Will Sports Betting Become Hawaii’s First Foray into Legalized Gambling?

Hawaii is one of only two states with no legal gambling of any kind.

Geoff Zochodne - Senior News Analyst at Covers.com
Geoff Zochodne • Senior News Analyst
Jan 31, 2024 • 17:45 ET • 4 min read
Chevan Cordeiro San Jose State Spartans Hawaii Bowl
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Hawaii has a lot of things: good weather, great scenery, ample surfing. It does not, however, have anywhere you can legally get down a dime on the upcoming Super Bowl. 

Some lawmakers want to change that fact, even if history suggests it is a longshot bid. Hawaii is one of only two states with no legal gambling of any kind (Utah is the other), which means no casinos and no sports betting on the island, at least not legally.

Nevertheless, the legislative docket in Honolulu shows several pieces of sports betting-related legislation have been introduced this year, offering a few different routes the island state could go down if lawmakers take action.

A buffet of bills

Two gambling bills, H.B. 2762 and 2765, are scheduled for public committee hearings on Friday, where more progress may be made. 

H.B. 2762 aims to establish a hotel and casino on Oahu, but H.B. 2765 would legalize and authorize online sports betting (and online sports betting alone). The latter measure would also install the Hawaii Department of Business, Economic Development, and Tourism as the regulator. 

Bettors would have to be 18 or older under H.B. 2765, but wagering could begin no earlier than July 1, when the legislation would take effect. 

To qualify for a license, an entity would first have to offer online sports betting legally in at least three U.S. jurisdictions. The cost for a three-year license is still to be determined — the tax rate is TBD, too — but the holder could take wagers across the entire archipelago. 

“A sports wagering operator shall accept wagers on wagering events only through mobile applications or digital platforms approved by the department or a patron's sports wagering account using a mobile application or digital platform approved by the department,” the bill states. “The branding for each mobile application or digital platform shall be determined by the sports wagering operator.”

But wait, there's more

But that is not the only legal sports betting model proposed in Honolulu this year. Bills H.B. 2259 and S.B. 3376 were introduced earlier this month as well, and the identical pieces of legislation would create a 10-year license for a single entity to offer online poker and sports betting to Hawaiians 21 and older. Tax revenues generated by the effort would go to support victims of wildfires in the state.

The preamble to the bill says "tens of thousands” of residents are already illegally gambling using online poker and sports apps and sites, which are often operated offshore and out of reach of Hawaiian authorities. This gambling is generating "tens of millions of dollars" that is not benefiting the state, the bill claims.

“To protect Hawaii residents who gamble on the internet, and to capture revenues generated in Hawaii from online sports wagering and poker, it is in the best interest of the State and its citizens to regulate this existing activity by authorizing and implementing a secure, responsible, and legal system for online sports and poker wagering,” the legislation states.

The bill would establish a Hawaii Gaming Control Commission to oversee the new wagering options. Within 120 days of members being appointed, the commission would publish an application for a gaming license, with submissions due no later than 60 days after that. Commissioners then would select one applicant that best meets the criteria — such as the level of economic benefits provided — no later than 90 days after the deadline. 

There are restrictions on who exactly could apply. Notably, would-be sportsbook operators (or one of their principal executives) would have to be residents of Hawaii for at least 15 years.

Applicants would have to pay a $50,000 fee to cover the costs of the background check (and the ultimate cost could be higher or lower, prompting an additional payment or refund) and put up a $200,000 bond. 

The winning bidder would also have to turn over 70% of their gross profits for their first year of doing business, a rate which would decline by five percentage points every year to a floor of 5% for year 14 and beyond. Finally, the legislation would take effect on July 1, if it passes.

There is also a proposal afoot to allow the Hawaii government to take legal sports betting for a test drive before any permanent implementation. H.B. 2114 would task the Department of Business, Economic Development, and Tourism with setting up a pilot program to license businesses in the state to offer online sports betting.

Under the proposal, up to five businesses could pay $30 million for an online sports wagering license. The department would report findings from the programs no later than 20 days into the 2025 regular legislative session. The pilot project would end by July 2028. 

Hawaii's 2024 legislative session started January 17 and is scheduled to adjourn in early May.

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