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HomeMy WebLinkAbout2392ORDINANCE NO. 2392 AN ORDINANCE OF THE PEOPLE OF THE CITY OF ARCADIA, CALIFORNIA, AMENDING THE ARCADIA MUNICIPAL CODE BY ADDING CHAPTER 6.5 TO ARTICLE II ("THE ADMINISTRATION CODE") TO ESTABLISH A GENERAL SPORTS WAGERING TAX AT A RATE OF UP TO 5% OF SPORTS WAGERING GROSS REVENUES RECEIVED BY QUALIFYING BUSINESSES WITHIN THE CITY THE PEOPLE OF THE CITY OF ARCADIA DO ORDAIN AS FOLLOWS: SECTION 1. Subject to the approval of a majority of the voters of the City of Arcadia at the General Municipal Election so designated by the City Council in a separate resolution placing the proposal on the ballot for such election, Part 6.5 of Chapter 6 is hereby added to Article II of the Arcadia Municipal Code to read as follows: 'PART 6.5 — SPORTS WAGERING TAX DIVISION 1. - DEFINITIONS 2665 - DEFINITIONS. For the purpose of this Part certain words and terms are hereafter defined and shall have the meaning thus ascribed. 2665.1. - TITLE. This Part shall be known as the Sports Wagering Tax Ordinance of the City of Arcadia. 2665.2. - ACCEPT OR ACCEPTANCE. An operator "accepts" a sports wager when the operator either (a) acquires a contingent obligation to pay the person placing the sports wager based on the outcome of the sports wager, (b) acquires an obligation as an intermediary or broker for, or otherwise facilitates the placement of a sports wager with, any third party, or (c) receives compensation from an online sports betting operator or other third party for facilitating online sports wagering or for operating an in-person location where online sports wagers may be placed. Acceptance occurs regardless of the ultimate outcome of the wager and regardless of whether the sports wager is placed at a physical location within the City, through an electronic application or service while at a physical location within the City, with a business within the City through the internet or other offsite service, or through any other means. 2665.3. - OPERATOR. "Operator" means any person engaged in the business of accepting sports wagers in the City of Arcadia. "Operator" also includes any person engaged in the business of operating a location in the City of Arcadia that facilitates online sports wagering or of operating an in-person location in the City of Arcadia where online sports wagers may be placed. 2665.4. - SPORTS EVENT. "Sports Event" means any physical, athletic, or sporting competition or event, whether professional, collegiate or amateur, on which persons may lawfully accept a wager on the outcome of the competition or on any occurrence related to the competition. "Sports Event" shall also include but not be limited to competitive games, electronic sports competitions, video gaming competitions and similar events. "Sports Event" does not include horse races or horse race meetings. 2665.5. - SPORTS WAGER. "Sports Wager" means a wager on any sports event or any portion thereof or occurrence therein, including but not limited to proposition bets on outcomes related to a sports event even if not part of the competition itself. This definition shall be inclusive of any system or method of wagering, including but not limited to single -game bets, teaser bets, parlays, over-under, moneyline, pools, exchange wagering, in -game wagering, in -play bets, proposition bets, straight bets, and fantasy sports pools or competitions. "Sports Wager" shall also include any fee, charge, membership dues or similar costs imposed by an operator on a person placing a sports wager or offered by an operator as a condition of, or incentive for, placing a sports wager. Examples include, but are not limited to, charges for opportunities to place sports wagers at different prices or values or charges for opportunities to make wagers that otherwise would be unavailable to persons who have not paid the charge. 2665.6. — SPORTS WAGERING GROSS REVENUE. "Sports Wagering Gross Revenue" means the total sum of all sports wagers an operator accepts in a reporting period, less only the total of all sums actually paid out as winnings in the same reporting period. "Sports Wagering Gross Revenue" also includes any compensation received from an online sports betting operator, or other third party, for facilitating online sports wagering or for operating an in-person location where online sports wagers may be placed. A. For purposes of the deduction, amounts paid out as winnings includes amounts returned to persons because no party wins the wager. B. Operators shall not make a deduction for any unredeemed winnings. Operators shall only make a deduction when winnings are actually paid out. C. Operators shall not deduct the cash equivalent value of any merchandise or thing of value included in a jackpot, raffle, sweepstakes, or prize. D. Sports wagering gross revenue is determined on a per -reporting period basis, regardless of when the outcome of a sports wager is subject to determination. For example, if the reporting period is quarterly, and the operator accepts a sports wager in the first quarter of the year for an event taking place in second quarter of the year, then the operator shall include the amount as sports wagering gross revenue in its first quarter return. The operator may then take a deduction when the patron redeems the winnings, which will either be in the second quarter or later. 