Hawaii Sports Betting Bill Finds Resistance from House Lawmakers
Hawaii's attempt to legalize online sports betting through House Bill 1308 (HB 1308) has encountered significant resistance, particularly from House lawmakers. The bill, which had advanced through both legislative chambers in a relatively swift manner, has now been sent to a Conference Committee after the House rejected the version that was amended and passed by the Senate.
LISTEN TO THIS ARTICLE:As HB 1308 made its way through the Senate, several substantial changes were introduced. Initially, the bill did not include specific provisions for a tax rate or an application fee, but these were added during the Senate floor debates. Additionally, the regulatory body overseeing the industry was modified during a Senate committee session, with the responsibility shifted to the Department of Law. This change replaced an earlier provision that had designated another agency as the regulator.
The original version of the bill included a 10% tax rate and a $250,000 application fee. However, the House Finance Committee removed these elements, sparking debate among lawmakers.
Rep. Sue L. Keohokapu-Lee Loy criticized the proposed application fee, suggesting it was far too low for an industry that generates billions of dollars in annual revenue. She expressed a desire for the licensing fee to be increased substantially to reflect the financial scale of the sports betting market.
Concerns were also raised during discussions in the Finance Committee regarding the projected tax revenue from sports betting. Jeremy Limun, Head of Government Affairs for BetMGM, has previously estimated that Hawaii could generate between $10 million and $20 million annually based on a 10% tax rate. However, when compared with states of similar population size, this forecast appears overly optimistic.
Furthermore, recent national trends show a shift toward higher initial tax rates and subsequent increases after launch. States such as Ohio and Illinois have significantly raised their tax rates in the past two years, with Ohio doubling its rate to 20% and Illinois moving to a sliding scale that reaches up to 40% for major operators.
Other states, including North Carolina, Louisiana, and New Jersey, are also considering or have implemented tax hikes on sports betting, underscoring a nationwide trend toward steeper taxation in the gaming sector. These comparisons have added to the skepticism among Hawaii lawmakers regarding whether a 10% rate would be sufficient or sustainable in the long term.
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Opposition Remains High
Beyond tax and regulatory concerns, HB 1308 has faced strong opposition from various local groups and government agencies. Officials from the Attorney General's Office, the Department of Consumer Affairs, and law enforcement have all expressed doubts about the state's readiness to manage a newly legalized gambling sector.
Additional opposition has come from a native Hawaiian organization and from advocates for responsible and problem gambling. They have raised questions about the social impact of legalizing sports betting in a state with no existing legal gambling infrastructure.
Earlier in the legislative process, the Senate Joint Committee on Economic Development and Tourism and Commerce and Consumer Protection advanced the bill. However, the committee altered the specification of the designated regulatory agency.
This decision followed testimony from Nadine Ando, Director of the Department of Commerce and Consumer Affairs, who informed the committee that her agency lacked both the experience and capacity to oversee a legal betting market. In response, the committee reassigned regulatory duties to the Department of Law, a move that may be contributing to hesitancy among House members regarding the state's ability to implement and enforce sports betting regulations effectively.
As of now, the members appointed to the Conference Committee have not been publicly disclosed. With Hawaii's legislative session scheduled to adjourn on May 2, the window for resolving these issues and finalizing the bill is narrowing.
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