Representative Daniel Holt’s House Bill 1308, which would permit online sports betting, gained greater traction during this session than many thought possible. However, disagreements between the House and the Senate have sent the bill to a bicameral committee, hoping to sort out their issues before the close of the session on May 2nd.
Working Towards a Compromise
The House and Senate disagree on several key components of HB 1308, which is why a committee comprised of members of both chambers will gather to try to sort out their differences and come to an equitable compromise.
As for the price sportsbooks will pay to enter the brand-new Hawaii sports betting market, the original House bill had a modest 10% tax on revenues coupled with a $250,000 license fee every five years.
Unsure what the Senate preferred, the House stripped both of those components from the bill, deferring to the Senate to fill in those blanks. Ultimately, the Senate reimposed both the 10% tax and the $250,000 licensing fee every five years.
Debate Over Regulatory Costs
However, Hawaii Representative Sue Keohokapu-Lee Loy (D-Hilo), a member of the House Finance Committee, argued neither of those levies is sufficient to even cover the regulatory costs. Surprisingly, the Sports Betting Alliance (SBA), an industry lobbying group representing the sportsbooks, agreed with her assessment and suggested a $500,000 licensing fee would be appropriate.
“With this entire sum paid in year one to cover the five-year period, we believe that this sum will cover the regulatory costs,” an attorney representing the SBA testified before the Senate Ways and Means Committee earlier this month.
Yet, not everyone is a fan of Representative Holt’s HB 1308, including the Attorney General’s office and Senate Ways and Means Committee Chair Sen. Donovan Dela Cruz.
“With so many issues facing our state, such as lack of affordable housing, homelessness, drug and alcohol addiction, we should be focused on addressing these real issues that impact our residents instead of bringing in legalized sports wagering and gambling that will exacerbate the problems already facing our community. Is the increase in tax revenue worth the negative impact on the lives of Hawaii residents?” Cruz asked.
Illegal Gambling Running Rampant
Hawaii is only one of two states (Utah being the other) without casinos, sports betting, lotteries, or daily fantasy sports. Therefore, it is not at all surprising that the prohibition on gambling has spurred an underground market, as prohibitions often do.
Shootings have broken out in residential neighborhoods like Kalihi just last week, as these illegal gaming rooms attract gangs, drugs, and violence.
“These games aren’t just some aunties playing mahjong. They’re not a bunch of uncles playing poker. This is a whole industry. And along with it comes the guns and drugs, just like we saw in the Kalihi bust and in the Halawa bust. These are really huge problems for our communities,” said Honolulu City Councilmember Tyler Dos Santos-Tam.
Lawmakers Call for Legalization
And it is because of the illegal market that many lawmakers believe the time has come to end the prohibition, legalize it, tax it, and take the economic incentive away from nefarious actors to continue their activities.
“People in Hawaii gamble. Do we need to have safe parameters? You betcha. But our people are doing it already? Yes, they are,” Kalihi-Palama Neighborhood Board Chair Amanda Ybanez said. “People that actually go to these game rooms have that addiction problem. That’s why there’s a market for it. So we need to also support mental health therapy and addiction therapy for those that are suffering from it.”
