iGaming Daily

Jessica Welman (00:06.643)
Why did the chicken cross the road? To fight another chicken, get hopped up on fentanyl, potentially make great sex workers to its place of residence and debate sports betting in Hawaii. I'm Jessica Wellman, Managing Editor of SBC media. And on today's episode of iGaming Daily, we are going to talk about the contention's effort to legalize sports betting in Hawaii that passed through the house last week. iGaming Daily is brought to you by OptiMove, the number one CRM marketing solution for the iGaming market. Guys.

Before we get into what has been one of my favorite stories of the year so far, big introduction, warm welcome to one of my favorite people to work with, Tom Nightingale, who is our senior writer for SBC Americas and Canadian Gaming Business and the editor behind Canadian Gaming Business Magazine. Tom, welcome to your maiden voyage of the podcast.

Tom Nightingale (00:55.51)
Yeah, thank you very much. It's good to be here. I think you've outdone yourself with that intro, if I may say so. But you've...

Jessica Welman (01:01.077)
You're always one to lowball your skills, but...

Tom Nightingale (01:05.6)
at the essence of the story, think, with the fentanyl and the chickens.

Jessica Welman (01:09.375)
you been to a chicken fight? am not. Is it like cock fighting? Is it the same thing? Do we know?

Tom Nightingale (01:15.08)
I, my, my first hand experience of chicken fighting is precisely zero. I don't know why I said first hand, cause also second hand experience of chicken fighting is zero as well.

Jessica Welman (01:23.861)
Yeah, have you been to Hawaii ever?

Tom Nightingale (01:27.008)
I have not been to Hawaii. I have looked into the possibility of going to Hawaii and then decided to go somewhere closer to home for cost reasons, but it's on the list.

Jessica Welman (01:36.531)
got to go once when I was a kid and it is gorgeous, beautiful. There's a reason it is a massive tourist destination. And that's also one of the reasons why gambling in general, not just sports betting has been something Hawaii does not want. Them and Utah are two of these states that are just like, we don't want the lottery. We don't want anything. Please go away. I'm also told I got a very generous email from

reader that there's a large Mormon population in Hawaii as well, which kind of has impacted some of the gaming stalling bills stalling there. I know when we first got these bills in, I'm pretty sure I told you, write them up, you'll never write them about them again. And I lied. So since you've been the one writing everything up, can you give us a rundown? I know there's a few different bills. So maybe just a sense of.

Tom Nightingale (02:22.99)
That is what he said, yeah.

Jessica Welman (02:32.999)
what kind of bills are out there and then focus on the bill that is moving forward into the Senate.

Tom Nightingale (02:38.53)
Yeah, so I mean, we've there are at least four at my account with obviously HP 1308. Daniel Holt's one, the one that's making actually made progress has its companion bill in the Senate, which actually stalled in the Senate. So we'll talk about the amount of work there is still to do. I think there are a couple of others there as well that have since been introduced haven't really got anywhere. There's one that's specifically DFS. I think there's one that's a casino, I believe this one.

1308. This would be a minimum a minimum of four online sports betting platforms. I have seen some suggestions that it was up to four. I did check the language again. In the most recent amended version, it does specifically say a minimum of four online sports betting platforms. It would also legalize DFS. It would also introduce DFS as well, but as a separate vertical that wouldn't be classed as sports wagering. So it is trying to do a fair amount in one swoop.

Jessica Welman (03:23.605)
Okay, I think I've made that mistake myself.

Tom Nightingale (03:39.134)
and you know, they did, they did include suggested tax rate and suggested application fees for licensing and everything, but to say that it has undergone changes would be slightly understating it.

Jessica Welman (03:51.574)
It started out pretty low, right?

Tom Nightingale (03:54.222)
Yeah, it was the I mean, the tax rate was 10%. The licensing fee was $250,000 for a five year license, which I believe we had you and I had a back and forth about this. I can't remember exactly who it was. But one of the people giving testimony basically said that is not enough money to do anything in this industry when trying to legalize sports betting. So that got real pushback and some serious concerns. And as a result, the tax rate and the application fee were just have just been completely scrubbed from the language like you go into

Jessica Welman (03:57.418)
Yeah.

Jessica Welman (04:21.599)
just TBD.

Tom Nightingale (04:22.934)
Yeah, you go into the most recent amended version and there is just literal blank spaces for both of those things. So we'll see what comes of it, guess, moving forward.

