Report 2018-132 Recommendation 9 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 #9 To: Gambling Control Commission, California

To prevent unnecessary delays and use of resources and to ensure its compliance with state law, the commission should, following the Legislature's amendment of the Gambling Act that we recommend, revise its regulations and policies for conducting evidentiary hearings. These revisions should specify that the commission may vote at regular meetings on a final basis to approve or deny licenses, registrations, permits, findings of suitability, or other matters and that it is not required to conduct evidentiary hearings unless applicants request that it do so.

Annual Follow-Up Agency Response From October 2022

Assembly Bill 120 (Salas, Chapter 45, Statutes of 2021) provided the necessary statutory change required for the California Gambling Control Commission (Commission) to implement the changes formally recommended by the State Auditor. AB 120 provided the Commission the authority to amends its regulations to approved or deny licenses at regular meetings. Once AB 120 became effective on January 1, 2022, the Commission immediately began the Office of Administrative Law (OAL) process to amend its regulations to incorporate the changes outlined in the Auditor's formal recommendation.

The Commission's AB 120 Hearing Update regulatory package was formally submitted to the OAL, and subsequently approved by the OAL and filed with the Secretary of State on February 8, 2022. With OAL's approval, the Commission's regulations went into effect April 1, 2022, at which time the Commission began providing the Commissioners the ability to approved or deny licenses at the regular Commission meetings.

This Recommendation is fully implemented.

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

Annual Follow-Up Agency Response From October 2021

The ability to fully implement this recommendation has been outside of the Commission's control as statutory amendments were necessary in order for the Commission to begin work on its part of the recommendation. Notwithstanding, the Commission submitted proposed legislation outlining the necessary statutory changes during the 2020 and 2021 legislative sessions. AB 2771, as introduced by Assemblyman Salas during the 2020 legislative session, was held in the Assembly Committee on Governmental Organizations and did not pass. During the 2021 legislative session, Assemblyman Salas introduced AB 120, which was chaptered on July 9, 2021, with an effective date of January 1, 2022.

In anticipation of the January 1, 2022 effective date of AB 120, the Commission has formally noticed the necessary corresponding proposed regulatory changes titled AB 120 Hearings Update. The formal rulemaking notice beginning the required 45-day public comment period was released to all stakeholders on September 17, 2021. The public comment period will end on November 2, 2021. Once Commission staff has reviewed all public comments received and made any necessary changes to the proposed regulations, the Commission will schedule a public meeting for the Commissioners to consider approval and submission of the proposed regulations to the Office of Administrative Law (OAL). Once approved by the Commission, the regulations package will be submitted to the Department of Finance (DOF) for their 30-day review period and then onto the OAL to complete their review within the 30 working day period they are provided to either issue an approval or denial of the regulations submitted.

California State Auditor's Assessment of Annual Follow-Up Status: Partially Implemented

Annual Follow-Up Agency Response From May 2021

As it had in 2020, the California Gambling Control Commission (Commission) resubmitted its legislative proposal requesting the necessary statutory changes to implement Recommendation #9 for the 2021 legislative session. The legislative proposal was approved by the Governor's Office.

On December 18, 2020, AB 120 was introduced to address the CSA's Recommendation #9. Assemblymember Salas is the author, and recently Assemblymember Gibson joined as co-author. In summary, the bill authorizes the Commission to take action to deny or approve an application for a state gambling license in its regular meetings rather than requiring the commission to hold evidentiary hearings, unless the commission is requested to do so by a denied applicant or if the application is approved with limits, restrictions or conditions. The bill passed through the first house without opposition and is pending in the second. The Commission does not anticipate any opposition on this bill.

The Commission has been working with Assemblymember Salas' office on AB 120 since early 2020. In addition, the Commission submitted a formal Letter of Support (attached) for AB 120.

Following any statutory changes via signed legislation and resulting effective date, the Commission will immediately submit a Section 100 regulatory package to the Office of Administrative Law to conform to the updated law.

California State Auditor's Assessment of Annual Follow-Up Status: Partially Implemented

Annual Follow-Up Agency Response From October 2020

The Commission has prepared statutory proposals and are pursuing legislative solutions for consideration during the 2021 legislative session, as it did during the 2020 legislative session.

The Commission will continue to pursue implementation of this recommendation; however, implementing this recommendation is completely dependent on legislative action.

Following any statutory changes via signed legislation and resulting effective date, the Commission will immediately submit a Section 100 regulatory package to the Office of Administrative Law to conform to the updated law.

California State Auditor's Assessment of Annual Follow-Up Status: Not Currently Feasible

As the commission points out in its response, its implementation of this recommendation is dependent on legislative action. We made a separate recommendation to the Legislature to amend the Gambling Act to allow the commission to take action at its regular licensing meetings. However, the Legislature has not yet implemented that recommendation. As such, there is no action the commission can take at this time.

1-Year Agency Response

The Commission has prepared statutory proposals and are pursuing legislative solutions. We are assessing the ability to achieve these goals in the 2020 session due to the COVID-19 pandemic.

In addition, Assemblyman Rudy Salas, Jr., who is also the Chair of the Joint Legislative Audit Committee, introduced AB 2771 on February 20, 2020. AB 2771, if signed, would provide the necessary amendments to existing statute to allow the Commission to take an action of denial at regular meetings. The Commission has been working, and will continue to work, with Assemblyman Salas' office to provide technical assistance on this bill.

Following any statutory changes via signed legislation, the Commission will immediately submit a Section 100 regulatory package to the Office of Administrative Law (OAL) to conform to the updated law.

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

6-Month Agency Response

The Commission is reviewing potential changes to the applicable existing statutes for consideration during the Proposed Legislation process.

Following any statutory changes via signed legislation, the Commission will immediately submit a Section 100 regulatory package to the Office of Administrative Law (OAL) to conform to the updated law.

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

60-Day Agency Response

The Commission is reviewing potential changes to the applicable existing statutes for consideration during the Proposed Legislation process.

Following any statutory changes via signed legislation, the Commission will immediately submit a Section 100 regulatory package to the Office of Administrative Law (OAL) to conform to the updated law.

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

All Recommendations in 2018-132

Agency responses received are posted verbatim.