Hawaii appears set to join America’s wave of gaming legalization with the introduction of House Bill 2765 to legalize poker and sports betting apps in the state. Senator Ronald Kouchi introduced the bill and a companion bill to introduce a single casino to the Aloha State.
In its language, the bill alludes to tens of thousands of Hawaii residents illegally gambling using offshore gambling websites or apps. According to state lawmakers, these websites and apps do not protect players from dishonest game mechanisms and are not obligated to pay taxes to the state.
Senate Bill 3376 aims to authorize Hawaii sports betting to “protect residents who gamble on the internet” and to capture revenue generated from online wagering and poker.
Profit Sharing Plan Proposed
The bill proposes profit-sharing to allow a single gaming operator in the state. If passed without revisions, the state would collect 70% of Hawaii’s gambling revenue in the first year. The bill proposes a 5% yearly reduction in revenue collection until it reaches its lower limit of 5% in 14 years. New Hampshire and Rhode Island also follow similar single-operator plans suited to smaller states with lower populations.
Legislators propose the earmarking of funds earned through gambling for the state’s wildfire, which helps aid victims and prevent future disasters. Wildfires have been at the forefront of Hawaii’s issues since last August when Mauii caused large-scale property damage in Lāhainā, Upper Kula, Pūlehu/Kihei, and Kaanapali. More than 100 people died in the fires, and the losses are estimated to be over $5 billion.
Sports Betting Operators Show Their Support
Representatives from DraftKings and Sports Betting Alliance showed their support for the bills. Kathleen Owen, an attorney representing the alliance, said that sports betting is already happening in the state. “An estimated $277 million is wagered annually in Hawaii,” Owen told the committee. “This money is being wagered by residents with unregulated, illegal offshore websites and with illegal bookies where there is no oversight, no consumer protection, and no revenue generated for the state.”
According to the SBA, Hawaii has the potential to earn more than $9 million extra in tax revenue through legalized and regulated online sports betting. “A regulated, competitive mobile sports betting market would replace the predatory, illegal platforms already operating in Hawaii and generate new revenue for the state through a policy that has constituents’ support,” Owen said in her written testimony.
“According to a 2022 poll conducted by Anthology Research, 73% of Hawaii residents support legalizing and regulating online sports wagering in Hawaii for adults 21 or older to generate annual tax revenue,” the testimony stated.
Currently, the legislature is taking up several pieces of gambling-related legislation. It remains to be seen whether they will be taken up by any lawmakers, with opposition to legal sports betting taking shape. The Honolulu Police Department submitted a written testimony saying that it “believes that all forms of gambling are associated with a great amount of social ills and financial ruin for many people.”
The chairman of the economic development committee and sponsor of HB 2765 said any decisions on legislation will take place the following week. “My intentions for these measures are not to keep poor people poor,” Holt said. “It’s to provide tourists another option to come and spend their money here so the state can receive tax revenues.”
Finer details, such as the license cost and the taxation rate, are still yet to be finalized. However, the bill clearly states that an approved operator could accept bets across the archipelago. “A sports wagering operator shall accept wagers on wagering events only through mobile applications or digital platforms approved by the department or a patron’s sports wagering account using a mobile application or digital platform approved by the department,” the bill stated. “The sports wagering operator shall determine the branding for each mobile application or digital platform.”
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