Hawaii Surprises With Possible Sports Betting Legislation

It wasn't that long ago that a smart betting man would have wagered everything on the notion that Hawaii and Utah would never pass sports betting legislation. It's beginning to look like Utah might end up being the last non-sports betting state standing.

In recent weeks, two sports betting bills have been presented in the Hawaii House of Representatives. In both cases, it would appear that the bills have been written to combat an increasing issue related to unregulated operators being used for sports betting and prediction markets.

A Look at Bill Specifics

The two bills in question are HB 2198 and HB 2570.

HB 2198 has been specifically created to address language that's currently in the state's constitution. This bill would effectively broaden the definition of the term "gambling" to include sports betting, prediction market wagering, and other forms of financial market speculation.

While discussions about this bill are largely positive, there are warnings for some lawmakers about the impropriety of allowing wagers on things like politics, disasters, award show winners, or mass-casualty events. These are wagering opportunities largely associated with prediction markets.

HB 2570 is directed at the "meat and potatoes" of sports betting. The bill essentially forms the framework for the creation of a legal sports betting community. Here are some of the key highlights included in the bill:

• Operators would only be permitted to offer sports betting services if licensed by a designated regulatory agency


• Prospective licensed operators would need to pay an initial licensing fee of $500K


• Renewal fees of $500K would need to be paid every five years


• A designated regulatory agency would develop key rules such as gambling age limits


• A tax rate of 15% would be charged on gross wagering revenue. Additional fees may also be charged.
  

According to industry experts, this bill could help the state create up to $102 million in tax revenue. That would certainly provide a significant boost to the state's coffers. Of course, the high fees being recommended might restrict the participation of smaller sports betting operators, leaving the larger operations (DraftKings, Caesars, BetMGM, and FanDuel) with limited competition.

What Opponents are Saying

In the past, Hawaii regulators have been reluctant to even consider legalizing sports betting and or online casino gambling. It's simply a sign of the times that there is a sense that if residents are going to gamble, the state might as well control such activities.

The key opposition is being led by Honolulu Prosecuting Attorney Steve Alm. He is using a recent study by the University of California, San Diego, that showed evidence that the legalization of sports betting would lead to a drastic increase in gambling addiction among residents. Even more poignant were the indications that said problems would be targeted towards lower-income players.

It's a common argument that gets expressed in every state that tries to pass some new form of retail or online gambling. It now appears as though it's Hawaii's time to address this issue for the benefit of its residents.