The odds of Hawaii joining the 38 other states that generate tax revenue from online sports betting are unknown as advocates on both sides of the issue make their final pitches to lawmakers.
In May 2018 the U.S. Supreme Court gave states the ability to legalize sports betting by overturning the Professional and Amateur Sports Protection Act of 1992, which limited sports betting to the state of Nevada.
Legal online sports books have partnerships with every professional sports league, and advertisements for their services permeate online, TV, radio and streaming services.
States that permit access to online sports books allow players to wager on an array of outcomes from daily fantasy sports and player proposition bets to sides, money lines and totals.
Unregulated and illegal sports betting has gone on since Hawaii became a territory, with bookmakers welcoming wagers on everything from high school football to college and professional sports.
The decades-old debate on whether to permit sports betting in Hawaii continues this legislative session. Today is final processing for nonfiscal bills when lawmakers decide whether to send legislation for final votes by the full House and Senate next week ahead of the scheduled May 2 session adjournment.
House Bill 1308, House Draft 3, Senate Draft 2 allows for the regulation of sports wagering by the state Department of Law Enforcement and authorizes officials to perform criminal history record checks on applicants and licensees relating to sports wagering.
The measure would establish licensing requirements for operators and suppliers and the general excise tax to be paid. It would also set up the Problem Gambling Prevention and Treatment Special Fund to be administered and expended by the Department of Health. It makes clear that legal sports wagering and fantasy sports contests shall not be considered contests of chance or gambling.
From April 1, 2024, to March 31, GeoComply processed about 400,000 geolocation checks on devices located in Hawaii that tried to access legal online sports books in other states before the company’s software blocked them, according to a release from the company. During that same period, GeoComply identified about 54,000 sports betting user accounts in Hawaii, a 47% increase.
Gov. Josh Green told Hawaii News Now that a survey taken by a private third party showed that two-thirds of respondents support online sports betting and that if it passes, he likely won’t veto it.
“Look, as long as there’s some safeguards with gambling addiction services and so on, if the Legislature goes to the full way and passes it, I’ll likely let it become law,” Green told HNN.
Honolulu’s three top city officials — Mayor Rick Blangiardi, Prosecutor Steve Alm and police Chief Arthur “Joe” Logan — issued a joint written statement Thursday urging state lawmakers to reject any measures to legalize online sports betting, which they warned would have “devastating consequences for local families and communities.”
“Online sports betting is not harmless entertainment— it’s a high-tech pipeline to addiction and financial ruin,” Alm said in the statement. “These new gambling platforms are designed to be predatory, using data and algorithms to keep users engaged and spending well beyond their means. Ninety-six percent of online bettors lose. The consequences are real: mounting debt, family breakdown, and even wage garnishment for those who can’t pay.”
Thirty-eight states, Washington, D.C., and Puerto Rico allow online sports betting. Hawaii, California, Texas, Idaho, Utah, Minnesota, Missouri, Alabama, Georgia, South Carolina, Oklahoma and Alaska do not. The legal age to bet is 21 in most places that allow it and 18 in some others. Americans bet $119.84 billion on sports in 2023, up 27.5% from 2022, according to Forbes.
Law enforcement and social conservatives maintain their opposition to sports betting and gambling. Las Vegas casino interests have lobbied state lawmakers all session to ensure that Hawaii gambling proceeds benefit their businesses and the state of Nevada.
Proponents point to the ever-present need to develop new tax revenue streams to pay for the state’s diverse array of issues including a housing shortage and the need to improve education and access to health care.
The Sports Betting Alliance estimates that Hawaii residents bet about $300 million a year, much of it with offshore websites and illegal sports book operations that utilize runners to collect losses and deliver payouts.
Les Bernal, national director of Stop Predatory Gambling, a nonprofit advocacy network dedicated to revealing the “truth behind gambling operators to prevent more victims,” told the Honolulu Star-Advertiser in an interview that his organization opposes state governments partnering with gambling corporations to permit online sports betting.
Sports betting is the Trojan horse to online casinos that offer all forms of gambling in a digital form, he said, and the partnership between state government and the gambling companies is a “form of consumer financial fraud.”
“Is state government- sanctioned gambling in the best interest in the people of Hawaii? The evidence is overwhelming that it has been an epic policy failure” for states that allow online sports betting, said Bernal, who noted a recent study of 600,000 online sports accounts showed that only 4% of bettors turned a profit. “We like to consider states the laboratories of democracy. … Predatory gambling is the only public policy that states keep replicating. It’s not driven by merits; it’s driven by greed of gambling operators and a lust for power from lawmakers from both parties.”
But Keith Whyte, who spent 26 years as executive director of the National Council on Problem Gambling, told the Star-Advertiser in an interview that Hawaii could allow online sports betting in a way that minimizes costs and maximizes the benefits. Hawaii is poised to learn from the experiences of other states who legalized it.
Since 2016 the NCPG has received an average of 100 calls a year from Hawaii residents seeking help with gambling addiction.
“For people who want to gamble … you are giving them a safer, transparent regulated space to do so. Obviously, there is tax revenue that benefits state government,” said Whyte, who noted the bill sets up Hawaii’s first problem gambling treatment program. “You don’t have to wait for the expansion of legalized gambling to do something about these social costs. Right now it seems the costs are maximized and the benefits minimized, which is the opposite of what states are trying to do when they legalize online gambling.”
In testimony delivered April 2 to the state Senate Committee on Ways and Means, Honolulu Police Maj. Raynor M. lkehara of HPD’s Narcotics/Vice Division told lawmakers the department opposes any measure to “legalize sports wagering by not considering it gambling.”
“Numerous studies have confirmed that gambling, including sports wagering, causes problems such as bankruptcy, theft, embezzlement, suicide, child abuse and neglect, divorce, incarceration, and homelessness,” Ikehara wrote. “Studies have also demonstrated that gambling schemes are essentially regressive taxes on low-income people, those who can least afford to participate. The financial burden associated with these problems will far outweigh any benefit realized in the name of community betterment.”
T. George Paris, managing director of the Iron Workers Stabilization Fund, told legislators April 2 that the legalization of sports wagering presents a “viable strategy for economic diversification and long-term fiscal stability.”
The implementation of a 15%-20% tax on gaming of a regulated sports wagering would generate a new, reliable source of tax revenue, said Paris.
“This revenue stream can be allocated to address the rising cost of living, bolster critical public services such as education, healthcare, and infrastructure, and stimulate job creation. We must prioritize innovative approaches to keep our people home,” wrote Paris. “The departure or potential departure of Native Hawaiians and long-term residents represents a significant cultural loss. We acknowledge the concerns regarding the potential impact of sports wagering on Hawaii’s cultural fabric. However, we contend our population drop of 15,000 residents a year is already precipitating a profound cultural shift.”
