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The Honolulu Advertiser
Posted on: Sunday, February 14, 2010

Hawaii lawmaker again debating legal gambling

By Derrick DePledge
Advertiser Government Writer

Hawaii news photo - The Honolulu Advertiser

A 2000 study prepared for gambling industry lobbyists estimated that two O'ahu casinos would take in $711 million a year.

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The state House Finance Committee will probably consider two bills that would legalize gambling:

HB 2251: Creates a five-member gambling commission within the state Department of Commerce and Consumer Affairs authorized to issue one five-year casino license on O'ahu. Imposes a wagering tax, with the revenue going to treat problem gamblers and to the state's general fund.

HB 2759: Gives the Hawaiian Homes Commission the authority to allow casinos on Hawaiian home lands. Creates a five-member gaming commission within DCCA to consider casino applications. Imposes a wagering tax, with revenue going to the state's general fund and the Hawaiian Home Lands Trust Fund.

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Gambling interests spent hundreds of thousands of dollars on lobbying and public relations in Hawai'i nearly a decade ago, tempting state lawmakers with new tax revenue from a grand resort and casino.

Nothing happened.

This year, with no similar lobbying blitz, state House lawmakers have opened the door to legalized gambling, either through a single casino on O'ahu or casinos on Hawaiian home lands.

Privately, many lawmakers doubt that gambling has much of a chance, even with the state facing a $1.2 billion budget deficit through June 2011. There appears to be a firewall of opposition in the state Senate and, if a bill were to pass, it would likely fall short of the two-thirds' majorities needed in both chambers to override an almost-certain veto by Gov. Linda Lingle.

But the fact that gambling bills have cleared initial committee review has given the issue some currency.

"I think we should have a public hearing. It's been about 10 years since we've had a good public hearing on these issues, in line with the idea that we have to consider all options," said state Rep. Marcus Oshiro, D-39th (Wahiawä), the chairman of the House Finance Committee, which will review the gambling bills that moved to the committee last week.

"Personally, I've never supported gaming. But I think it deserves that public debate and discussion."

Lingle, U.S. Sen. Daniel K. Inouye, Honolulu's prosecutor and police, and several religious and good-government groups oppose gambling.

Even the talk of the state allowing casinos on Hawaiian home lands may undercut years of assurances in Washington, D.C., by Inouye and U.S. Sen. Daniel Akaka that federal recognition for Native Hawaiians would not lead to gambling as it has on Indian reservations.

State Rep. Jon Riki Karamatsu, D-41st (Waipahu, Village Park, Waikele), the chairman of the House Judiciary Committee, said he believes gambling has gained some traction this session because people are feeling the burden of state budget cuts and tax increases.

Closing the deficit through additional cuts to public education and social service programs, or by raising taxes or tapping special funds, is wearing on some lawmakers, who are open to hearing about new ways of raising money.

Karamatsu's bill would create a five-member gambling commission within the state Department of Commerce and Consumer Affairs that would be authorized to issue one five-year license for a casino on O'ahu.

Initially limited to tourists, lawmakers have amended the bill to allow both tourists and residents who are 21 and over to gamble.

The state would impose a 7 percent tax on monthly gross receipts, retaining some of the revenue for the commission's administrative costs and a treatment program for problem gamblers. The remainder of the new tax revenue would go to the state's general fund.

A December 2000 study prepared by Michigan Consultants for lobbyists for the gambling industry estimated that two casinos on O'ahu — in Waikíkí and Ko Olina — would generate $711 million annually, including $309 million from gambling.

The study estimated that $58.5 million of the gambling revenue would come from locals.

The study predicted that the two casinos would bring in $143 million in new tax revenue each year and create 19,575 jobs.

Assuming that one casino would generate about half the tax revenue annually — $71.5 million — and would take at least one to two years to be up and running, it is clear that gambling alone would not solve the state's budget crisis.


John Radcliffe, a lobbyist who works with Marketing Resource Group, a Michigan consulting firm with gambling industry clients, said he plans to update the study to focus on a single casino.

Unlike a decade ago, when gambling interests were ready with specific projects, investors are waiting to see whether lawmakers are serious.

Money for lobbying and outreach has apparently not been pouring into Hawai'i, according to Radcliffe and recent lobbying reports filed with the state Ethics Commission, but that could change if the House moves out a bill.

