SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Isadore Hall, III
Chair
2015 - 2016 Regular
Bill No:
SB 692
Vidak
Author:
2/27/2015
Version:
No
Urgency:
Consultant: Felipe Lopez
Hearing Date: 4/14/2015
Fiscal:
Yes
SUBJECT: Gambling: California Gambling Control Commission
DIGEST: This bill prohibits a member of the California Gambling Control
Commission (CGCC), the executive director, the chief, and any employee of the
CGCC or Department of Justice (DOJ) designated by regulation, for a period of 2
years after leaving office or terminating employment, from being employed as a
consultant or key employee of a gambling establishment.
ANALYSIS:
Existing law:
1) Provides, under the Gambling Control Act (Act), for the licensure and
regulation of various legalized gambling activities and establishments by the
CGCC and the investigation and enforcement of those activities and
establishments by DOJ.
2) Specifies qualifications for eligibility as a member of the CGCC and provides
that a person is ineligible for appointment if, within 2 year prior to appointment,
the person was employed by, retained by, or derived substantial income from, a
gambling establishment.
3) Prohibits a member of the CGCC, the executive director, the chief, and any
employee of the CGCC or the department designated by regulation, for a period
of 3 years after leaving office or terminating employment, for compensation,
from acting as agent or attorney for any other person before the CGCC or the
DOJ, if the appearance or communication is for the purpose of influencing
administrative actions, as specified.
4) Defines a “key employee” as a natural person employed in the operation of a
gambling enterprise in a supervisory capacity or empowered to make
SB 692 (Vidak)
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discretionary decisions that regulate gambling operations, including, among
others, pit bosses, shift bosses, gambling operation managers and assistant
managers, or any other natural person designated as a key employee by the DOJ
for reasons consistent with the policies of the Act.
This bill prohibits a member of the CGCC, the executive director, the chief, and
any employee of the CGCC or the DOJ designated by regulation, for a period of 2
years after leaving office or terminating employment, from being employed as a
consultant or key employee of a gambling establishment.
Background
Purpose of the bill: According to the author, while there are regulations in place to
stop the revolving door for past members and employees to not directly lobby the
Bureau of Gambling Control (Bureau) and the CGCC, there is no revolving door
prohibition on members and employees who go to work as consultants or key
employees of a gambling establishment. The author further contends that over the
years, former Bureau employees have resigned and immediately started consulting
with tribal casinos and cardrooms which has led to at least one recent conflict of
interest case currently being presented by the Attorney General.
Attorney General’s Accusation: On December 23, 2014, the Attorney General’s
Office filed an accusation against Bob Lytle, former director of the Division of
Gambling Control from 2002 until his retirement in 2007. In the accusation, the
state alleges that Lytle began negotiating a new job with a cardroom in San Jose
while he was still in charge of cardroom regulation. Lytle retired from the
Division of Gambling Control on December 30, 2007 and began working as a
consultant for a card room in San Jose, on December 31 of that same year.
The accusation also alleges that Lytle began working as a representative of the card
room, and contacted both the Bureau and the commission many times on behalf of
his client.
Additionally, the accusation also states that between 2012 and 2013, Lytle asked
for and obtained confidential information from the Bureau’s special agent in
charge. Furthermore, the state alleges that the two exchanged over 180 phone calls
as well as text messages and emails.
The accusation, which could result in the loss of three separate licenses Lytle has
been issued from the state, will be heard before an administrative law judge at a
hearing scheduled for October of this year.
SB 692 (Vidak)
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Gambling regulation/enforcement in California: The Gambling Control Act
created a comprehensive scheme for statewide regulation of legal gambling under a
bifurcated system of administration involving the Bureau within the Attorney
General’s Office and the five-member CGCC by the Governor. The CGCC is
authorized to establish minimum regulatory standards for the gambling industry
and to ensure that the state gambling licenses are not issues to or held by unsuitable
or unqualified individuals.
The Bureau monitors the conduct of gaming operations to ensure compliance with
state gambling laws and conducts extensive background investigations of
applicants seeking a state gambling license. The Bureau also conducts background
checks for all key employees and state gambling license and vendor applications.
The Bureau inspects premises where gambling is conducted, examines gambling
equipment, audits papers, books, and records of the gambling establishment,
investigates suspected violations of gambling laws, and is ultimately responsible
for enforcing compliance with all state laws pertaining to gambling.
Prior/Related Legislation
AB 2526 (Hall), 2011-2012 Legislative Session. The bill would have revised
several definitions within the Act. Specifically the bill revised the definition of a
"key employee," added surveillance managers and supervisors to the definition of
"key employee" for licensing purposes and deleted the term "pit boss" and replaced
the term "shift boss" to "shift manager." (Held on the inactive file on the Senate
Floor)
SB 730 (Florez), Chapter 438, Statutes of 2007. The bill made various changes to
the licensing and regulatory processes related to key employees for gambling
establishments under the Act.
AB 1753 (Governmental Organization Committee), Chapter 546, Statutes of 2005.
The bill deleted the residency requirement for key employees of California card
rooms and revised the penalties for violations of California's gambling related
laws.
SB 8 (Lockyer), Chapter 867, Statutes of 1997. The bill repealed the Gaming
Regulation Act, and instead enacted the Act, which provided for DOJ to
investigate and enforce controlled gambling in the state. It also establishes the
CGCC to regulate gambling in this state and to issue, suspend, or revoke gambling
licenses.
SB 692 (Vidak)
FISCAL EFFECT:
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Appropriation: No Fiscal Com.:
Yes
Local: Yes
SUPPORT:
Artichoke Joe’s Casino
Communities for California Cardrooms
OPPOSITION:
None received
ARGUMENTS IN SUPPORT: According to Artichoke Joe’s Casino, the
“cooling-off” requirements proposed under this bill are similar to laws imposed on
other key California policy-makers in order to avoid conflicts of interest.
Therefore, it seems appropriate that the CGCC, which oversees the highly
regulated gaming industry, should have the same “cooling-off” period imposed on
its commissioners and key employees.
Communities for California Cardrooms (CCC) states that protecting the decision
making process is critical in gaming regulation because of the broad discretionary
authority given to regulators. CCC further argues that regardless of context,
regulators should garner facts and weigh factors without unethical influences
before exercising discretion and that regulatory systems need to properly safeguard
against dishonesty, and self-dealing.