Hawaii Two-0

Hawaii, the American Pacific tourist paradise of 137 islands and latterly best known as the birthplace of former U.S. president Barack Obama, may be on the cusp of a gambling revolution. 

The 50th U.S. state has a slew of gambling bills under consideration this legislative session. 

Yet only two appear likely to pass: One to legalise sports betting in the hitherto anti-gambling state – and the other to ban prediction markets.

HB2198–simply titled “Gambling; Prediction Markets”–is the legislative bill that has made the most progress to date.

It was introduced by House Representative Scot Matayoshi (D) and sailed through its first hurdle, the House Commerce-Consumer Protection Committee vote on February 5, by 11 unopposed votes.

Ground-breaking

The bill seeking to ban prediction markets is the first of its kind, not just in Hawaii but in all U.S. states.

The purpose, according to the text of the bill, is to “update Hawaii’s gambling laws to expressly prohibit prediction event contracts relating to sports, contests, people, politics, catastrophe, and death”, which it states: “Violate moral and ethical standards.” 

If passed, the bill would revise Hawaii’s Statutes–which, alongside the state constitution, codify all laws passed by the state legislature–and amend the definition of gambling to include these types of events trading; while excluding “bona fide business transactions”, like health insurance.

Hawaii lawmakers thus far are united in their opposition to prediction markets, making it likely that H2198 will pass. 

But will it stop the rampant spread of event betting across the Hawaiian archipelago?

Unlikely.

According to gaming lawyer Daniel Wallach, “any state efforts to ban or regulate prediction markets seems premature” until the preemption argument–essentially deciding if prediction markets are regulated by state or federal law–is settled in court. 

Until then, in Wallach’s legal view, state legislation banning prediction markets is unlikely to be effective. 

Once More, With Feeling 

The second bill–HB1308, which seeks to legalise retail and online sports betting and Daily Fantasy Sports–has been carried over from last year’s legislative session, where it secured the support of both the House and Senate.

But the bill failed to pass before the legislative deadline–hence the carryover–due to disagreements over amendments, including which department should oversee the regulated industry and, crucially, how tax revenue should be allocated.

Reinvigorated, Hawaiian lawmakers are now taking a second run at passing the bill. While it has not yet been discussed this legislative session, it is on the roll call and hopes are high that it will pass easily, given how close it came last year.

In its current form, HB 1308 provides for a minimum of four licences, costing US$250,000 (£183,144) for five-years, with taxes of 10 percent on GGR. 

It would also establish a Problem Gambling Prevention and Treatment Special Fund, financed by the generated tax revenue.

Cha…changes

Hawaii–population only 1.45 million people–is currently one of only two U.S. states, alongside Utah, with no forms of legal gambling – be it retail casinos, lottery, sports betting or bingo.

Unlike Utah, opposition to gambling in Hawaii is not based entirely on religion, but rather strong societal values and concerns over the ill effects of gambling, especially given that the average GDP per capita in Hawaii is US$62,428 (£47,223) – almost one-third below the national average of US$91,000 (£66,669), while the cost of living is the highest of any U.S. state.

However, with the rise of prediction markets and Department of Law Enforcement Director Mike Lambert recently estimating that some US$700-800 million (£513.3-586.4m) is spent gambling on the illicit market, attitudes in Hawaii appear to be changing.

Great hopes are pinned on HB1308 passing and delivering stronger consumer protections.

Watch this space!