Both online sports betting and online poker have made a serious expansion in the US over the past decade, with sports betting in particular being legalized in a large number of states. And while many states have either legalized online gambling in some capacity, there has been little talk of it in Hawaii, until now.
Senate Bill SB3776, introduced by Senator Ronald D. Kouchi, suggests the licensing of a single operator in the Aloha State for online sports betting and poker, with the main purpose of alleviating the damages caused by recent wildfires, which killed 100 residents and damaged over 2,000 buildings.
The potential legalization of online poker and sports betting in Hawaii would certainly come as a surprise, as the state was not a part of anyone’s plans for igaming expansion in 2024, but would be welcome news for the thousands of Hawaiians who engage in online gambling via unlicensed operators every year.
Hawaii iGaming Bill in Detail
As is usually the case, Kouchi’s SB3776 is an extensive document with numerous details, but the most important ones can be summed up in a few sentences.
The Bill recommends that a Hawaii Gaming Control Commission (HGCC), comprised of seven part-time members, be created, overseeing the licensing process and acting as the state’s regulatory body.
From there, HGCC would have 120 days to accept applications from potential operators and a further 90 days to choose a single operator to award an operating license in the state.
If passed, the Bill would see online sports betting and poker launch in early 2025 and would be operated by a single operator for a period of 10 years, similar to Delaware online poker, which also features only a single licensed entity. There is also only one online poker poker site in Nevada, though this is not due to a licensing restriction.
SB2776 would have each applicant pay up to $50,000 in investigation costs to HGCC, while the eventual licensee would post a $200,000 bond as a guarantee of compliance.
From there, the operator would enter a profit-split deal with the state and also pay a tax. In the first year of operation, the operator would get to keep 30% of the profits, while the state would take 70%, and the deal would move 5% in favor of the operator each year, awarding 95% of the profits to the operator by year 14.
The initial Bill has not specified the exact taxation rate the operator would pay, but has explicitly stated that no retail gambling options would be added as part of the gaming expansion efforts.
Black Market Considerations and Wildfire Relief
According to a national survey conducted by the National Council on Problem Gambling, legal prohibitions of gambling do very little to alleviate gambling participation. In Hawaii and Utah, the only two states without any legal gambling, more than half of all adults still reported participation in some form of gambling in the year before the survey.
The proposed Bill argues that legalizing sports betting and online poker, which thousands of Hawaiians apparently participate in via unlicensed apps, would allow the state to charge taxes on the gambling revenue, which is currently going to waste.
The licensing should also do a lot regarding player protection, as playing with a licensed operator would bring additional security and protection for problem gamblers.
Finally, the Bill proposes that the taxes charged from gambling revenue be used in their entirety to deal with the aftermath of the recent wildfires which devastated the islands and created more than $5.5 billion in damages.
The effective date for SB3776 is July 1, 2024, which means the future of online gambling in Hawaii will be decided over the coming six months.
