Bill Text: HI SB1107 | 2023 | Regular Session | Introduced
Bill Title: Relating To Gaming.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Introduced - Dead) 2023-01-27 - Referred to JDC, WAM. [SB1107 Detail]
Download: Hawaii-2023-SB1107-Introduced.html
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THE SENATE |
S.B. NO. |
1107 |
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THIRTY-SECOND LEGISLATURE, 2023 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
relating to gaming.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
"Chapter
Lottery and gaming
§ -1 Definitions. As used in this chapter:
"Board"
means the board of directors of the
Hawaii lottery and gaming corporation.
"Chief
executive officer" means the chief executive officer of the Hawaii lottery
and gaming corporation.
"Community
betterment purposes" means:
(1) Funding public education programs related to technology;
(2) Assisting teachers, principals, vice-principals, and other staff in the public school system with their professional development; and
(3) Addressing heat abatement issues in the public school system.
"Corporation"
means the Hawaii lottery and gaming corporation.
"Lottery",
"lottery game", or "lottery games" means any game of chance
approved by the board and operated pursuant to this chapter, including
but not limited to interactive instant win games and draw games.
"Major
procurement contract" means any product or
service contract for an amount in excess of $75,000.
"Member"
or "members" means a director or directors of the board of directors
of the Hawaii lottery and gaming corporation.
"Net proceeds" means all revenue
derived from the operations of the corporation,
less operating expenses.
"Operating
expenses" means all costs the corporation incurs through its operations,
including but not limited to prizes, bonuses, advertising and marketing costs, costs
related to the gaming provider, personnel costs, capital costs, funds for problem
gambling education and treatment, and other operating costs.
"Person"
has the same meaning as set forth in section 1‑19.
"Problem
gambling" or "gambling addiction" includes all gambling behavior
patterns that compromise, disrupt, or damage personal, family, or vocational
pursuits.
"Vendor" means a person who provides or proposes to provide goods or services to the corporation pursuant to a major procurement contract, but does not include an employee of the corporation, or an agency or instrumentality of the State.
§ -2 Hawaii lottery and gaming corporation
established. There is established a body corporate
and politic to be known as the Hawaii lottery and gaming corporation, which
shall be deemed to be an instrumentality of the State but shall not be deemed a
state agency. The corporation shall be a
public corporation registered with the director of commerce and consumer
affairs and shall be subject to the corporate laws of the State. For purposes of venue, the corporation shall
be deemed to reside in the first judicial circuit.
§ -3 Purpose and authority of corporation. (a) The
purpose of the corporation shall be to conduct and regulate wagering and gaming
for the benefit of the State and for community betterment purposes, with the
assistance of a private gaming provider, pursuant to this chapter and rules
adopted hereunder.
(b) The corporation may:
(1) Offer wagering on games of chance and games of
skill, including lottery, poker, and casino games, to individuals over the age
of eighteen years; provided that the corporation shall not offer wagering on
any sporting event or sporting contest;
(2) Enter into agreements with other state gaming
entities for the offering of multistate games,
consistent with state and federal law;
(3) Utilize the broad reach of its gaming platform
to offer legally compliant free-play games and sweepstakes with Hawaii-related
prizes to individuals outside of Hawaii, for the purpose of attracting tourists
and providing free exposure for Hawaii and Hawaii
businesses to domestic and overseas markets;
(4) Conduct no more than two gaming entertainment
events per year, related to the corporation's other game offerings, for the
purpose of attracting tourists to Hawaii; provided that
the corporation shall not conduct any other form of event-based gambling; and
(5) Engage in other activities consistent with the
purpose of this chapter and rules adopted
hereunder, and with state, federal, and international laws.
§ -4 Board
of directors; membership; reimbursement for expenses; conflict of interests;
quorum. (a) The corporation shall be governed by a board
of directors composed of seven members.
Three initial members shall be appointed by the governor, two shall be appointed
by the president of the senate, and two shall be appointed by the speaker of
the house of representatives.
(b)
Members of the board shall be prominent
persons in their business or profession and shall not have been convicted of
any felony offense. The board shall
include individuals with knowledge and expertise in lottery
and gaming, marketing and entertainment, technology, accounting, law, and
operation of a business enterprise.
(c)
Notwithstanding section 26-34(a), with
respect to the length of terms, members of the board shall serve for terms of
five years; provided that of the initial members appointed, three shall be
appointed for a term of two years, two shall be appointed for a term of four
years, and two shall be appointed for a term of five years. Any vacancy occurring on the board shall be
filled by the governor by appointment for the unexpired term.
(d)
Members of the board shall not have any
interest in an undertaking that places their personal interest
in conflict with that of the corporation, including but not limited to an
interest in a major procurement contract or a participating vendor.
(e)
The board may delegate to any one or
more of its members, to the chief executive officer, or to
any agent or employee of the corporation, any powers and duties as it may deem
proper.
(f)
A majority of members of the board shall
constitute a quorum for the transaction of any business
and for the exercise of any power or function of the corporation.