2665.7. - TAX ADMINISTRATOR. "Tax Administrator" means the City Administrative Services Director, or their designee. 2665.8. - PERSON. "Person" shall mean any individual, firm, partnership, joint venture, association, social club, fraternal organization, joint stock company, corporation, estate, trust, business trust, receiver, trustee, syndicate, or any other group or combination acting as a unit. DIVISION 2. - IMPOSITION AND RATE 2666. - TAX IMPOSED. For the privilege of operating a sports wagering business within the City, each operator is subject to and shall pay a tax in the amount of five percent (5%) of the operator's sports wagering gross revenue. Said tax constitutes a debt owed by the operator to the City which is extinguished only by payment to the City. The proceeds of this tax are allocated to the City's General Fund for governmental expenditures. This tax is not a sales, transactions or use tax and shall not be calculated or assessed as such. 2666.1 - CITY COUNCIL AUTHORIZATION TO ADJUST TAX RATE AND/OR METHODOLOGY. The City Council may impose the tax authorized by this Part at a lower rate and may otherwise repeal or amend this Part without a vote of the people. However, as required by California Constitution Article XIIIC (Proposition 218), voter approval is required for any amendment that would increase the maximum rate or methodology of any tax levied pursuant to this Part. The people of the City of Arcadia affirm that the following actions shall not constitute an increase of the maximum rate or methodology of the tax requiring subsequent voter approval: A. The restoration of the rate of the tax to a rate that is no higher than the maximum set by this voter -approved Part, if the City Council has previously acted to reduce the rate of the tax; B. An action that interprets or clarifies the methodology of the tax, or any definition applicable to the tax, so long as interpretation or clarification (even if contrary to some prior interpretation or clarification) is not inconsistent with the language of this Part; C. The establishment of a class of sports wager that is exempt or excepted from the tax or that is subject to a reduced tax rate, or the discontinuation of any such exemption, exception or reduction; and D. Resuming collection of the tax imposed by this Part, even if the City had, for some period of time, either suspended collection of the tax or otherwise failed to collect the tax, in whole or in part; and DIVISION 3. - COLLECTION PROCEDURE 2667. - REPORTING AND REMITTING. Each operator shall, on or before the last day of the month following the close of each calendar quarter, or at the close of any shorter reporting period which may be established by the Tax Administrator, make a return to the Tax Administrator, on forms provided by the Tax Administrator, of the total sports wagers accepted, the allowable deductions for sums actually paid out as winnings in the same reporting period and the amount of the sports wagering tax. At the time the return is filed, the full amount of the tax collected shall be remitted to the Tax Administrator. The Tax Administrator may establish shorter reporting periods for any operator if the Tax Administrator deems it necessary in order to ensure collection of the tax and may require further information in the return. Returns and payments are due immediately upon cessation of business for any reason. All taxes collected by operators pursuant to this Part shall be held in trust for the account of the City until payment thereof is made to the Tax Administrator. 2667.1. - PENALTIES AND INTEREST. Penalties shall apply and interest be due as provided in the following subsections. 2667.1.1. - SAME. ORIGINAL DELINQUENCY. Any operator who fails to remit any tax imposed by this Part within the time required shall pay a penalty of 10% of the amount of the tax in addition to the amount of the tax. 2667.1.2. - SAME. CONTINUED DELINQUENCY. Any operator who fails to remit any delinquent remittance on or before a period of thirty (30) days following the date on which the remittance first became delinquent shall pay a second delinquency penalty of 10% of the amount of the tax in addition to the amount of the tax and the 10% penalty first imposed. 