The Hawaii senate joint committee on economic development and tourism and commerce and consumer protection unanimously moved forward HB 1308 on Thursday (13 March). Of the nine votes, four were “with reservations”.
The bill would allow four digital sports betting platforms and no retail locations. It does not have a tax rate or fees in it. Both were removed by a house committee that wanted to keep the issue alive. The bill has been passed in the house and now by one senate committee.
The senate committee members questioned witnesses about how much money legal sports betting would bring into the state and about the potential for gambling addiction.
It was somewhat surprising that the bill got out of committee, as the number of opponents far outnumbered supporters. Opponents included several government agencies as well as native Hawaiian groups. BetMGM and DraftKings offered testimony seeking to counteract the concerns, although nearly half of the committee did not seem sold.
AG, taxation department, others opposed
We are “concerned that legalised gambling… will increase the risk of adverse social effects on Hawaii citizens”, deputy attorney general David Williams testified. He said that his department has reviewed studies showing “increased credit card debt, reduced credit and an increase in bankruptcies in the most vulnerable families”.
Williams also said studies have revealed an increase in domestic abuse and negative effects on youth where gambling is legal. Representatives from the department of commerce and consumer affairs and the taxation department testified in person. The department of budget and finance was among other government and local agencies that submitted written testimony in opposition.
In addition, Brandon Maka’awa’awa, vice president of the Independent & Sovereign Nation State of Hawaii pointed to an unfinished study on the effects of legal wagering in Hawaii. He said moving forward without the study was “irresponsible policy making”. He contended that revenue projections “don’t hold up”.
Previously, BetMGM director of government affairs Jeremy Linum told lawmakers they could expect $10 million-$20 million in tax revenue per year. That assumes a 10% tax rate. For comparison, Maine (population: 1.4 million, slightly larger than Hawaii’s) launched digital sports betting in November 2023 with a 10% tax rate. In its first 12 months, the state collected $6 million in tax revenue.
In West Virginia (population: 1.77 million) the state has collected an average of $5.8 million in tax revenue per year, also using a 10% tax rate. Wagering has been live there for four and a half years.
Revenue “often less than anticipated”
Toward the end of the hearing, committee chair Lynn DeCoite asked Nadine Ando, the director of the department of commerce and consumer affairs, how long it would take to implement legal wagering, Ando said she didn’t know. Her agency would be tasked with promulgating rules and vetting applicants. But, as she pointed out, in most legal gambling states, there is a dedicated gaming commission to handle the process.
Ando also pointed to previous testimony from Boyd Gaming in which the company said “many other states of comparable size to Hawaii that have passed isolated sports wagering legislation have been disappointed in the outcome. Tax revenues from online sports wagering are often less than anticipated and revenues are usually not sufficient to fund or sustain regulatory and enforcement oversight and a responsible gaming infrastructure, which are crucial components to any regulatory framework.”
From that testimony, Ando said legal sports betting “just doesn’t make sense”.
When DeCoite called the vote, she said the “conversation should be had and we should be addressing this up front”. She made several administrative changes to the legislation, including changing which agency would be the regulator.
Senator Donna Mercado Kim voiced concerns, although she said that illegal gambling is already happening in the state. She asked for and was granted an amendment to direct some of the proceeds toward education.
