Sen. Ronald Kouchi has submitted a bill, SB 3376, to the Hawaii Senate to legalize online sports betting and poker. The bill presents a variety of nuances that make it one of the more unique sports betting legislation in the country. A companion bill in the House, HB 2260, calls for a single brick-and-mortar gambling location.
Bill would generate millions for wildfire relief fund
Sports betting bills include rules for how much a state can tax a sports betting operator as well as where that tax revenue will go. In some cases, such as Massachusetts, the money goes toward a variety of state programs. And, in other instances like Mississippi, the state uses the revenue to improve infrastructure such as roads and highways.
In Hawaii, we still don’t know where the tax revenue will go, as the bill doesn’t detail tax structures. However, the bill as it stands requires a profit-sharing structure for the first 14 years of sports betting and poker that would direct millions to the state’s wildfire fund.
Should the bill pass, the state would get a 70% cut of all revenue generated in the first year. That cut would decrease by five percentage points each year, such that, in the 14th and final year, the state would get a 5% cut.
If one Hawaii lawmaker gets his way, Hawaii will be more than just a paradise of pineapples and palm trees: It will be the home of parlays and poker.
That revenue would go a long way in steadying the state’s financial footing after wildfires in Maui destroyed thousands of structures and killed more than 100 people. And, according to insurance ratings agency Moody’s, cost the state between $4 and $6 billion.
Bill proposes single operator structure
Another feature of the Hawaii sports betting bill that makes it different from most pushes for legalization is that it mandates a single-operator model. The state would hire one operator to run sports betting the state.
“Tens of millions of dollars generated from online gambling are being realized by offshore operators illegally serving Hawaii residents, but no benefits are provided to the State,” the bill says.
Should the single-operator bill become law, it will be interesting to see who the state signs an operator contract with. Bigger names like DraftKings and FanDuel may shy away from the Hawaii market because of the revenue sharing required. It’s common industry practice to allow operators just a 30% cut of revenue in year one.
Will the wildfire fund tax and tax revenue be enough to push the bill through?
Hawaii is one of only two states in the country that has no legal gambling whatsoever: no lotteries, casinos, or sportsbooks. Lawmakers have tried to legalize sports betting in Hawaii in the past and failed. But what sets this proposal apart from its predecessors is the millions its revenue-sharing structure could bring to the state’s wildfire fund.
Additionally, the bill argues that Hawaii online gambling is illegal by law but not in practice. Plenty of residents use offshore sites to place bets. The bill reads:
Questions arise about the honesty and fairness of games offered to Hawaii residents, but neither federal nor state laws currently provide consumer protections for Hawaii residents who gamble online.”
The bill argues that the state is missing out on the revenue that offshore sites are amassing.
Here all the proposal document
