POSTED: 1:30 a.m. HST, Mar 24, 2011
Poker tournaments and other sanctioned games of skill would be allowed in Hawaii under a bill advancing in the state House.
Gambling would remain banned, but the proposal would authorize peer-to-peer games (not against a computer) in which no person or entity acting as the "house" receives a cut of the winnings. A state-licensed venue would be able to charge a fee to participate in games, with the state potentially getting a percentage of the entry fee.
A Peer-to-Peer Entertainment Commission also would be established to oversee the licensing of such tournaments and determine the percentage of the entry fee, or "rake," that would go to the state. Supporters say it would allow Hawaii to host national tournaments such as the World Series of Poker.
The commission also would have the authority to issue up to two licenses for companies willing to set up Internet servers in the islands that would operate online games of skill between players only, not against a computer. The commission would be able to determine whether the servers should allow Hawaii residents to participate.
"This gives the financial benefit everybody's talked about with these types of events, but yet it keeps the social ill out of Hawaii," said Rep. Angus McKelvey, chairman of the House Economic Revitalization and Business Committee, which voted 7-1 in favor of the bill.
The House Judiciary Committee approved it 9-3.
McKelvey (D, Olowalu-Kapalua) said he spoke with senators who agreed the proposal was worth bringing back for discussion, noting the downturn in tourism expected after this month's earthquake in Japan, the state's core visitor market.
"At least this way we can say we looked at every kind of idea to raise revenue to preserve important programs as well as to pay for tax credits and other economic initiatives without just going down the road of just increasing taxes more and more," McKelvey said.
Opposition came from Republican lawmakers.
"No matter how you describe it, it's the first step on the road to legalizing gambling in Hawaii," said Rep. Cynthia Thielen (R, Kailua-Kaneohe). "It's maybe a small step, but there's no way that it's not that first step."
The revenue potential from allowing online servers in Hawaii is too great to ignore, McKelvey said.
Under the current draft, any entity that enters Hawaii to operate the online servers would pay the state a fee of $100 million a year, a percentage of total wagers and advertising for the state. It would be up to the Peer-to-Peer Entertainment Commission to set regulations for the servers and determine whether the servers would block Hawaii residents from participating.
Anything that does not meet the standards set by the Commission or the peer-to-peer parameters of the law would still be considered gambling.
Republicans also objected to the process of gutting the Senate bill, which originally proposed a general excise tax exemption on the purchase of back-to-school supplies, and replacing it with the new proposal, saying the public was not given enough notice of the new House draft. Thielen cited the lack of testimony submitted against the bill and the absence of gambling opponents at the hearing.
"It wasn't widely known by people who have been very protective of keeping Hawaii as one of the two states (including Utah) where gambling is not allowed," she said.
McKelvey said the public notice for the meeting and the proposed House draft of the bill was posted online Monday. He argued that the proposal could raise the revenue needed to pay for future tax cuts and credits.
The proposal still must pass the Finance Committee before going back to the Senate for consideration.