Jessica Welman (04:32.757)
Let's start with the pushback from the government on this one.

Even though it's like made it over to the Senate, let's just say like, again, I didn't even think it would get this far. So clearly take my opinion with a grain of salt, but like one to 10, how optimistic are we that this actually gets passed into law?

Tom Nightingale (04:56.61)
I feel like as we are talking today, I'm sitting at around about the four or five out of 10 mark. think, go ahead. I think it's good to have seen it make some progress and get further, I think, it has got certainly in many years in the House. But the fact that it's met with opposition and serious reservations at every stage of the process doesn't exactly fill you with confidence, especially when the Senate companion bill has already been deferred.

Jessica Welman (05:02.313)
I'm going... go ahead. No, no, finish.

Jessica Welman (05:25.555)
I'm going to go, I was going to say two and a half, but you know what? I don't trust myself. So we'll say three. Part of the reason it's getting through and it hasn't before is because president Trump has been pulling all of these federal funds and the Island is freaking out about being able to pay the bills and they need to bring in revenue.

with a 10 % tax rate and you barely cover the overhead to regulate a business. I think what people kind of lose sight of too is in Hawaii where there is no gambling, you have to create a regulatory body to oversee this. And I think they were gonna put it in consumer affairs, right? Something like that.

Tom Nightingale (06:12.014)
Yeah, I believe so. did change the department part way through as well, which is another amendment that they made. But yeah, I think so.

Jessica Welman (06:17.557)
Yeah, so it's like you have to hire people, you have to find office space for them, you have to do these sorts of things and that costs money. And that was what this woman I believe she was from the Department of Consumer Affairs point was, which was you're bringing in like hardly anything that I don't even think we'd have money to like oversee this, let alone like deal with the budget deficit that we're facing.

Interestingly, you can look at, they have the written testimony posted and they have most of the testimony is from group government agencies within the state of Hawaii. And they've testified at every hearing, the attorney general's office, the, I think it's like the attorney general of Honolulu or the, or the DA of Honolulu, the department that is supposed to be in charge of this, the taxation department, they're all just like, I don't,

think this is going to make any money. We at the Consumer Affairs Protection Department don't believe this protects consumers because we're worried about problem gambling. Am I forgetting any? The long list of government pushback is intense.

Tom Nightingale (07:27.647)
I mean, like the...

In the Senate, the Senate companion bill that was deferred, the Attorney General's office made the point, the state Attorney General's office made the point that I can't remember the exact word in they use, but basically said stick to chill, stick to chill betting, like stick to friendly sort of competition, you know, like, and then essentially just said, do not do not make it corporate, because as soon as you make it corporate, and you open up to large scale betting, and then you get all of these problems. And we'll talk about some of the problems that

Jessica Welman (07:45.493)
That's right! They were like, just bat with your friends, we won't arrest you! Like, just do that!

Tom Nightingale (07:59.842)
Hawaii lawmakers are afraid of.

Jessica Welman (08:01.075)
My Lord, we will. Yeah, and I think that as you mentioned, it does go to the Senate. The Senate has already said, we don't, I mean, not the full Senate, but a committee has already said we don't have the appetite to do this this year. What I kind of love about the Hawaii legislature, we just have spent so little time with them. I didn't know this, that you can vote yes and be like, but I don't like it.

yes, with reservations, which is a great category, that, know, both of the committees that it advanced out of in the house, it was like, yeah, it did. But pretty, I think a majority in both of those were like, I mean, we can talk about it, but, I don't like this. the full vote though, actually more supportive than I thought. Right. The full house vote.

Tom Nightingale (08:53.742)
Yeah, I was kind of surprised as well because I think it passed 35 to 10 and only three of the 35 had reservations as well at that point. Whereas in the, I think to your point, in think the most recent committee hearing, there were 12 yeses but six of them were with reservations, which is kind of like, well, like you said, yeah, but not really sure about this. But 35 to 10, only three yeses with reservations seems to suggest that a lot of people have been convinced along the way.

Jessica Welman (09:23.401)
Yeah, I don't, it's hard to read the temperature, especially because a lot of, you know, the government affairs people are not, I wish, I'm sure they're like, I'll happily go to Hawaii and stump for sports betting, but most of them have been remotely testifying and calling in. And so I don't have as good a beat on the, on the ground about where lawmakers are at on this.

