SECTIONS 19985-19987 - California Statutes

BUSINESS AND PROFESSIONS CODE

SECTION 19985-19987

19985. The Legislature finds and declares the following:
(a) Nonprofit organizations provide important and necessary
services to the people of the State of California with respect to
educational and social services and there is a need to provide
methods of fundraising to nonprofit organizations so as to enable
them to meet their stated purposes.
(b) The playing of controlled games for the purpose of raising
funds by nonprofit organizations is in the public interest.
(c) Uniform regulation for the conduct of controlled games is in
the best interests of nonprofit organizations and the people of this
state.

19986. (a) Notwithstanding any other provision of state law a
nonprofit organization may conduct a fundraiser using controlled
games as a funding mechanism to further the purposes and mission of
the nonprofit organization.
(b) A nonprofit organization holding a fundraiser pursuant to
subdivision (a) shall not conduct more than one fundraiser per
calendar year, and each fundraiser shall not exceed five consecutive
hours. Each fundraiser shall be preapproved by the department.
Eligible nonprofit organizations that have multiple chapters may hold
one fundraiser per chapter per calendar year.
(c) No cash prizes or wagers may be awarded to participants,
however, the winner of each controlled game may be entitled to a
prize from those donated to the fundraiser. An individual prize
awarded to each winner shall not exceed a cash value of five hundred
dollars ($500). For each event, the total cash value of prizes
awarded shall not exceed five thousand dollars ($5,000).
(d) At least 90 percent of the gross revenue from the fundraiser
shall go directly to a nonprofit organization. Compensation shall not
be paid from revenues required to go directly to the nonprofit
organization for the benefit of which the fundraiser is conducted,
and no more than 10 percent of the gross receipts of a fundraiser may
be paid as compensation to the entity or persons conducting the
fundraiser for the nonprofit organization. If an eligible nonprofit
organization does not own a facility in which to conduct a fundraiser
and is required to pay the entity or person conducting the
fundraiser a rental fee for the facility, the fair market rental
value of the facility shall not be included when determining the
compensation payable to the entity or person for purposes of this
section. This section does not preclude an eligible organization from
using funds from sources other than the gross revenue of the
fundraiser to pay for the administration or other costs of conducting
the fundraiser.
(e) An eligible nonprofit organization shall not conduct a
fundraiser authorized by this section, unless it has been in
existence and operation for at least three years and registers
annually with the department. The department shall furnish a
registration form on its Internet Web site or, upon request, to
eligible nonprofit organizations. The department shall, by
regulation, collect only the information necessary pursuant to this
section on this form. This information shall include, but is not
limited to, the following:
(1) The name and address of the eligible organization.
(2) The federal tax identification number, the corporate number
issued by the Secretary of State, the organization number issued by
the Franchise Tax Board, or the California charitable trust
identification number of the eligible organization.
(3) The name and title of a responsible fiduciary of the
organization.
(f) The department shall adopt regulations necessary to effectuate
this section, including emergency regulations, pursuant to the
Administrative Procedure Act (Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code).
(g) The nonprofit organization shall maintain records for each
fundraiser using controlled games, which shall include:
(1) An itemized list of gross receipts for the fundraiser.
(2) An itemized list of recipients of the net profit of the
fundraiser, including the name, address, and purpose for which
fundraiser proceeds are to be used.
(3) The number of persons who participated in the fundraiser.
(4) An itemized list of the direct cost incurred for each
fundraiser.
(5) A list of all prizes awarded during each fundraiser.
(6) The date, hours, and location for each fundraiser held.
(h) As used in this article, "nonprofit organization" means an
organization that has been qualified to conduct business in
California for at least three years prior to conducting controlled
games and is exempt from taxation pursuant to Section 23701a, 23701b,
23701d, 23701e, 23701f, 23701g, 23701k, 23701l, or 23701w of the
Revenue and Taxation Code.
(i) The department may take legal action against a registrant if
it determines that the registrant has violated this section or any
regulation adopted pursuant to this section, or that the registrant
has engaged in any conduct that is not in the best interest of the
public's health, safety, or general welfare. Any action taken
pursuant to this subdivision does not prohibit the commencement of an
administrative or criminal action by the Attorney General, a
district attorney, or county counsel.
(j) The department may require an eligible organization to pay an
annual registration fee of up to one hundred dollars ($100) per year
to cover the actual costs of the department to administer and enforce
this section. The annual registration fees shall be deposited by the
department into the Gambling Control Fund.
(k) No fundraiser permitted under this section may be conducted by
means of, or otherwise utilize, any gaming machine, apparatus, or
device that meets the definition of a slot machine contained in
Section 330b or 330.1 of the Penal Code.
(l) No more than four fundraisers at the same location, even if
sponsored by different nonprofit organizations, shall be permitted in
any calendar year, except in rural areas where preapproved by the
department. For purposes of this section, "rural" shall mean any
county with an urban influence code, as established by the latest
publication of the Economic Research Service of the United States
Department of Agriculture, of "3" or more.
(m) The authority to conduct a fundraiser, as well as the type of
controlled games, may be governed by local ordinance.
(n) No person shall be permitted to participate in the fundraiser
unless that person is at least 21 years of age.
(o) No fundraiser permitted under this section may be operated or
conducted over the Internet.

19987. (a) The department, by regulation or order, may require any
person or entity set forth in subdivision (b), to register with the
department.
(b) "Person or entity" means one who, directly or indirectly,
manufactures, distributes, supplies, vends, leases, or otherwise
provides, supplies, devices, or other equipment designed for use in
the playing of controlled games by any nonprofit organization
registered to conduct controlled games.