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