The Hawaii Sports Betting Act would impose a 55% tax on sports betting

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Hawaii is one of two states in the nation – the other being Utah – that does not offer any legalized gambling opportunities, including lotteries.

But Hawaii house bill 1815, which was shelved late last week, is trying to change that as the bill’s author, Rep. John Mizuno, hopes to pass sports betting legislation.

The bill – which Mizuno himself dubbed an “opening salvo” on Monday as he passed SportsHandle – contains language that at first glance made it unclear who exactly would be on the hook for the 55% tax, with some commentators believing it would be the bettors themselves.

Section 15 reads less clearly: “Sports Betting Tax: A tax of fifty-five per cent shall be levied, assessed and collected on all winnings paid out to a person by a sports bookmaker. The tax revenue will go to the sports betting special fund.”

But Mizuno said the bill is designed to mimic New York’s bill and will tax operators, not bettors.

What we did was mimic New York law, we wanted to follow New York but go with a higher tax,” Mizuno said. “We said, ‘Hey, New York passed, so let’s do what they did.’ That was my request to the legislators.”

Big hill to climb

Mizuno recognizes that the bill, as written, needs tightening, something that will happen if and when it gets to committees. Unfortunately, Mizuno isn’t entirely convinced that this will happen.

Eventually, with technology, we will see sports betting across the US,” Mizuno said. “But remember we’re a little different. Utah and Hawaii are the only two states that do not allow gambling. That’s a big boost, but let’s be realistic…who doesn’t bet on the Super Bowl? Who doesn’t bet on the college championship game? If it’s going to happen, and we know it’s going to happen, let’s tax it and use those taxes to help with homelessness, to reduce crime. But yes. The trouble is that we’re a bit conservative when it comes to gaming.”

And as for the whopping 55% tax rate, what would be the highest for sports betting in the US?

I thought that was a little sugar on top to try and get lawmakers to support it,” Mizuno said. “But it will be difficult here too. It’s an opening salvo. We go to states like New York and say they’ve done a respectable job here and look at the value the taxes bring. I am trying to create this image. People will gamble anyway, let’s tax it for the sake of health and human services. But yes. It’s going to be difficult. This is the first bite into the apple.”

New State Authority

At Mizuno’s suggestion, the state would set up an online sports betting company, which would be housed within the Ministry of Economy, Economic Development and Tourism. The company would oversee sportsbooks and “exercise active oversight.”

As for the “providers,” they would be selected based on a variety of factors, including expertise in United States gaming laws and the level of their interactive and internet technology skills.

License fees are charged for the operators, but the draft bill leaves the amount open.

There is another bill carried over from the 2021 session, House bill 736, written by Rep. Chris Toshiro Todd, that would enable online sports betting in Hawaii under a pilot program. That bill includes a $30 million license fee for operators. If passed, the Ministry of Economy, Economic Development and Tourism would be tasked with setting the rules for the pilot scheme, which would include up to five sportsbooks.

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