2667.1.3. - SAME. FRAUD. If the Tax Administrator determines that the non-payment of any remittance due under this Part is due to fraud, a penalty of 25% or the amount of the tax shall be added thereto in addition to the penalties stated in subsections 2667.2.1 and 2667.2.2. 2667.1.4. - SAME. INTEREST. In addition to the penalties imposed, any operator who fails to remit any tax imposed by this Part shall pay interest at the rate of one-half of 1 % per month or fraction thereof on the amount of the tax, exclusive of penalties, from the date on which the remittance first became delinquent until paid. 2667.1.5. - SAME. PENALTIES MERGED WITH TAX. Every penalty imposed and such interest as accrues under the provisions of this Division shall become a part of the tax herein required to be paid. 2667.2. - TAX ADMINISTRATOR DETERMINATIONS. If any operator shall fail or refuse to make, within the time provided in this Part, any report and remittance of said tax or any portion thereof required by this Part, the Tax Administrator shall proceed in such manner as the Tax Administrator may deem best to obtain facts and information on which to base the estimate of the tax due. As soon as the Tax Administrator shall procure such facts and information as they are able to obtain upon which to base the assessment of any tax imposed by this Part and payable by any operator who has failed or refused to collect the same and to make such report and remittance, they shall proceed to determine and assess against such operator the tax, interest and penalties provided for by this Part. In case such determination is made, the Tax Administrator shall give a notice of the amount so assessed by serving it personally or by depositing it in the United States mail, postage prepaid, addressed to the operator so assessed at the operator's last known place of address. Such operator may within ten (10) days after the serving or mailing of such notice make application in writing to the Tax Administrator for a hearing on the amount assessed. If application by the operator for a hearing is not made within the time prescribed, the tax, interest and penalties, if any, determined by the Tax Administrator shall become final and conclusive and immediately due and payable. If such application is made, the Tax Administrator shall give not less than five (5) days written notice in the manner prescribed herein to the operator to show cause at a time and place fixed in said notice why said amount specified therein should not be fixed for such tax, interest and penalties. At such hearing, the operator may appear and offer evidence why such specified tax, interest and penalties should not be so fixed. After such hearing the Tax Administrator shall determine the proper tax to be remitted and shall thereafter give written notice to the person in the manner prescribed herein of such determination and the amount of such tax, interest and penalties. The amount determined to be due shall be payable after fifteen (15) days unless an appeal is taken as provided in the following subsection. 2667.2.1. - SAME. APPEAL. Any operator aggrieved by any decision of the Tax Administrator with respect to the amount of such tax, interest and penalties, if any, may appeal to the City Manager by filing a notice of appeal with the City Clerk within fifteen (15) days of the serving or mailing of the determination of tax due. The City Manager shall fix a time and place for hearing such appeal, and the City Clerk shall give notice in writing to such operator at their last known place of address. The findings of the City Manager shall be final and conclusive and shall be served upon the appellant in the manner prescribed above for service of notice of hearing. Any amount found to be due shall be immediately due and payable upon the service of notice. No injunction or writ of mandate or other legal or equitable process shall issue in any suit, action or proceeding in any court against the City or an officer thereof, to prevent or enjoin the collection of taxes sought to be collected pursuant to this Part and payment of all tax, interest and penalties shall be required as a condition precedent to seeking judicial review of any tax liability. 2667.3. - RECORDS. It shall be the duty of every operator liable for the payment to the City of any tax imposed by this Part to keep and preserve, for a period of three years, all records as may be necessary to determine the amount of such tax as he may have been liable for the collection of and payment to the City, which records the Tax Administrator shall have the right to inspect at all reasonable times. 