Hawaii Senate Advances Digital Sports Betting Bill

Despite substantial opposition from several government agencies and Native Hawaiian groups, the Hawaii Senate’s Joint Committee on Economic Development, Tourism, and Commerce and Consumer Protection has moved forward with a digital sports betting bill. The committee unanimously voted to advance House Bill 1308 (HB 1308) on Thursday, March 13, though four of the nine votes were cast “with reservations.”

The bill, which aims to establish digital sports betting in Hawaii, would allow four online sports betting platforms to operate, but without the establishment of any physical retail locations. A notable aspect of the bill is the absence of tax rates and fees, both of which were removed by a House committee seeking to keep the issue open for further discussion. With passage in the House and the Senate committee, HB 1308 is now poised to proceed through the legislative process, although significant hurdles remain.

Supporters and Opponents

While the bill has gained traction in the Senate, it faces strong opposition from multiple quarters. Government agencies, including the Department of the Attorney General, the Department of Taxation, and the Department of Commerce and Consumer Affairs, have all voiced concerns about the potential negative impacts of legalized gambling on Hawaii residents. Native Hawaiian groups have also expressed their opposition, arguing that the potential harm to local communities, particularly in terms of gambling addiction and its social consequences, outweighs the projected economic benefits.

David Williams, Deputy Attorney General, presented compelling concerns about the risks of legalized gambling, highlighting studies that point to increased credit card debt, bankruptcies, and even domestic abuse in regions where gambling is legal. Williams noted that the effects of gambling legalization disproportionately impact vulnerable families and youth, raising alarms about the broader social implications for Hawaii. Furthermore, representatives from the Department of Budget and Finance submitted written testimony expressing concern over the financial sustainability of such a venture, particularly when compared to the actual revenue outcomes from similar state initiatives.

In contrast, proponents of the bill, including representatives from BetMGM and DraftKings, provided testimony suggesting that the state could see significant revenue from legal sports betting. Jeremy Linum, Director of Government Affairs at BetMGM, projected annual tax revenues between $10 million and $20 million, based on a 10% tax rate. However, such projections were met with skepticism by many on the committee, particularly in light of real-world data from other states.

For example, Maine, with a population of approximately 1.4 million, launched digital sports betting in November 2023 with a 10% tax rate. In its first year, the state collected just $6 million in tax revenue. Similarly, West Virginia, which has a slightly larger population (1.77 million), has averaged $5.8 million in annual tax revenue from online sports betting over the last four and a half years. These figures raise doubts about the accuracy of revenue projections for Hawaii.

Challenges to Implementation

The implementation of digital sports betting in Hawaii also faces logistical challenges. During the committee hearing, Lynn DeCoite, the committee chair, questioned Nadine Ando, Director of the Department of Commerce and Consumer Affairs, about the timeline for establishing a legal sports betting framework. Ando acknowledged the uncertainty, noting that while her department would be responsible for developing regulations and vetting applicants, there is currently no dedicated gaming commission to oversee the process. Most states that have legalized gambling have a specific body tasked with such responsibilities, which Hawaii lacks.

Ando also referenced previous testimony from Boyd Gaming, which cautioned that states with comparable sizes to Hawaii have seen less-than-anticipated revenue from digital sports betting. Moreover, the financial resources required to fund regulatory and enforcement oversight, as well as a responsible gaming infrastructure, have often proven insufficient.

We are concerned that legalized gambling will increase the risk of adverse social effects on Hawaii citizens.

Looking Ahead

Despite these concerns, the bill’s supporters, including Senate Committee Chair Lynn DeCoite, argue that the issue warrants further discussion. DeCoite emphasized the importance of addressing the topic openly and making necessary adjustments to the legislation, such as revising which agency would serve as the regulatory body. Senator Donna Mercado Kim also expressed reservations but acknowledged that illegal gambling already occurs in Hawaii and suggested that some of the revenue generated could be directed toward educational initiatives.

As HB 1308 progresses through the legislative process, it remains to be seen whether the bill will gain sufficient support to pass in its final form. The debate over digital sports betting in Hawaii reflects broader tensions between economic interests and social concerns, with both sides presenting strong arguments for and against the proposal. The ultimate outcome will likely hinge on how these competing factors are balanced in the coming months.