"There are people calling me from all over the country at the moment," Radcliffe said.

Radcliffe said gambling is not an immediate answer to the deficit but should be one of many tools lawmakers consider.

"The only thing that this is is a revenue stream that you didn't have before," he said. "It's an arrow in a quiver of arrows."

State Sen. Donna Mercado Kim, D-14th (Hälawa, Moanalua, Kamehameha Heights), the chairwoman of the Senate Ways and Means Committee, has been open to electronic gambling such as slot machines and video poker, but has concerns about a full casino with table games such as blackjack.

"I'm surprised that the House has brought it up. I'm glad that they have because I think that the discussion should take place," she said. "But if you're a realist and you look at the votes. There's not enough votes on this side."

Lingle, in a radio interview last week, said she doubted that gambling would bring much new money into the state.

"My thought has always been, if you want to gamble, I say go to Vegas and have a good time," she said. "But then come home. Let's not bring all of that here to Hawai'i. So for me it's not a moral issue. It's just not in our interest. It would cost us more than we would ever bring in.

"The other point — and this is the key point — it wouldn't bring any new money to the state. Because, whether it was focused on tourists, any money tourists lost in gambling, they simply wouldn't buy T-shirts to take home, or candy or coffee or any of the other things they take home. Or, they may start to have to eat in their room as opposed to going to a restaurant."


A second gambling bill pending before the House Finance Committee would give the Hawaiian Homes Commission the authority to allow casinos on Hawaiian home lands.

A five-member gambling commission within the DCCA would consider casino applications and impose a tax on monthly gross receipts. After subtracting money for administrative costs, 20 percent of the new tax revenue would go to the state's general fund and 80 percent would go into the Hawaiian Home Lands Trust Fund.

The Native Hawaiian federal recognition bill — known as the Akaka bill — prohibits gambling by a new Hawaiian governing authority that would negotiate with the state and federal governments over land use and cultural issues. Inouye and Akaka added the prohibition, aides say, to answer critics who have suggested that federal recognition is a potential back door to legalized gambling.

The Akaka bill has been the subject of negotiations between the state's congressional delegation, the Obama administration and the Lingle administration. The delegation is trying to bring the Akaka bill to the U.S. House and U.S. Senate for votes as soon as possible.

State Rep. Mele Carroll, D-13th (E. Maui, Moloka'i, Läna'i), the chairwoman of the House Hawaiian Affairs Committee, who introduced the gambling bill, said she supports federal recognition and does not want to interfere with the debate in Washington. But she added that she wants Hawaiians to have a discussion about casino gambling as a potential revenue source.

"They know that my intent is not to take away from the Akaka bill," Carroll said.


Hawai'i and Utah are the only states that do not allow some form of gambling. In Utah, the opposition stems mainly from claims that gambling is immoral and the influence of the Mormon church. In Hawai'i, a combination of moral objections, concerns about preserving the unique cultural heritage, and the potential social impact have been cited as reasons.

Locals have made Las Vegas their favorite vacation destination.

"Going to a casino is no more sinful or awful than going dancing or to a movie or a rock concert, all of which are legitimate venues of entertainment, and all of which have been banned by various religious groups," Radcliffe said. "Wisconsin has 28 casinos. Michigan, 24. There are nearly 900 of them scattered around the United States, in almost all states.

"And our moral standing in Hawai'i doesn't seem to be that much higher than that of all the rest of the country."

Nearly a decade ago, Japanese investors and Sun International Hotels, based in the Bahamas, pitched a resort and casino at Ko Olina. Michigan investors behind the MotorCity Casino in Detroit backed casino projects near the Hawai'i Convention Center and Ko Olina.

Hollywood Casino Corp., of Dallas, offered floating dockside casinos.

Gambling interests spent hundreds of thousands of dollars on lobbying — $346,000 in one period during 2000 and 2001 — but their bills died even though the state's economy was struggling.

"We can do better," said state Rep. Corinne Ching, R-27th (Nu'uanu, Liliha, 'Älewa Heights). "I'm not a prude about gambling. I'm really not. Las Vegas may be the perfect situation for people who are responsible to go to Vegas and then come back.

"What I'm concerned about is the other side of gambling. The very real side of gambling, where people get involved and then they can't pay their debt. That's real."