Bill Text: HI HB2765 | 2024 | Regular Session | Amended

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Bill Title: Relating To Sports Wagering.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced) 2024-02-08 - Passed Second Reading as amended in HD 1 and referred to the committee(s) on CPC/JHA with Representative(s) Chun, Garrett, Hussey-Burdick, Ichiyama, Kila, Matsumoto, Poepoe, Souza, Tam voting aye with reservations; Representative(s) Alcos, Garcia, Kapela, Kobayashi, Lowen, Marten, Matayoshi, Perruso, Pierick, Quinlan voting no (10) and Representative(s) Nakashima, Nishimoto, Sayama, Ward excused (4). [HB2765 Detail]

Download: Hawaii-2024-HB2765-Amended.html

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HOUSE OF REPRESENTATIVES	H.B. NO.	2765
THIRTY-SECOND LEGISLATURE, 2024		H.D. 1
STATE OF HAWAII

A BILL FOR AN ACT

 

 

RELATING TO SPORTS WAGERING.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 

     SECTION 1.  The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"Chapter

regulation of sports wagering

     §   -1  Definitions.  As used in this chapter:

     "Adjusted gross sports wagering receipts" means a sports wagering operator's gross receipts from sports wagering excluding free bets and promotional credits, less the total of all winnings paid to patrons, including the cash equivalent of any merchandise or thing of value awarded as a prize, and less excise tax payments remitted to the federal government.

     "Collegiate sports or athletic event" means an athletic or sporting event in which at least one participant is a team or contestant competing on behalf or under the sponsorship of a public or private institution of higher education, regardless of where the institution is located.

     "Department" means the department of business, economic development, and tourism.

     "License" means any license applied for or issued by the department under this chapter, including but not limited to:

     (1)  A sports wagering operator license under section    -5 to permit a sports wagering operator to operate sports wagering through an approved mobile application or other digital platform that involves, at least in part, the use of the Internet; and

     (2)  A sports wagering supplier license under section    -6 to sell goods and services to be used in connection with sports wagering but not to directly accept wagers.

     "National criminal history background check system" means the criminal history record system maintained by the Federal Bureau of Investigation based on fingerprint identification or any other method of positive identification.

     "Professional sports or athletic event" means an event at which two or more contestants participate in a sports event or athletic event and one or more participants receive compensation.

     "Qualified gaming entity" means an entity that offers sports wagering through computers, mobile applications, or digital platforms in no less than three jurisdictions in the United States pursuant to a state regulatory structure.

     "Sports wagering" means the business of accepting wagers on wagering events or portions of wagering events, the individual performance statistics of individuals in wagering events, or a combination of any of the same by any system or method of wagering approved by the department via a sports wagering operator licensee's mobile applications and digital platforms that use communications technology to accept wagers.  "Sports wagering" includes but is not limited to single-game bets, teaser bets, parlays, over-under, moneyline, pools, exchange wagering, in-game wagering, in-play bets, proposition bets, and straight bets.  "Sports wagering" does not include fantasy contests in which the winning outcome reflects the relative knowledge and skill of the participants and is determined predominantly by the accumulated statistical results of the performance of athletes or individuals in an actual event.

     "Sports wagering account" means a financial record established by a sports wagering operator for an individual patron in which the patron may deposit and withdraw funds for sports wagering and other authorized purchases and to which the licensed sports wagering operator may credit winnings or other amounts due to that patron or authorized by that patron.  A sports wagering account may be established electronically through an approved mobile application or digital platform.

     "Sports wagering operator" means a sports wagering operator licensee pursuant to section    -5.

     "Sports wagering supplier" means a person that provides geolocation and know your customer services to a sports wagering operator.

     "Wager" means a sum of money or thing of value risked on an uncertain occurrence.

     "Wagering event" means any professional sports or athletic event, collegiate sports or athletic event, or amateur sports or athletic event, including but not limited to an Olympic or international sports or athletic event; a motor vehicle race; electronic sports event, also known as e-sports; and any other event as permitted by the department.

     §   -2  Authorization of sports wagering; license required.  (a)  Notwithstanding any law to the contrary, sports wagering and ancillary activities shall be lawful when conducted in accordance with this chapter and rules adopted under this chapter.

