AB 2179 - Amended

AMENDED IN ASSEMBLYAPRIL 11, 2000

INTRODUCED BYAssembly Member Wesson

FEBRUARY 23, 2000

An act to add Section 330d to the Penal Code, relating to gambling.

LEGISLATIVE COUNSEL'S DIGEST

AB 2179, as amended, Wesson. Gambling: prohibited online gambling games.

(1) Existing law prohibits banking or percentage games played with cards, dice, or devices, including roulette, faro, and twenty-one, lottery games, other than charitable bingo and the games of the California State Lottery, the operation, possession, sale or control of slot machines, as defined, and sports wagering and other forms of bookmaking and pool selling, other than licensed parimutuel wagering on horse races, and provides that any person who operates or bets at these prohibited gambling games is guilty of a crime and is punishable by a misdemeanor or felony, as specified. Existing court decisions generally provide that contracts concerning illegal gambling transactions, and any losses or debts thereby incurred, are against public policy and are unenforceable in this state.

This bill would state finding and declarations of the Legislature with regard to online gambling games, and would provide that it is unlawful for any person to operate or bet against any prohibited online gambling game, as defined, for money, checks, credit, or any other representative of value. This bill would provide that every person who operates or offers for play any prohibited online gambling game to any person physically located in this state at the time of the transaction, or who operates such a game from a host server, as defined, that is physically located in this state at the time of the transaction, is guilty of a misdemeanor and is punishable by imprisonment in a county jail not to exceed 90 days, a fine not to exceed $1,000 per transaction, or by both that fine and imprisonment. By creating a new crime, this bill would impose a state-mandated local program. This bill would provide that every person or entity who knowingly solicits or facilitates another person who is physically located in this state to play or bet at any prohibited online gambling game in violation of this section is guilty of a misdemeanor punishable by imprisonment in a county jail not to exceed 90 days, a fine not to exceed $1,000 per violation, or by both that fine and imprisonment. The bill would provide that a person or entity "knowingly" violates these provisions if he or she knows or has reason to know that the participation of persons in this state in online gambling games is unlawful, or if he or she has received a warning from the Attorney General to that effect. This bill would provide that these provisions shall not apply with respect to advertisements that are not specifically directed towards this state and which contain adequate disclosure of the illegality of these games, or to Internet service providers, web pages and search engines, or other indexes, networks, or network equipment which act as mere functional intermediaries between a patron and an online gambling enterprise and which do not reasonably constitute an advertisement or promotion of that enterprise.

By creating a new crime, this bill would impose a state-mandated local program.

This bill would provide that every person who plays or bets at or against a prohibited online gambling game while physically located within this state is guilty of an infraction punishable by a fine not to exceed $100 per transaction. By creating a new crime, this bill would impose a state-mandated local program.

This bill would also provide that, notwithstanding any other provision of law, and in addition to any other limitation on the enforceability of gambling debts, losses, and transactions, debts incurred as a result of wagering on a prohibited online gambling game are not enforceable in this state.

This bill would also provide that notwithstanding any other provision of law, the Attorney General is expressly authorized to enforce these provisions, and in addition to bringing criminal actions shall have the authority to file civil actions, issue cease and desist letters, and take other actions as necessary to maximize compliance with these provisions by both online gambling enterprises and individual citizens of this state, and would specifically authorize the Attorney General to review electronic, print, and other advertisements of online gambling enterprises for accuracy, and demand that advertisements appearing in this state disclose that these online games are illegal in this state.

This bill would provide that its provisions are severable, and that if any of its provision or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect.

This bill would declare the intent of the Legislature to codify numerous court decisions relating to illegal gambling and the nonenforceability of gambling losses and debts, with application to prohibited online gambling in particular, insofar as they hold that gambling losses and debts from illegal gambling, from online gambling in particular, are unenforceable, and that credit card issuers and other lenders doing business in this state shall take notice of the nonenforceability of that these debts are unenforceable and take appropriate action to protect their legitimate business interests.

(2) 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: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. (a) The Legislature finds and declares the following:

(1) Online gambling threatens the health, safety, and welfare of the citizens of this state, because, unlike controlled gambling conducted within licensed gambling establishments and tribal casinos, online gambling is completely unregulated.

(2) The unregulated nature of online gambling enterprises, combined with the fact that many online gambling providers are located beyond the criminal jurisdiction of this state or of the United States, poses an unacceptable risk of fraudulent business practices to patrons of these establishments.

(3) Due to the anonymous nature of the Internet, online gambling establishments are unable to accurately assess the age or identity of online patrons, and thus these enterprises facilitate illegal gambling by minors and other persons prohibited from engaging in gambling.

(4) Online gambling enterprises routinely and incorrectly assert that persons in this state can legally participate in online gambling games, and thus these enterprises engage in false and misleading advertising.

(b) It is the intent of the Legislature in enacting this act to remove any ambiguity as to the illegality of online gambling in this state.

