SB45 Online Gambling Bill

California Senate Bill 45 – known as The Gambling Control Act – was first introduced by State Senator Rod Wright on December 8, 2010. SB 45 (PDF) has several features in common with the more widely supported and discussed SB 40, but contains enough significant differences to make it a very different approach to legalizing online gambling in California.

As with SB 40, SB 45 would “establish a framework to authorize intrastate Internet gambling.” SB 45 is designed to allow up to three gambling “hub operators” to enter into contracts with the state of California. These contracts would allow these operators to run websites that could provide “lawful Internet gambling games” to Californians for a 20-year period.

SB 45 does not specify exactly how much hub operators would have to pay; the amount would presumably be determined during contract negotiations. However, it does set a minimum standard of 10% of gross revenues to be paid to the state Treasurer on a monthly basis.

In addition, SB 45 would create an Internet Gambling Fund from the proceeds of these payments. This fund could be appropriated by the California Legislature, and “would not be subject to the formulas established by statute directing expenditures from the General Fund.” Some funds would be set aside for the Office of Problem Gambling to “alleviate problem gaming that results from the offering of authorized games.”

Similar to SB 40, this bill would also strengthen regulations against illegal online gambling. It would make offering or playing in an illegal online gambling game (which would be any game not authorized by the state of California) a misdemeanor offense.

How SB 45 Differs From SB 40

There are several features in SB 45 that have caused the bill to garner less attention and less support than its counterpart, SB 40. Primarily, these deal with what games can be offered by the hub operators, and exactly who these hub operators may be.

First, SB 45 does not specifically limit the games that hub operators may offer to Californians; instead, these specifics would likely be part of any negotiations between the state and the potential operators. This opens the possibility of a wide range of casino games or other gambling options being offered, which is somewhat more controversial than simply offering poker, which is seen as (at least partially) a game of skill. In addition, many tribal casino groups oppose this measure, as they feel it would cut into business at their land-based casinos.

Secondly, SB 45 has fewer restrictions on who can apply to operate these online gambling sites. While SB 40 required operators to be present in California, this bill would instead open bidding to any interested parties. It is likely that offshore groups would apply for licenses, as would major gambling interests from Las Vegas. For obvious reasons, the California Online Poker Association that has supported SB 40 has balked at this provision, which could result in their members being shut out of operating online poker sites in the state.

There has been no movement on SB 45 since January 2011, and the bill appears unlikely to pass (or even receive a full vote) because of the greater support for SB 40.