     (b)  No person or entity shall engage in any activities in the State that require a license under this chapter unless all necessary licenses have been obtained in accordance with this chapter and rules adopted under this chapter.

     §   -3  Application; criminal history record check.  (a)  An application for a license or for renewal of a license required under this chapter shall be submitted on an application form as prescribed by the department.  An application submitted to the department shall include the following:

     (1)  The full name, current address, and contact information of the applicant;

     (2)  Disclosure of each person that has control of the applicant as described in subsection (b);

     (3)  Consent to permit the department to conduct a criminal history record check, in accordance with subsection (c), of the applicant and each person disclosed under subsection (b)(2), in accordance with procedures established by the department;

     (4)  For the applicant and each person disclosed under subsection (b)(2), a record of previous issuances and denials of a gambling-related license or application in the State or in any other jurisdiction;

     (5)  For a sports wagering operator applicant, proof that the sports wagering system, or equipment, systems, or services provided by the sports wagering supplier, has been tested and certified for use in another United States jurisdiction by an independent testing laboratory; and

     (6)  Any other information that the department may require by rule.

     (b)  The following persons shall be considered to have control of an applicant or a licensee:

     (1)  Each corporate holding company, parent company, or subsidiary company of a corporate applicant or licensee and each person who owns fifteen per cent or more of the corporate applicant or licensee and who has the ability to control the activities of the corporate applicant or licensee or elect a majority of the board of directors of that corporate applicant or licensee, except for a bank or other licensed lending institution that holds a mortgage or other lien acquired in the ordinary course of business;

     (2)  Each person associated with a noncorporate applicant or licensee that directly or indirectly holds a beneficial or proprietary interest in the noncorporate applicant's or licensee's business operation or that the department otherwise determines has the ability to control the noncorporate applicant or licensee; and

     (3)  Any executive, employee, or agent of an applicant or licensee who has ultimate decision-making authority over the conduct of the applicant's or licensee's sports wagering operations in the State.

     (c)  The department shall request a criminal history record check in the form the department requires and submit fingerprints for a national criminal records check against the national criminal history background check system.  The fingerprints shall be furnished by all persons required to be named in the application and shall be accompanied by a signed authorization for the release of information by a law enforcement agency in the State and the Federal Bureau of Investigation; provided that an individual who has submitted to a criminal history record check in the State or any other state within the previous twelve months shall not be required to submit to another criminal history record check; provided further that the person shall submit the results of the previous criminal history record check to the department and affirm that there has been no material change in the individual's criminal history since the time of the previous criminal history record check.

     (d)  A person licensed under this chapter shall give the department written notice within thirty days of any material change to any information provided in the licensee's application for a license or renewal, including any change in the identity of persons considered to have control of the licensee under subsection (b).

     (e)  The department shall keep all information, records, interviews, reports, statements, memoranda, or other data supplied to or used by the department in the course of its review or investigation of an applicant for a sports wagering operator license confidential.  The department shall also keep confidential any trade secret, proprietary information, confidential commercial information, or confidential financial information pertaining to any applicant or licensee.

     §   -4  Denial of license; reprimand, suspension, and revocation.  The department may deny a license to any applicant, reprimand any licensee, or suspend or revoke a license if:

     (1)  The applicant or licensee has knowingly made a false statement of material fact to the department;

     (2)  The applicant or licensee has intentionally not disclosed the existence or identity of other persons that have control of the applicant or licensee as required by section    -3;

     (3)  The applicant or licensee has had a license revoked by any government authority responsible for regulation of gambling or gaming activities;

     (4)  The applicant has been convicted of a crime of moral turpitude, gambling-related offense, theft or fraud offense, or has otherwise demonstrated, either by a police record or other satisfactory evidence, a lack of respect for law and order;

     (5)  The applicant or licensee has not demonstrated to the satisfaction of the department financial responsibility sufficient to adequately meet the requirements of the licensed business or proposed business; or

     (6)  An applicant has not met the requirements of this section or any other provision of this chapter.

