Report 2018-132 Recommendation 17 Responses

Report 2018-132: Bureau of Gambling Control and California Gambling Control Commission: Their Licensing Processes Are Inefficient and Foster Unequal Treatment of Applicants (Release Date: May 2019)

Recommendation #17 To: Gambling Control Commission, California

To increase uniformity in the licensing process, the commission should revise its current regulations and submit them to the Office of Administrative Law for public review by May 2020 to address the following areas of inconsistency:

Application processes and time frames.

The ability to work during the application process.

The ability to reapply after denial.

In revising its regulations, the commission should increase consistency across application types while minimizing risk to the public.

1-Year Agency Response

As stated previously, the Commission presented its proposed regulatory package that would provide uniformity in the licensing process at a public workshop on August 12, 2019. At the August workshop, the Commissioners approved the proposed changes and to start the formal rulemaking process. Since then, the Commission has been finalizing the proposed regulatory package and documentation required to begin the formal rulemaking process. All required documentation has been completed as was submitted to the Department of Finance on March 27, 2020. In addition, the complete proposed regulatory package was submitted to the Office of Administrative Law (OAL), satisfying the Auditor's recommendation, on April 14, 2020.

In normal circumstances, the OAL has a 10-day review period and, absent any requested changes, would publicly post the proposed regulatory changes on its website the Friday following their 10-day review period. The OAL publication date triggers the start of the 45-day comment period for the public.

Given the current declared State of Emergency for COVID-19 and the devastating impact it has had on everyone, including the Commission's stakeholders, the Commission has requested the OAL to publish the proposed regulatory changes at a later date, on June 19, 2020. The later publication date allows the public comment period to occur at a later time that is, hopefully, outside of the current State of Emergency.

The Commission understands it has met the requirements of this recommendation with its April 14, 2020 submission to the OAL. Although the Commission has requested a later OAL publication date to assist the public and/or stakeholders, the Commission has posted the proposed regulatory changes on its website as of April 27, 2020, and provided email notification to those that subscribe to the Commission's website that same day, making the proposed changes public and essentially providing a significantly longer review and comment period for the public.

California State Auditor's Assessment of 1-Year Status: Fully Implemented

The commission provided us with the proposed revisions to its regulations, which are responsive to our concerns about the major areas of inconsistencies we identified during our audit. The commission also provided evidence that it has submitted the revisions to the Office of Administrative Law for public review and comment. As such, the commission has implemented the letter of our recommendation.

6-Month Agency Response

The Commission has drafted a proposed regulatory action that would provide uniformity in the licensing process and held a public workshop on the proposed text on August 12, 2019. At the August workshop, the Commissioners approved the proposed changes to start the formal rulemaking process.

The Commission is currently developing the final documents required prior to submitting the initial rulemaking package to the OAL for notice. The required documents include the initial statement of reasons, notice of proposed action, and fiscal impact. The fiscal impact necessitates seeking input from the stakeholders, Bureau, as well as identifying the Commission impact, and must be submitted to Department of Finance for a 30-day review prior to noticing the package with OAL.

California State Auditor's Assessment of 6-Month Status: Partially Implemented

We verified that the commission held a public workshop in August 2019 concerning its proposed revisions to existing regulations.

60-Day Agency Response

The Commission has drafted proposed regulatory changes that would provide uniformity in the licensing process. These proposed regulations are scheduled for a public workshop on August 12 and 13, 2019. The Commission's proposed regulatory package is currently open for stakeholder comments until July 29, 2019.

Depending on the outcome of the August workshop, the Commissioners may provide the approval to enter the formal rulemaking process, or the Commissioners may require further work on the regulatory package for another workshop.

Prior to entering the formal rulemaking process, the Commission will develop final documents and submit the initial rulemaking package to the OAL for notice. Documents include the initial statement of reasons, notice of proposed action, and fiscal impact. The fiscal impact necessitates seeking input from the stakeholders, Bureau, as well as identifying the Commission impact, and must be submitted to Department of Finance for a 30-day review prior to noticing the package with OAL.

Please see ATTACHMENT C for supporting documentation.

California State Auditor's Assessment of 60-Day Status: Pending

All Recommendations in 2018-132

Agency responses received are posted verbatim.