Hawaii and Utah are the only U.S. states without gambling. Now the Aloha State has several active gaming bills in the legislature. And they are very different from each other.
Each bill is being considered by four committees: Economic Development, Customer Protection and Commerce, Judiciary, and Hawaiian Affairs and Finance. Each committee would have to agree to move any legislation forward.
The unanimous support requirement has traditionally kept the legislature from moving on gaming. But that hasn’t prevented multiple proposals over 30 years. In 1995, a lawmaker proposed a floating casino in Honolulu Harbor. At the time, the state estimated that six such floating casinos could generate up to $104 million in taxes.
Last year, six gambling bills were introduced and died. One of them was proposed by the Department of Hawaiian Home Lands. It proposed a casino on Oahu to help buy land for Native Hawaiians. About 28,000 are on a waiting list. That bill could be revived this year. But at the current rate such homes are being built, the department estimates it will take 182 years to complete the task.
House Bill 772 would authorize one, members-only casino in Waikiki with a 10-year license. It could not be located in a hotel. However, guests at Oahu hotels would be allowed to play for a $20-per-day fee. The bill would also create the Hawaii Gaming Control Commission, which would vet applicants for the single license. It would tax gross gaming receipts, create a state gaming fund and operate a program for problem gamblers. Development costs of the casino would be borne by the owner.
The bill’s author, House Vice Speaker John Mizuno, sees it as a way to bring back the entertainment economy in Waikiki, which has declined in recent years.
House Bill 1973 would authorize sports betting under the umbrella of the Department of Business, Economic Development and Tourism. Profits would be taxed at 10 percent of gross. Operators such as BetMGM or DraftKings—an unlimited number of them—could operate apps and sportsbook websites. Licenses would cost $50,000, would be good for three years, and would cost $50,000 to renew.
The bill’s author, Rep. Chris Todd, says the 10 percent tax is just to get the conversation started, and that he’s open to other percentages.
Hawaii doesn’t have a lottery. House Bill 2040 and a similar bill in the Senate would create one: The Hawaiian Lottery and Gaming Corp. As in other states, it would regulate sports betting. House Bill 2485 and a companion bill in the Senate would also create a lottery commission. Profits would be used to fight invasive species, a big problem in the state.
Rep. 1815, also authored by Mizuno, is a sports betting bill that would allow operators to take sports bets online but no brick-and-mortar locations. It would tax it at 55 percent on gross.
This is an election year, and all 76 legislative seats are in play. For that reason, Mizuno doesn’t expect any votes on his gaming bills. He told Honolulu Civil Beat, “I just don’t feel the legislature is ready to go all out and pass a casino bill.” He does hope to start the conversation rolling.
To those who fear the problems associated with gaming addiction, Mizuno counters, “A lot of that fear can be taken out by saying this casino is for people that are actually staying in a Waikiki hotel or any hotel on Oahu.” That means natives wouldn’t be subject to gaming’s corrupting influences. He uses as an example casinos in Singapore, which make it very expensive for locals to enter.
Mizuno likes the models of states like Rhode Island or Maine, states that are limited to two casinos.
Sports betting is proliferating across the U.S. as can be seen from the billions bet on this year’s Super Bowl. It is legal in 33 states. Because it is so widespread, some observers think it might be the gaming activity with the best chance to be legalized in Hawaii.
Kahil Philander, a Washington State University professor who specializes in gaming, told Civil Beat: “In some cases, the public sees sports betting as something much less taboo than casino gaming and other gambling products.”
The problem is that just legalizing sports betting wouldn’t bring in enough tax revenue to justify it alone. Although there is a multibillion-dollar black market in sports betting in Hawaii, even if that market were legalized, sportsbooks normally keep about 5 percent as profit. A state tax would then skim off some from that.
According to John Holden, an Oklahoma State University professor specializing in gaming law, “A state looking to patch all the potholes or pay teachers a six-figure salary is going to be really disappointed.”
However, the ease of sports betting by app could erode the popularity of black market bookies, says Holden. “If you have mobile sports betting, we could all do that from the couch.”
Some lawmakers want to also legalize daily fantasy sports. Although proponents argue that these are games of skill, Hawaii’s Attorney General disagrees. It has ruled that DFS is a game of chance, and therefore illegal.
Rep. Angus McKelvey’s House Bill 2004 would change that. He argues that DFS games are ruled by many elements, such as how individual “players” on teams match up against other teams. “It’s not something like roulette,” he said. “It’s a very skill-based thing that takes into account a number of factors.”
His bill would exempt DFS from the state’s definition of gambling. But it would only allow operators of online DFS websites—think DraftKings or FanDuel— to operate in the state. He envisions these websites working with the Department of Taxation to pay the state’s share of revenues.
HB 2004 is probably lifeless for this year, although McKelvey is likely to work on the bill to reintroduce it next year. As part of the groundwork, DHHL want a study on potential revenue that could be generated by a resort-casino on Hawaiian homelands, as well as impacts on public health and safety that a casino might have. In yet another piece of legislation, Senator Jarrett Keohokalole and Rep. Dan Holt are introducing the DHHL proposal via Senate Bill 2608 and House Bill 1962. They would give the DHHL $500,000 to conduct the study, which would be due before the 2023 legislative session.
As the discussion continues, factions remain divided on the issue. Rep. Sean Quinlan said, “At some point, this is something we absolutely should do. It’s a huge market, and we’d be missing out on tax revenues.”
State Senator Kurt Fevella countered, “I don’t want that in our community. It’s only going be a tragedy for my community.”
All the while, the underground gambling economy continues to flourish.