     §   -5  Sports wagering operator license; issuance; fees; term of license; temporary license.  (a)  The department shall issue a sports wagering operator license to an applicant that meets all requirements of this section, section    -3, and rules adopted under this chapter and that has not violated any provision of this chapter; provided that this section shall not be interpreted to direct the department to license an unqualified applicant.  The department shall establish a process that ensures an equal opportunity for sports wagering operators that submitted an application within thirty days of applications first being accepted by the department to first commence offering, conducting, and operating sports wagering on the same day.

     (b)  Only a qualified gaming entity shall be eligible to apply for a sports wagering operator license.

     (c)  A sports wagering operator license granted by the department pursuant to this section shall grant a licensee the lawful authority to conduct sports wagering through a mobile application or digital platform approved by the department and any rules adopted under this chapter.

     (d)  The fee for an initial or renewal sports wagering operator license shall be $          ; provided that the fee shall be retained by the department for the costs of administering this chapter.  In addition to the license fee, the department may charge a processing fee for an initial or renewal sports wagering operator license in an amount equal to the projected cost of processing the application and performing any background investigations.  If the actual cost exceeds the projected cost, an additional fee may be charged to meet the actual cost; provided that if the projected cost exceeds the actual cost, the difference may be refunded to the applicant or licensee.

     (e)  Except as provided in subsection (f), a license granted or renewed under this section shall be valid for three years, unless sooner revoked by the department pursuant to section    ‑4.

     (f)  An applicant for a sports wagering operator license may submit with the application a request to the department for the immediate commencement of sports wagering through a temporary license; provided that this request shall include the initial temporary license fee of $           payable to the department.  Upon receiving a request for a temporary license, the department shall review the request.  If the department determines that the entity requesting the temporary license is a qualified gaming entity, has paid the initial temporary license fee, and has submitted an application for a sports wagering operator license, the department shall authorize the qualified gaming entity to conduct sports wagering for three years under a temporary license or until a final determination on the sports wagering operator's license application is made.  Sports wagering conducted under authority of a temporary license shall comply with the sports wagering operator's house rules adopted pursuant to section    -7.  The department shall establish a process that ensures an equal opportunity for all temporary licensees that submitted an application within thirty days of applications first being accepted by the department to commence offering, conducting, and operating sports wagering on the same day, which may be before the date established for licensees that are not eligible for a temporary license.

     §   -6  Sports wagering supplier license; issuance; fees; term of license; temporary license.  (a)  The department shall issue a sports wagering supplier license upon finding that the applicant meets all the requirements of this section, section    -3, and rules adopted under this chapter.

     (b)  An applicant for a sports wagering supplier license shall demonstrate that the equipment, systems, or services that the applicant plans to offer to a sports wagering operator conform to standards established by the department by rule.  The department may accept approval by another jurisdiction that is specifically determined by the department to have similar equipment standards as evidence that the applicant meets the standards established by the department.

     (c)  A sports wagering supplier license granted by the department pursuant to this section shall grant a licensee lawful authority to sell or lease sports wagering equipment, systems, or services to sports wagering operators in the State within the terms and conditions of the license and any rules adopted under this chapter.

     (d)  The fee for an initial or renewal sports wagering supplier license shall be $          ; provided that the fee shall be retained by the department for the costs of administering this chapter.  In addition to the license fee, the department may charge a processing fee for an initial or renewed license in an amount equal to the projected cost of processing the application and performing any background investigations.  If the actual cost exceeds the projected cost, an additional fee may be charged to meet the actual cost; provided that if the projected cost exceeds the actual cost, the difference may be refunded to the applicant or licensee.

     (e)  Except as provided in subsection (f), a license granted or renewed under this section shall be valid for three years unless sooner revoked by the department under section    ‑4.

     (f)  An applicant for a sports wagering supplier license may submit with the application a request for a temporary license; provided that the request for a temporary license shall include the initial temporary license fee of $          .  If the department determines that the applicant is qualified under subsection (b), meets the requirements established by rule for a temporary license, and has paid the initial temporary license fee and the department is not aware of any reason the applicant is ineligible for a license under this section, the department shall issue a temporary sports wagering supplier license.  A temporary sports wagering supplier license issued under this subsection shall be valid for three years or until a final determination on the sports wagering supplier license application is made, whichever is sooner.  If after investigation the department determines that the applicant is eligible for a sports wagering supplier license under this chapter, the department shall issue the initial sports wagering supplier license, at which time the temporary license shall be terminated.