Again, I think the fact that the tax rate and the licensing fee have been made TBD does make this more palatable. know, we're looking at a group where, or a time where how many states are saying they want to double change, increase tax and the 10 % is now just like, you know, free basically. I think most states are looking at 20 % or higher. All right.

We've talked through the actual important meat of the stuff, but guys, when we come back, you don't want to go away because this is the fun part. We're going to break down some of the very intense criticism that came on the House floor debate around this bill.

All right, welcome back to iGaming Daily. I'm excited for your first pod's a good one, Tom, because this is going to be every legislative season. And this is your first full one. You didn't you had a couple last year because you joined us in April, but this is your first full legislative season with SBC Americas. This is my third or fourth. And then I've certainly covered it years before. Every year, there's at least one hearing that just gives.

when it comes to anti-gambling commentary. that was last week. You wrote up a great article. We'll have the link to it in the description below. What all did people have to say about sports betting, some of the full floor vote?

Tom Nightingale (11:22.286)
So I mean, I was tuning in expecting to hear a lot of the usual stuff, problem gambling, addiction concerns. it actually make the, you know, generate the, yeah, will it generate the revenue that, you know, people are advocates say it will. What I did not expect was to have sex trafficking straight off the bat. was, I did not see the first legislative session. It's a...

Jessica Welman (11:30.815)
Click them out to lose a house.

Jessica Welman (11:42.115)
there's always sex trafficking. You didn't know this? okay. Now you're learning.

Tom Nightingale (11:48.43)
So there was, know, we had one rep saying that, you know, once gambling is legalized, there's a lot of bad things that follow from sex trafficking to stealing, all kinds of bad things when you open the doors. But it turned out that was just the appetizer because you certainly can.

Jessica Welman (12:00.725)
Well, can I interject really quickly on this one? This is my favorite. So he is not wrong in that land-based casinos tend to generate problems. They are places where prostitution is an issue and these sorts of things. Many states have mitigation funds that the casinos have to pay into to go back to the community for what they are doing. A reminder, this is an online.

only sports bill. So the idea that like, now that you can get DraftKings on your phone, women or men or whoever are going to like flock to Hawaii to become sex workers is kind of delightful as an argument. Continue.

Tom Nightingale (12:46.99)
Speaking of delightful arguments, did also enjoy the rep at Rep Iwamoto, I believe, who said that local game rooms and chicken fights, which she was clear to say that she does not support, they contribute to a circular economy because the money stays within the community. Whereas online gaming, most of that money is just going into another state, her words. I've never heard the chicken fight comparison, so that was a new one for me. I don't know about you.

Jessica Welman (13:15.157)
heard it, but here's, was saying this to a friend of mine yesterday. She's not wrong. This is the problem that seems to keep cropping up in these hearings across the country. And I believe it was Hawaii where they were kind of asking like, how many people are you going to hire? Like, what is the economic impact of this? And the MGM rep

Tom Nightingale (13:21.379)
Amen.

Jessica Welman (13:43.323)
did make the argument that when you legalize sports betting, is more interest in sports. And so in theory, you're going to have more gatherings with friends to watch sports. And in turn, you might get more servers and bartenders jobs in Hawaii, which I appreciate the effort. like, God's honest truth is, if each of these at least four operators create one job,

I mean, maybe I'm not positive because you do have to have usually servers set up in the state and that sort of thing. So you do bring a little bit of economic impact that way, but like they're not going to open an office in Hawaii. You know, that's not happening. That's not the way these companies are set up. And I think that these major companies, now that we've seen the way things are going and it is this clear dichotomy in the sports betting space, it's not like the

gold rush of before where we naively perhaps believed that local operators could come in and succeed. So yeah, what do operators say to the economic impact of things, especially in an online only?

Tom Nightingale (14:52.842)
Yeah, well, I mean, they were it's an interesting point, because at one of the hearings, they were, you know, the better GM representative, we had a couple of representatives at most hearings from the Sports Betting Alliance, and Ben Jim's representative was very, very vocal on the hospitality, then, you know, the indirect economic benefits that would come from the booster hospitality and that sort of stuff. And I, think it's because the we know that the positive economic argument is one that

sports books understandably like to make about introducing online sports betting. But you're right, like Hawaii is a pretty unique, I think, potential regulatory environment. So the hospitality point was interesting to me. While we're still I just just do have to say we've had chicken fights, we've had sex trafficking, there was of course, there was the underground hard drugs comparison as well. Where we had a rep because you know, one of the arguments as we know, is that

Jessica Welman (15:45.886)
yeah.