2667.4. - REFUNDS. Whenever the amount of any tax, interest or penalty has been overpaid or paid more than once or has been erroneously or illegally collected or received by the City under this Part it may be refunded as provided in the following subsections provided a claim in writing therefor, stating under penalty of perjury the specific grounds upon which the claim is founded, is filed with the Tax Administrator within one year of the date of payment. The claim shall be on forms furnished by the Tax Administrator. 2667.4.1. - SAME. CREDITS. An operator may claim a refund or take as credit against taxes remitted the amount overpaid, paid more than once or erroneously. 2667.4.2. - SAME. PROOF. No refund shall be paid under the provisions of this Part unless the claimant establishes their right thereto by written records showing entitlement thereto. 2667.5. - ACTION TO COLLECT. Any tax required to be paid by any operator under the provisions of this Part shall be deemed a debt owed by the operator to the City. Any person owing money to the City under the provisions of this Part shall be liable to an action brought in the name of the City for the recovery of such amount. The prevailing party in any action may be entitled to recover its attorney's fees under this Chapter.. 2667.6. - VIOLATIONS. No person shall fail or refuse to furnish any return required to be made by this Part, or fail or refuse to furnish a supplemental return or other data required by the Tax Administrator. No person required to make, render, sign or verify any report, return or claim shall make any false or fraudulent report, return or claim with intent to defeat or evade the determination required by this Part to be made of any amount due. No person shall fail or refuse to pay any sum required by this Part to be paid. DIVISION 4. ADMINISTRATIVE PROVISIONS. 2668. - CITY COUNCIL AMENDMENTS. This Part was submitted to the voters for approval. Any amendment to this Part to increase the tax above the maximum rate expressly provided in Section 2666 shall not become effective until such amendment is approved by the voters. The voters expressly authorize the City Council to amend, modify, change, or revise any other provision of this Part as the City Council deems in the best interest of the City, 2668.1. - ADMINISTRATIVE RULES. The City Manager or the City Manager's designee shall promulgate rules, regulations, and procedures to implement and administer this Part to ensure the efficient and timely collection of the tax imposed by this Part. 2668.2. - ILLEGAL ACTIVITY. This Part does not authorize engaging in any activity that is otherwise illegal under federal, state or local law. The payment of the tax required pursuant to this Part shall not be construed as authorizing the conduct or continuance of any illegal business or of a legal business in an illegal manner." SECTION 2. Pursuant to Article XIIIB of the California Constitution, the appropriation limit for the City of Arcadia will be increased by the maximum projected aggregate collection authorized by the levy of this general tax, as indicated in Section 1, in each of the years covered by this Ordinance plus the amount, if any, by which the appropriation limit is decreased by law as a result of the levy of the general tax set forth in this Ordinance. SECTION 3. If any portion of this Ordinance is declared invalid by a court of law or other legal body with applicable authority, the invalidity shall not affect or prohibit the force and effect of any other provision or application of the Ordinance that is not deemed invalid. The voters of the City hereby declare that they would have circulated for qualification and/or voted for the adoption of this Section, and each portion thereof, regardless of the fact that any portion of the initiative may be subsequently deemed invalid. SECTION 4. Pursuant to California Constitution Article XIIIC Section (2)(b) and California Elections Code Section 9217, this Ordinance shall take effect only if approved by a majority of the eligible voters of the City of Arcadia voting at the General Municipal Election to be held on November 8, 2022. SECTION 5. The Mayor is hereby authorized to attest to the adoption of this Ordinance by the People voting thereon on November 8, 2022, by signing where indicated below. I hereby certify that the foregoing Ordinance was PASSED, APPROVED AND ADOPTED by the People of the City of Arcadia on the 8th day of November, 2022. Dated: 01 Mayor of the City o rcadia ATTEST: City C rk APPROVED AS TO FORM: Stephen P. Deitsch City Attorney