     §   -7  Sports wagering; house rules.  (a)  A sports wagering operator shall adopt comprehensive house rules for game play governing sports wagering transactions with its patrons.  The rules shall specify the amounts to be paid on winning wagers, the circumstances under which the sports wagering operator will void a bet, treatment of errors, late bets and related contingencies, and the effect of schedule changes.  The department shall approve house rules before implementation by a sports wagering operator.

     (b)  The house rules, together with any other information the department determines to be appropriate, shall be available in the sports wagering system.

     §   -8  Sports wagering operator; duties.  A sports wagering operator shall:

     (1)  Employ a monitoring system using software to identify irregularities in volume or odds swings that could signal suspicious activity that requires further investigation; provided that the suspicious activity shall be promptly reported to and investigated by the department; provided further that monitoring system requirements and specifications shall be in accordance with industry standards;

     (2)  Promptly report to the department any facts or circumstances related to the operation of a licensee that constitute a violation of state or federal law and immediately report any suspicious betting over a threshold amount, to be set by the sports wagering operator and approved by the department;

     (3)  Conduct all sports wagering activities and functions in a manner that does not pose a threat to the public health, safety, or welfare of the residents of the State;

     (4)  Keep current in all payments and obligations to the department;

     (5)  Prevent any person from tampering with or interfering with any sports wagering;

     (6)  Ensure that sports wagering occurs using only a mobile application or digital platform approved by the department that uses communications technology to accept wagers originating in the State or in a state or jurisdiction approved by the department and consistent with federal law;

     (7)  Conspicuously display the minimum and maximum wagers permitted on any mobile application or digital platform used to place wagers and shall comply with the same;

     (8)  At all times, maintain sufficient cash and other supplies to conduct sports wagering;

     (9)  Maintain daily records showing the gross sports wagering receipts and adjusted gross sports wagering receipts of the licensee; and

    (10)  Timely file with the department any additional reports required by this chapter or by rule adopted under this chapter.

     §   -9  Sports wagering agreements.  (a)  The department shall be authorized to:

     (1)  Enter into sports wagering agreements with other states, territories, nations, jurisdictions, governments, or other entities to accept wagers from individuals located outside the State; provided that entering into the sports wagering agreement shall not violate state or federal law; and

     (2)  Take all necessary actions to ensure that any sports wagering agreement entered into pursuant to this section becomes effective.

     (b)  The department may adopt rules pursuant to chapter 91 to implement this section.

     §   -10  Acceptance of wagers; excluded persons.  (a)  A sports wagering operator shall accept wagers on wagering events only through mobile applications or digital platforms approved by the department or a patron's sports wagering account using a mobile application or digital platform approved by the department.  The branding for each mobile application or digital platform shall be determined by the sports wagering operator.

     (b)  A sports wagering operator shall allow patrons to fund a sports wagering account using:

     (1)  A credit card or debit card;

     (2)  Bonuses or promotions;

     (3)  Electronic bank transfer;

     (4)  An online or mobile payment system that supports online money transfers; and

     (5)  Any other means approved by the department.

     (c)  A person placing a wager shall be eighteen years of age or older and be physically located in the State.  No person shall offer sports wagering at a physical location via kiosks, computer terminals, or other means established for that purpose.

     (d)  A sports wagering operator may accept layoff wagers placed by other sports wagering operators and may place layoff wagers with other sports wagering operators as long as a sports wagering operator that places a wager with another sports wagering operator informs the sports wagering operator accepting the wager that the wager is being placed by a sports wagering operator and discloses the sports wagering operator's identity.

     (e)  The department or a sports wagering operator may prohibit a person from placing wagers through a sports wagering operator.  The department shall maintain a log of all excluded persons and share the log with each sports wagering operator.  No person on the department's exclusion list or a sports wagering operator's exclusion list shall engage in sports wagering under this chapter.

     (f)  No employee of a sports wagering operator shall place a wager on any wagering event through a mobile application or digital platform of that employee's employer.

