of a gambling establishment maintains or operates a bank in a controlled game for the benefit of any person or entity other than the player pool. 2.Defines "player-banked game" to mean any game in which a AB 317 Page 3 player or players maintain or operate the bank. 3.Defines "player-pool banked game" to mean any game in which the bank is maintained or operated by the licensed owner of the gambling establishment for the sole and exclusive benefit of the player-pool. 4.Requires propositional players to be clearly identified to every other player participating in a controlled game. 5.With approval of rules for the game of 21 to be played only as a player-pool banked game, by both the State Gambling control division and the Division of Gambling Control, allows a licensed gambling establishment to offer the play of 21 as specified. 6.Provides for a limit on the maximum number of tables in card clubs where the game of 21 can be conducted as follows: (a) one to four tables, may operate one 21 table, (b) five to nine tables, may operate up to two tables, (c) 10 to 19, may operate up to four tables, (d) 20 to 39 tables, may operate up to six tables, (e) 40 to 59 tables, may operate up to eight tables, (f) 60 or more tables, may operate up to 20 tables. 7.Provides that the fees for the issuance or renewal of a state gambling license that are based upon the number of authorized tables in a card club as specified, will be doubled with respect to tables where 21 is played. 8.Specifically details the conditions under which a controlled game can be conducted as either a player-pool banked or player-banked game. 9.Allows the licensed owner of a gambling establishment to extend an interest free, unsecured loan to initiate a player-pool as specified. 10.Authorizes the owner of a gambling establishment to extend an interest-free loan to initiate a pool, but provides that in no event shall any of the funds on the player-pool account or accounts be accessed by the owner. AB 317 Page 4 11.Makes a number of technical and conforming changes to various sections of the Penal Code. 12.Requires two-thirds of voters to approve a measure or ordinance that results in the expansion of gaming 13.Provides that this bill will only become operative if an amendment to the California Constitution that expands authorized gaming operations by Native American tribes is approved by the voters at the March 2000 election\. Background Since 1872, California has prohibited gambling on specified games. In 1885, the Legislature prohibited several additional games, including stud-horse poker and twenty-one, as well as any "banking" or "percentage" games played with cards, dice, or any device. Legislation enacted in 1991, (AB 97 Floyd), subsequently deleted stud-horse poker from this list of prohibited games. While present law specifies the prohibited games played as either house banked or percentage games, it does not define what banking or percentage games are. As a result, the public, law enforcement agencies, and the card club industry, generally, have had to rely on case law to determine legal games and how they are played in California. House banked games have come to be defined as games whereby the house is a participant in the game, taking on all comers, paying all winners, and collecting from all losers. A percentage game generally describes 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. Both these types of games are commonly associated with games played at out-of-state casinos, and are disallowed in California because in these games the house has a direct interest in the game, a statistical advantage in some instances, and generally possess limitless funds. By contrast, poker, and other games played in a "round" AB 317 Page 5 where players bet against each other rather than against the house (player-banked games), have always been legal in California. In fact, any game not specifically prohibited in statute, or that is not a banking or percentage game may be played in California subject to the provisions of the Gambling Control Act and contingent upon approval by the local electorate. Additionally, many California card clubs play card games that utilize a player-dealer format, and while similar, they are not identical, and therefore not determined to be illegal, ( e.g. "California Aces," "California Blackjack," "Newjack," or "Twenty-First Century Blackjack"). The difference is that the object of these games is to achieve a hand of 22 rather than 21. At various times, the courts have had to determine whether new card games are either derivatives of those games that are prohibited under existing law, or are banking or percentage games. In Huntington Park Club Corp. v. County of Los Angeles , the Court of Appeal held that the game of pai gow was not an illegally banked game because the role of the player-banker continually and systematically rotates among each of the participants. Recently, in Oliver v. County of Los Angeles , the courts were asked to consider whether the newly introduced game of "Newjack" was prohibited under existing law, or if the game was inconsistent with previous judicial determinations regarding banking and percentage games. In Oliver , the trial court determined that "Newjack" was not a banking or percentage game, but instead, violated existing law because the rules of the game (with a target number of 22) merely represented a variation of 21, a game prohibited under current law. The Appellate court subsequently ruled that "Newjack" violated existing law because the game had the "potential of being played as a banking game. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: Yes SUPPORT : (Unable to verify at time of writing) California Commerce Club Lucky Lady Cardroom AB 317 Page 6 Empire Sportsmen's Association Lucky Derby Cardroom OPPOSITION : (Unable to verify at time of writing) Stand Up for California ARGUMENTS IN SUPPORT : According to the author's office, the author believes that the current prohibition against the playing of twenty-one, which dates back to 1885, is arbitrary and difficult to justify given the proliferation of copycat games that are now played in card clubs that use a target of 22 rather than 21. Card clubs maintain that this situation has increased the chances for confusion among players and local law enforcement agencies regarding the rules of the particular game a player may be involved in. The author feels that this measure as drafted, permitting player-pooled twenty-one, will end any confusion, and be better in the long run, for the players, clubs, and local law enforcement. ARGUMENTS IN OPPOSITION : Opponents of this measure believe that it represents a major expansion of gambling in California, and is the next step to full casino gambling in California. ASSEMBLY FLOOR : AYES: Aanestad, Ackerman, Alquist, Aroner, Ashburn, Baldwin, Bates, Battin, Baugh, Bock, Briggs, Calderon, Campbell, Cardenas, Cardoza, Cedillo, Corbett, Correa, Cox, Cunneen, Davis, Dickerson, Ducheny, Dutra, Firebaugh, Florez, Floyd, Frusetta, Gallegos, Hertzberg, Honda, House, Kaloogian, Keeley, Knox, Kuehl, Leach, Lempert, Longville, Lowenthal, Machado, Maddox, Maldonado, Margett, Mazzoni, McClintock, Migden, Nakano, Olberg, Oller, Robert Pacheco, Papan, Pescetti, Romero, Scott, Shelley, Soto, Steinberg, Strickland, Strom-Martin, Thomson, Torlakson, Vincent, Washington, Wayne, Wesson, Wiggins, Wildman, Wright, Zettel, Villaraigosa NOES: Havice, Leonard, Thompson NOT VOTING: Brewer, Granlund, Jackson, Rod Pacheco, Reyes, AB 317 Page 7 Runner TSM:cm 9/5/99 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END ****