Despite opposition from multiple government agencies and several Native Hawaiian groups, a Senate committee in the state has proposed a digital sports betting bill.
The Hawaii State Senate Committee on Economic Development, Tourism, and Commerce and Consumer Protection unanimously passed HB 1308. Out of nine votes, four were "with reservations".
The bill would allow four digital sports betting platforms but not retail stores. There are no tax rates or fees in the bill. The House committee wanted to continue discussing the issue, so both bills were deleted. The bill has been passed by the House and now by a Senate committee again.
The Senate committee members asked witnesses how much money legal sports betting would bring to the state and the potential for gambling addiction.
The bill was somewhat surprisingly defeated in the committee, as the number of opponents far exceeded the supporters. Opponents included several government agencies and Native Hawaiian groups. BetMGM and DraftKings provided testimony trying to alleviate these concerns, although nearly half of the committee seemed unconvinced.
The Attorney General, the Department of Taxation, and other departments expressed opposition
"We are concerned that the legalization of gambling... will increase the risk of adverse social impacts on the citizens of Hawaii," Deputy Attorney General David Williams testified. He said his department reviewed studies showing "increases in credit card debt, decreases in credit, and higher bankruptcy rates among the most vulnerable families."
Williams also mentioned that studies show an increase in domestic violence incidents and negative impacts on teenagers in places where gambling is legal. Representatives from the Department of Commerce and Consumer Affairs and the Department of Taxation testified in person. Other government and local agencies, such as the Department of Budget and Finance, also submitted written opposition.
Furthermore, Brandon Makaawaawa, Deputy Head of State of the Independent Sovereign Nation of Hawaii, pointed out that Hawaii has not yet completed a study on the impacts of legal gambling. He said that moving forward without a study is "irresponsible policy-making". He believed the revenue forecasts "do not hold up".
Previously, Jeremy Linum, Director of Government Affairs at BetMGM, told legislators that they expect annual tax revenues to reach $10 million to $20 million, assuming a tax rate of 10%. By comparison, Maine (population: 1.4 million, slightly more than Hawaii) launched digital sports betting in November 2023 with a tax rate of 10%. In the first 12 months, the state collected $6 million in taxes.
West Virginia (population: 1.77 million) averages $5.8 million in annual tax revenue, also at a 10% tax rate. The gambling industry has been there for four and a half years.
Revenue "usually below expectations"
Towards the end of the hearing, Committee Chair Lynn DeCoite asked Nadine Ando, Director of the Department of Commerce and Consumer Affairs, how long it would take to implement legal gambling, and Ando said she did not know. Her agency would be responsible for enacting rules and reviewing applicants. But as she pointed out, in most states with legal gambling, there is a dedicated gaming commission to handle the process.
Ando also mentioned previous testimony from Boyd Gaming, which stated, "Many other states of similar size to Hawaii have passed separate sports betting legislation but have been disappointed with the results. Tax revenues from online sports betting are usually below expectations, and the revenues are often insufficient to fund or sustain regulatory and law enforcement oversight and responsible gambling infrastructure, which are key components of any regulatory framework."
From that testimony, Ando stated that legal sports betting "simply does not make sense".
When DeCoite announced the vote, she said, "We should have a conversation, we should address this issue ahead of time." She made several administrative amendments to the bill, including changing which agency would become the regulatory body.
Senator Donna Mercado Kim expressed concerns, although she noted that illegal gambling already exists in the state. She requested and received an amendment to allocate some of the proceeds to education.