     §   -11  Sports wagering revenues; tax.  (a)  For the privilege of holding a license to engage in sports wagering as a sports wagering operator or sports wagering supplier under this chapter, there is hereby levied and shall be assessed and collected a tax equal to      per cent of the adjusted gross sports wagering receipts and      per cent of the gross receipts of a sports wagering supplier.  The accrual method of accounting shall be used for purposes of calculating the amount of the tax owed by the licensee.

     (b)  Tax revenues collected under this section shall be deposited into the sports wagering special fund established by section    -15.

     (c)  The department shall adopt rules pursuant to chapter 91 and develop any forms necessary to enforce this section.

     §   -12  Civil violation.  Except as provided in section    ‑13, a violation of any provision of this chapter shall be a civil violation.  The department may impose a fine of no more than $5,000 on any person who violates this chapter and shall not be limited to persons licensed under this chapter.

     §   -13  Unlicensed sports wagering; penalties.  (a)  Any person other than a licensee under this chapter who conducts sports wagering shall be subject to a fine of no more than $10,000 or a term of imprisonment of no more than ninety days, or both.

     (b)  A person convicted of a second violation of subsection (a) shall be subject to a fine of no more than $50,000 or a term of imprisonment of no more than six months, or both.

     (c)  A person convicted of a third or subsequent violation of subsection (a) shall be subject to a fine of no less than $25,000 and no more than $100,000 or a term of imprisonment of no less than one year and no more than five years, or both.

     §   -14  Exemption from gambling.  Sports wagering operated by a sports wagering operator that is licensed under this chapter and in compliance with this chapter shall not constitute a gambling offense under part III of chapter 712.

     §   -15  Sports wagering special fund.  (a)  There is established in the state treasury the sports wagering special fund, to be administered by the department of law enforcement and into which shall be deposited:

     (1)  Tax revenues collected pursuant to section    -11;

     (2)  Any moneys appropriated by the legislature to the special fund; and

     (3)  The interest or return on investments earned from moneys in the special fund.

     (b)  Moneys from the sports wagering special fund shall be used by the department of law enforcement to:

     (1)  Enforce any violation of gambling offenses as provided in part III of chapter 712, including deterrence of illegal game room operations and online gambling; and

     (2)  Create a gambling mitigation program."

     SECTION 2.  Section 712-1220, Hawaii Revised Statutes, is amended by amending the definitions of "contest of chance" and "gambling" to read as follows:

     ""Contest of chance" means any contest, game, gaming scheme, or gaming device in which the outcome depends in a material degree upon an element of chance, notwithstanding that skill of the contestants may also be a factor therein.  "Contest of chance" does not include sports wagering pursuant to chapter    .

     "Gambling"[.  A person engages in gambling if he stakes or risks] means staking or risking something of value upon the outcome of a contest of chance or a future contingent event not under [his] a person's control or influence, upon an agreement or understanding that [he] the person or someone else will receive something of value in the event of a certain outcome.  [Gambling] "Gambling" does not include [bona]:

     (1)  Bona fide business transactions valid under the law of contracts, including but not limited to contracts for the purchase or sale at a future date of securities or commodities[, and agreements];

     (2)  Agreements to compensate for loss caused by the happening of chance, including but not limited to contracts of indemnity or guaranty and life, health, or accident insurance[.]; and

     (3)  Sports wagering authorized pursuant to chapter     and placing wagers on wagering events or portions of wagering events, the individual performance statistics of individuals in wagering events, or a combination of any of the same by any system or method of wagering pursuant to chapter    ."

     SECTION 3.  This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

     SECTION 4.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 5.  This Act shall take effect on July 1, 3000.

 

Report Title:

Sports Wagering; Sports Wagering Operators; Sports Wagering Suppliers; Sports Wagering Special Fund; License

 

Description:

Allows for the regulation of sports wagering by the Department of Business, Economic Development, and Tourism.  Establishes licensing requirements for sports wagering operators and sports wagering suppliers.  Creates a Sports Wagering Special Fund.  Specifies that sports wagering shall not be considered games of chance or gambling.  Effective 7/1/3000.  (HD1)

 

 

 

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.