Hawaii Considers Limited Online Gambling Legalization in 2024

Hawaii has made an unexpected entry into the US online gambling discourse as a new bill offers to implement a limited form of online gambling in 2024. Despite not being a likely candidate for gambling expansion, Senator Ronald D. Kouchi has introduced bill SB3376, proposing the creation of a single-operator market for online poker and sports betting.

Legalized Gambling Could Solve Several Issues

The proposed bill establishes the Hawaii Gaming Control Commission (HGCC), consisting of seven part-time members appointed by the Governor. It aims to regulate online-only gambling, keeping Hawaii free of any regulated retail gambling. The HGCC would be responsible for selecting a single operator for licensing, with a 10-year renewable license, prioritizing ease of regulation.

Senator Kouchi’s legislation aims to address the tens of thousands of Hawaii residents engaging in illegal online gambling, often on offshore platforms. The bill argues that a regulated market would capture lost revenue and benefit the state and its citizens. Hawaii urgently needs extra income, especially after the 2023 wildfires, as it still struggles to recover from the disaster.

The selected licensee may offer sports betting and online poker but not casino games. The financial terms involve a unique profit split, starting at 70% for the state and 30% for the operator in the first year. This ratio gradually shifts in favor of the operator by 5% each successive year, reaching a minimum of 5%.

The Bill’s Future Remains Uncertain

While Hawaii’s proposal is unique in structuring the revenue split and proposing online poker without casino games, the bill faces several immediate issues. The state’s small population size and the niche nature of poker could make it less attractive to operators. The bill omits any references to negotiations for interstate compacts, leaving questions about sustaining online poker traffic.

Hawaii’s strategy mirrors past proposals in Kentucky that prioritized sports betting over poker due to broader appeal and potential revenue. Mounting financial pressures mean the legislation has very ambitious timing, aiming to become effective on 1 July 2024. This timeframe gives the HGCC 120 days to accept applications and an additional 90 days to select a winning candidate, setting a probable market launch in the first half of 2025.

House sports betting bill, HB 2765, does not yet have a hearing date, making its fate even more uncertain. It reflects a continuing trend of states exploring online gambling as a source of revenue and regulatory control. Industry experts are keenly observing the situation to see how Hawaii’s unique approach will fare in the legislative process.