BILL ANALYSIS                                                                                                                                                                                                    



                                                             


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|SENATE RULES COMMITTEE            |                   AB 317|
|Office of Senate Floor Analyses   |                         |
|1020 N Street, Suite 524          |                         |
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                       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





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  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  







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   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.







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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"  







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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







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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,  







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  Runner


TSM:cm  9/5/99   Senate Floor Analyses 

               SUPPORT/OPPOSITION:  SEE ABOVE

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