Third Hawaii house committee advances digital wagering bill

Hawaii’s House Finance Committee Advances Online Sports Betting Legislation

On February 24, Hawaii’s House Finance Committee took significant steps towards the legalization of online sports betting by advancing a crucial bill, House Bill 1308. This legislation, now approved by three different committees, will be presented on the House floor for a comprehensive vote. Furthermore, a companion bill, Senate Bill 1569, is scheduled for a hearing in the Senate Ways and Means Committee on Wednesday.

The committee’s approval came with a series of amendments aimed at enhancing the likelihood of successful passage. Notably, Chairman Kyle Yamashita proposed the removal of the proposed 10% tax rate and license fee pending further analysis and discussions. This strategy underscored the committee’s focus on maximizing the potential revenue and benefits for the state, which remains a topic of considerable interest and debate among lawmakers.

Representative Sue L. Keohokapu-Lee Loy articulated concerns regarding the proposed $250,000 (£197,761/€238,712) license fee, suggesting that it appears disproportionately low given the immense revenue potential within the multi-billion-dollar industry. “I would love to see that license fee go up exponentially,” she stated, emphasizing the need for a fee structure that reflects the industry’s financial landscape.

Yamashita expressed his belief that the bill merits ongoing dialogue, framing it as a “work in progress,” and acknowledging the importance of discussing gambling within the state. “We do have to bring up gambling, so I don’t think it’s a bad thing to talk about,” he remarked, indicating the bill’s potential to generate both revenue and critical public discourse.

Industry Support and Economic Implications

As has been the case in previous hearings within both chambers of the Hawaii legislature, local unions voiced strong support for the bill, emphasizing the necessity for new revenue streams to offset the rising cost of living in the state. Noteworthy endorsements also came from key players in the gambling industry, including BetMGM, DraftKings, and the Sports Betting Alliance (SBA), which consists of major operators such as Fanatics Sportsbook and FanDuel. Each of these organizations highlighted the advantages of establishing a regulated sports betting market, including enhanced law enforcement capabilities to combat illegal gambling and a potential rise in tax revenue.

Jeremy Limun, Head of Government Affairs at BetMGM, projected that Hawaii’s tax revenue could range between $10 million to $20 million annually based on a 10% tax rate. These estimates assume an operator revenue projection of $100 million to $200 million and a betting handle exceeding $1 billion. For comparative analysis, Maine, with a population of 1.4 million, introduced digital sports betting operators in November 2023, generating $550 million in bets and yielding $6 million in tax revenue within the first year, aligned with a similar 10% tax structure. West Virginia, with its population of 1.77 million, has seen impressive figures since the initiation of digital betting in September 2019, accumulating a total handle of $2.8 billion and $25.9 million in tax revenue over four and a half years.

Concerns and Counterpoints

However, opposition to the bill highlights significant concerns regarding the impact of gambling on society. Critics, including representatives from state offices and advocates for responsible gambling, have raised alarm over the potential for addiction, increased bankruptcy rates, and associated criminal activities. These concerns spotlight the delicate balance policymakers must navigate when considering the expansion of gambling in any form.

Under the proposed legislation, only digital sports betting would be permitted, with the number of licenses capped at four. Notably, transactions could be funded using credit cards—an option currently restricted in several states including Iowa, Massachusetts, and Tennessee. Furthermore, the bill entails the establishment of a dedicated problem gambling prevention and treatment fund, aimed at addressing and mitigating addiction-related issues.

The Hawaii legislative session is set to run until May 2, with the critical crossover deadline for bills to transition between chambers scheduled for March 6. As discussions continue, stakeholders in the industry remain optimistic about the prospects of regulated online sports betting in Hawaii and the economic benefits it could usher in for the state.