Hawaii Five-Five: Legislator’s Sports Betting Bill Proposes Staggering 55% Tax Rate

Posted on: January 24, 2022, 11:12h. 

Last updated on: January 24, 2022, 12:56h.

At 51 percent, New York currently has the highest tax rate on sports betting in the US. Hawaii might be ready to say, “Hold my beer.”

Hawaii sports betting
Hawaii state Rep. John Mizuno (D) seen here in 2015. His sports betting bill recommends a 55 percent tax rate. (Image: Honolulu Civil Beat)

In House Bill 1815 (HB 1815), Rep. John Mizuno (D) proposes a jaw-dropping 55 percent levy on sports wagering in Hawaii, assuming the famously anti-gambling state approves regulated sports betting.

There shall be levied, assessed, and collected a tax of 55 percent on all winnings paid out to any person by a sports wagering provider,” according to text of the legislation. “The tax revenues shall be deposited into the sports wagering special fund.”

In the bill, Mizuno proposes the creation of a seven-member board to oversee the implementation of sports wagering in the state and select sportsbook operators. If it comes to life in proposed form, it’d likely be a highly partisan board, because the governor would select three members while the president of the state Senate and the speaker of the state House would each pick two. Hawaii’s political landscape is dominated by Democrats.

Bill Faces Long Odds

Sports wagering is currently live and legal in 30 states and Washington, DC and legal though not yet live in another three states, according to the American Gaming Association (AGA).

However, that doesn’t imply broad support for sports wagering in Hawaii. The state is one of just two — Utah is the other — with no form of legal wagering. Previous proposals to alter that are always deemed long shots and ultimately meet the same fate: death in the legislature.

Assuming it could make it out of the House and Senate, Mizuno’s bill would need Gov. David Ige’s (D) signature to become law.  But in late 2020, the governor opposed a proposed casino in Kapolei, the second-largest city on the island of Oahu.

That effort was also opposed by some Democrats, indicating a veto by Ige on sports wagering probably wouldn’t be overturned.

Tax Could Be Deterrent to Operators

Hawaii is home to 1.4 million residents – just 10 states and Washington, DC are smaller by population. Interestingly, some form of sports wagering is legal in seven of those jurisdictions, including Wyoming, which is the smallest state by population.

In the quests for revenue and customer acquisition, many sportsbook operators look to procure licenses in as many states as possible. However, Hawaii — assuming the proposed legislation even becomes law — could be a different animal.

Gaming companies are willing to deal with New York’s 51 percent tax rate for the simple fact that it’s New York and the fourth-largest state in the country. Hawaii lacks that obvious population advantage, and with an even higher wagering levy, the market could prove unappealing to operators.