Hawaii could launch sports betting at 55% tax rate

Legislators in Hawaii have introduced a bill to regulate sports betting with a 55% tax rate on the state’s licensed operators.

House Bill 1815 (HB 1815), introduced by Hawaii state Representative John Mizuno, imposes the tax on all winnings paid out to any person by a sports wagering provider.

Revenues generated from the conduct of sports wagering will be funnelled into a ‘special fund’, with all monies not spent on regulation activities put back into Hawaii’s state coffers.

If passed, the bill would make the Aloha State the US’s highest taxing jurisdiction, just ahead of the newly-regulated New York market, where operators pay a 51% tax rate on all sports betting operations. Despite the Empire State’s high tax rate, New York has seen a huge interest in sports betting, with bettors making bets of more than $1bn in the first two weeks of operation following its launch on January 8.

Under the Hawaiian bill, regulated activities will be overseen by an online sports wagering corporation deployed within the Hawaiian Department of Business, Economic Development & Tourism (DBEDT).

The corporation is designed to function as both a public entity and a corporate entity and would be overseen by a seven-member board which would focus on implementation and selection of licensees.

Hawaii’s governor would be able to select three members, while the president of the state senate and the speaker of the state’s house of representatives would each pick two board members.

Each board member will serve for terms of five years and the corporation will be required to submit quarterly reports to state authorities.

The board shall include individuals with “knowledge and expertise in sports wagering or gaming, marketing and entertainment, technology, accounting, law, and operation” of a business enterprise.

The corporation has the power to hire employees and appoint a CEO responsible for the day-to-day running of the organisation.

HB 1815 introduces an accelerated timetable for delivery of regulations and the licensing of operators, with the seven-member board required to adopt governance regulations for the new market and to begin the licensing process within 180-days of the passage of legislation.

State authorities have said they are keen to recruit “qualified and suitable” sports wagering partners with knowledge of the US market, running an online business, and adhering to principals of “honesty, fairness, and integrity” in all operations.

“The board shall select sports wagering providers that offer the greatest integrity for the corporation, the greatest long-term benefit to the State, and the best service and products for the public,” HB 1815 states.

In addition to setting out the regulation and licensing process, HB 1815 suggests the implementation of initial licensing fees as well as an annual renewal fee, both of which have not been confirmed.

Hawaii is home to just 1.4 million residents, making it one of the smallest states in the US.

It is just one of two US states, the other being Utah, to not operate gambling in any form, with the state’s Democrat-majority senate opposing previous attempts to introduce land-based casinos in the island’s second-largest city, Oahu, in 2020.

In tandem with this legislation, separate bills to operate a members-only casino in Waikiki as well as a Hawaiian state lottery were also introduced.