Jessica Welman (15:51.219)
black market.

Tom Nightingale (15:51.346)
sports, a lot of this sports betting is happening already, we just bring it into the light and regulate it for the benefit of the state and the consumer. We did have one rep push back against that saying, well, the underground market is already thriving, we can use that same argument for meth dealers and cocaine dealers, even fentanyl, it doesn't make it right. Which I will say did elicit something of an eye roll from me. But again, I guess. Yeah.

Jessica Welman (16:14.101)
Again, he's not wrong. This is the thing is like, I find these arguments a bit straw man for sure. But like I've made them too because I'm constantly like the fact that DFS sites and sports betting sites continue to offer these college props under the guise of, well, they're just gonna do it on the black market instead.

It's like 1 % of their revenue. It's super incremental and they should just get rid of them. I'm just like, well, I guess we should allow betting on the spelling bee or who's going to win the game of tag at the preschool. You know, like I've made these arguments myself that I can't be too hard on him. You know who I can be hard on? Representative David Alcos, whose his quote was, do we want to see Hawaii be like Vegas? That's a quote. mean,

Tom Nightingale (16:53.134)
Mm-mm.

Jessica Welman (17:07.719)
These are like the two most popular tourist attractions in the United States. I'm pretty sure they're fairly similar to begin with, but that's a question we should be asking ourselves. Do we want this money in this kind of money in the state of Hawaii to fix our roads? I would like to note that this comes from a lawmaker who was fined $12,500 to settle an ethics commission complaint last year because he did not report that he had millions of dollars in tax liens held against him before he

took office and failed to file. Martin Elliott pointed that one out to me yesterday. He's like, I always Google the lawmakers. was like, Martin, we write about 12 lawmakers a day. If I did that, I wouldn't be able to have time to do anything else. So yeah, it was, it was a, it was a fun one.

Tom Nightingale (17:41.614)
That is certainly good color. did not know that.

Tom Nightingale (17:57.922)
Yeah, I we had, we had one, I don't know if was Rep Alco's, but we had another lawmaker who just out, you know, outright labeled said that any revenue that came from legal online sports betting would be dirty money.

Jessica Welman (18:11.573)
There was another guy who was just like, you know, I don't know anybody who's won at sports betting. have plenty of friends who have lost lots of money sports betting. And we're highlighting this, but like, they're no different than Georgia, which I'm sure we'll be writing about this week or not actually. This podcast will be going out after crossover day. So it might be dead, but a lot of these states that are left have very strong anti-gambling sentiment.

As we've conceded, some of these are pretty decent reasons to do so. And I think the particular measure that's moving forward is not really great about the selling point of we can fix your budget crisis unless they're putting like a 35 % tax rate on it. I can't imagine. And like a million dollar license fee or something like that, you'd have to quadruple some of these numbers to get even close to this having.

being worth like a drop of a penny to the actual state itself. All right, finishing thoughts.

Tom Nightingale (19:14.456)
Just, mean, there was one more quote from me from the Bill co-sponsor that I really liked at one of the hearings, which is that people are generally very good at understanding what potential negative outcomes may arise from legalization, but very bad at recognizing the current negative outcomes of prohibition, which I thought really succinctly spoke to the general struggle that this industry has in trying to convince lawmakers on legislation like this.

Jessica Welman (19:37.911)
I'm glad you did call that out, because that is a good one. I know a lot of the, you know, government affairs and lobbying groups out there are pushing the fact that the black market continues, you know, we're seeing and we're seeing action on it. We're seeing Michigan take action. We've seen Nevada. mean, Cal she's not the black market, to be fair, but pushing against unregulated operators and so on. All right, Tom, great first job.

Guys, we will have the updates as we get them from Hawaii and maybe we'll revisit and mock the fact that I said three out of 10. If it happens to get legalized, tons of legislative stuff, at least two or three a day at sbcamericas.com. Be sure to check that out. Check out Canadian Gaming Business. Tom has a handle on all things Canada and check out the next episode of iGaming Daily tomorrow.