Hawaii online sports betting took a step towards legalization after a House-approved bill was voted 11-2 in favor on April 2nd.
Rep. Daniel Holt’s HB1308, “(a)llows for the regulation of sports wagering by the Department of Business, Economic Development, and Tourism.”
The committee discussion also revealed tax plans for the state. The sports betting tax rate will be 10% and approved operators will have to pay $250,000 to obtain licenses.
The bill originally called for regulation by the Department of Commerce and Legal Affairs but director, Nadine Ando, doubted her department could fulfil these obligations. Instead, the Hawaii Department of Law Enforcement will regulate online sports betting in the state if the bill passes.
Hawaii, along with Utah, is one of few states not to legalize sports gambling in any form.
Hawaii online sports betting costs and benefits
Some voiced concerns over the bill. One of the dissenters was Senate Ways and Committee Vice Chair Sen. Sharon Moriwaki, who stated, “It has a lot of social and enforcement regulatory costs that may far outweigh the revenues that would be generated. So, I too will vote no.”
Sen. Lorraine R. Inouye was the other no voter amid concerns that legalization would increase problem gambling. The National Council on Problem Gambling estimates 24,000 Hawaiians struggle with compulsive gambling behaviors. The state has the second highest number of gambling-related arrests after Nevada.
However, those in favor would argue that legalizing online sports betting may solve some of these issues. Despite the problems, Hawaii does not allocate public funds for gambling addiction treatment or prevention programs. Additional tax revenue could be used for such a purpose.
BetMGM estimated that legalization of online sports betting could generate between $10 – $20 million in tax revenue. Maine, which has a similar population to Hawaii, applied the same tax rate of 10% and gained $6 million in tax revenue in 2023.
Alternative means of betting in Hawaii
At the moment, services such as Kalshi, Robinhood, and Crypto.com offer sports event trading. Many states are objecting that this amounts to online sports betting, but for now, customers in Hawaii can use the prediction markets. Other customers may use alternative means to access gambling sites, such as VPNs or offshore sportsbooks. Legalization could be a way for the state to capitalize on the already existing market of sports bettors.
The bill is scheduled to take effect in July this year if it progresses through the chambers to be fully passed.
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