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Hawaii Online Poker Bill Advances

24 March 2011 by admin

hawaii-map-21A bill that would legalize and regulate online poker in Hawaii has been approved by the House Economic Revitalization and Business Committee by a 7-1 vote and by the House Judiciary Committee on a 9-3 vote. The bill would allow residents of Hawaii to engage in peer-to-peer gaming, where players compete against each other rather than against a computer or the house.

The bill, SB 755, was originally intended to provide an excise tax exemption for purchasing school supplies. That language has been removed and replaced with what is essentially an online poker bill, with the thinking being that taxes from poker regulation can help pay for those tax breaks.

There are, of course, potential problems with the bill. All forms of gambling are currently illegal in Hawaii. It is one of two U.S. states (Utah being the other) that doesn’t allow gambling in any form. This bill gets around that, not by changing gambling law, but by clarifying that online poker is not gambling because it is a game of skill. Yes, it’s that tired argument again.

During the committee hearing, lawmakers not only couldn’t agree on the merits of online poker, but they couldn’t even agree on whether or not it is currently banned. Representative Tom Brower said that you can gamble legally in Hawaii because “there is not a law that says you may not gamble online in Hawaii.” While that is technically true, there is a law saying you cannot gamble, without making a distinction between online or offline gambling. Most people, including Representative George Fontaine, take that to mean that “online gambling is illegal, period.” The only way to make the online poker that is currently going on in Hawaii legal is to amend the gambling ban or pass a new law saying that poker is exempt, which is what the current legislation aims to do.

Another problem facing the bill is that, unlike the online gambling bills in New Jersey, Florida, California, South Carolina and Texas, this is not an intrastate online poker bill. The bill would allow peer-to-peer online gaming that involves “human players competing against other players from around the world in a virtual gaming room that is hosted by the licensed site.”

If Hawaiian players are going to be playing against residents of other U.S. states, that means the industry would fall under the regulatory authority granted to the federal government by the Commerce Clause of the U.S. Constitution. Though there is no federal law banning online gambling, UIGEA acts as a de facto ban by requiring banks to block transactions related to the undefined “unlawful” Internet gambling. The feds treat UIGEA as a gambling ban and as such, they are likely to interfere with Hawaii’s online poker market in the name of interstate commerce if one is created.

The bulk of Hawaii’s revenue comes from tourism, but as the bill states, there is a need to expand other industries and bring in more revenue. That is particularly important now because of the increased price of air travel and the devastation in Japan, since that Japanese make up approximately 20% of their visitor market. The bill would create a Peer-to-Peer Entertainment Commission, which would regulate the industry. Online gambling operators who want to enter the Hawaiian market would have to pay a state licensing fee of $100 million per year and give a percentage of total wagers to the Aloha State. The bill has not been scheduled for a floor debate at this time.

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