SEC. 2. Section 330d is added to the Penal Code, to read:

330d. (a) Notwithstanding any other provision of law, and in addition to the prohibitions and limitations on gambling contained in this chapter and in Chapter 9 (commencing with Section 319), it is unlawful for any person to operate or bet at or against any prohibited online gambling game, as defined in subdivision

(d) (f) , for money, checks, credit, or any other representative of value.

(b) Every person who deals, carries on, opens or causes to be opened, or who conducts, operates, or offers for play any prohibited online gambling game played for money, checks, credit, or any other representative of value, to any person that he or she knows or has reason to know is physically located within this state at the time of the transaction, is guilty of a misdemeanor punishable by imprisonment in a county jail not to exceed 90 days, a fine not to exceed one thousand dollars ($1,000) per transaction, or by both that imprisonment and fine.

(c) Every person who deals, carries on, opens or causes to be opened, or who conducts, operates, or offers for play any prohibited online gambling game played for money, checks, credit, or any other representative of value, from a host server, as defined in subdivision (g), that is physically located within this state at the time of the transaction, is guilty of a misdemeanor punishable by imprisonment in a county jail not to exceed 90 days, a fine not to exceed one thousand dollars ($1,000) per transaction, or by both that imprisonment and fine.

(d) (1) Every person or entity who knowingly solicits or facilitates another person who is physically located in this state to play or bet at any prohibited online gambling game in violation of this section is guilty of a misdemeanor punishable by imprisonment in a county jail not to exceed 90 days, a fine not to exceed one thousand dollars ($1,000) per violation, or by both that fine and imprisonment. For purposes of this subdivision, a person or entity "knowingly" solicits or facilitates a violation of this provision if he or she knows or has reason to know that the participation of persons in this state in online gambling games is unlawful, or if he or she has received a warning from the Attorney General to that effect.

(2) This subdivision shall not apply with respect to advertisements that are not specifically directed towards the residents of this state and which contain adequate disclosure of the illegality of these games, nor shall this subdivision apply with respect to Internet service providers, web pages containing hypertext links, web search engines, networks, routers, hubs, or other directories, indexes, devices, or equipment which act as mere functional intermediaries between a patron and an online gambling enterprise and which do not reasonably constitute an advertisement or promotion of that enterprise.

(e) Every person who plays or bets at or against any prohibited online gambling game for money, checks, credit, or any other representative of value, while that person is physically located within this state, is guilty of an infraction punishable by a fine not to exceed one hundred dollars ($100) per transaction.

(f) A prohibited online gambling game, for purposes of this section, means any banking or percentage game played with dice, cards, or devices, as well as any of the following games, including any common variations thereon or facsimiles thereof, that are conducted, operated, or offered for play over the Internet:
(1) Craps.
(2) Roulette.
(3) Blackjack or twenty-one.
(4) Slot machines.
(5) Poker, including stud poker, draw poker, Caribbean stud poker,
or Pai gow poker.
(6) Baccarat.
(7) Bingo, including bingo pulltab games.
(8) Sportsbook wagering, including wagering on the outcome, statistics, or any other aspect of a sporting event, other than lawful wagering on a horse race.
(9) Lottery games, other than games lawfully conducted by the California State Lottery.

(g) A host server, for purposes of this section, means the computer or network of computers on which an online gambling game is operated. Host server does not include any computer, hub, or other device, or any independent computer network, that acts as an intermediary in the transfer of Internet Protocol (IP) packets to and from the host server, provided that the intermediary device is not owned or controlled by the person or entity, or a subsidiary thereof, that owns or controls the host server.

(h) Notwithstanding any other provision of law, and in addition to any other limitation on the enforceability of gambling debts, losses, and transactions, debts incurred as a result of wagering on a prohibited online gambling game, as defined in subdivision (d), are not enforceable in this state.

(i) Notwithstanding any other provision of law, the Attorney General is expressly authorized to enforce this section, and in addition to bringing criminal actions shall have the authority to file civil actions, issue cease and desist letters, and take other actions as necessary to maximize compliance with these provisions by both online gambling enterprises and individual citizens of this state. The Attorney General is specifically authorized to review electronic, print, and other advertisements of online gambling enterprises for accuracy, and may demand that advertisements appearing in this state disclose that these online games are illegal in this state.

(j) The provisions of this section are severable. If any provision of this section or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.

SEC. 3. It is the intent of the Legislature in enacting Section 330d of the Penal Code to codify numerous decisions of the courts of this with respect to illegal gambling the nonenforceability of gambling losses and debts, with application to prohibited online gambling in particular state insofar as they hold that gambling losses and debts from illegal gambling, from online gambling in particular, are unenforceable. It is also the intent of the Legislature in enacting this section that credit card issuers and other lenders doing business in the State of California take notice of the nonenforceability of that these debts are unenforceable and take appropriate action to protect their legitimate business interests.

SEC. 4. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB 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 XIIIB of the California Constitution.