(g)
Action may be taken and motions and
resolutions adopted by the board at any meeting thereof
by the affirmative vote of a majority of present and voting members.
(h)
No vacancy in the membership of the
board shall impair the right of the members to exercise all the powers and
perform all the duties of the board.
(i) The members of the board shall be compensated
in the amount of $
per year and shall be reimbursed for expenses, including travel expenses, necessary
for the performance of their duties.
§ -5 Board of directors; powers and duties. In addition to
any other powers and duties authorized by law, the board shall:
(1) Select a gaming provider, pursuant to the
requirements of this chapter;
(2) Adopt regulations, policies, and procedures
relating to the conduct of games and the gaming provider,
including but not limited to rules governing:
(A) Type of games to be conducted;
(B) Price points for
games and percentage of rake;
(C) Forms of payment accepted and prohibited;
(D) Number and amount of prizes;
(E) Method of selecting winners and validating winnings;
(F) Manner and time of payment of prizes;
(G) Frequency of games
and drawings or selection of winning tickets or shares;
(H) Means of conducting
drawings for lottery games;
(I) Responsible
gaming;
(J) The conduct
of the gaming provider;
(K) The gaming
platform; and
(L) Any and all
other matters necessary, desirable, or
convenient toward ensuring the efficient and effective operation of gaming;
(3) Provide the chief executive officer with
private sector perspective and direction;
(4) Approve, disapprove,
amend, or modify the budget recommended by the chief executive officer for the
operation of the corporation;
(5) Approve, disapprove, amend, or modify the
terms of the major procurements recommended by the
chief executive officer; and
(6) Perform other
functions as necessary to carry out the purposes of this chapter.
§ -6 Chief executive officer; appointment; compensation.
The
board of directors, at its discretion, shall appoint and shall provide for the
compensation of a chief executive officer who shall be an employee
of the corporation and who shall serve at the pleasure of the board. The chief executive officer shall direct the
day-to-day operations and management of the corporation and shall be vested
with powers and duties as specified by the board and by law.
§ -7 Chief
executive officer; powers and duties. The
chief executive officer of the corporation shall direct and supervise all
administrative and technical activities of the corporation in accordance with
this chapter and with regulations, policies, and procedures adopted by the board.
It shall be the duty of the chief
executive officer to:
(1) Supervise and exercise active oversight of the
operations of the gaming provider;
(2) Hire and supervise a small staff of employees,
as deemed necessary; provided that all applicants for employment shall be
subject to a background check; provided further that no person who has been
convicted of a felony or bookmaking or other forms of illegal gambling or of a
crime involving moral turpitude shall be employed by the corporation;
(3) In consultation with the gaming provider,
prepare an annual budget, including a marketing budget, for the approval of the
board;
(4) Report quarterly to the board a full and
complete statement of gaming revenues and expenses for the preceding quarter;
and
(5) Perform any other duties customary of the
position of chief executive officer.
§ -8 General powers of the corporation. The corporation is granted comprehensive and
extensive powers as generally exercised by corporations engaged in for-profit
business activities and all powers as are necessary or convenient to effectuate
those purposes and provisions of this chapter that are not in conflict with the Hawaii State Constitution
or federal law, including to:
(1) Sue
and be sued in contract and in tort and to complain and defend in all courts;
(2) Adopt
and alter a seal;
(3) Adopt,
amend, and repeal bylaws, regulation, and policies and procedures for the
regulation of its affairs and the conduct of its business;
(4) Elect
and prescribe the duties of officers and employees of the corporation and to
perform other matters as the corporation may determine;
(5) Procure or provide insurance;
(6) Hold copyrights, trademarks,
and service marks and enforce its rights with respect thereto;
(7) Initiate, supervise, and administer the
operation of games in accordance with this chapter and regulations, policies,
and procedures adopted pursuant thereto;
(8) Enter into written agreements with one or more
other states or sovereigns for the operation, participation in marketing, and
promotion of joint games;
(9) Conduct market research as is
necessary or appropriate;
(10) Acquire or lease real property and make
improvements thereon and acquire by lease or by purchase personal property, including
but not limited to computers; mechanical, electronic, and on-line equipment and
terminals; and intangible property, including but not limited to computer programs,
systems, and software;
(11) Enter into contracts, incur debt in its own
name, and enter into financing agreements with the State, agencies or
instrumentalities of the State, or with any commercial bank or
credit provider; provided that any debt shall be approved by the director of
finance;
(12) Administer oaths, take depositions, issue
subpoenas, and compel the attendance of witnesses and the production of books,
papers, documents, and other evidence relative to any investigation or
proceeding conducted by the corporation;
(13) Appoint and select officers, agents, and
employees, including professional and administrative staff and personnel, as
deemed necessary;
(14) Select and contract with
vendors;
(15) Enter into contracts or agreements with state
or local law enforcement agencies for the performance of law enforcement, background
investigations, and security checks;
(16) Establish
and maintain banking relationships, including but not limited to establishment
of checking and savings accounts and lines of credit;
(17) Purchase, lease, or lease-purchase goods or
services as necessary to effectuate the purposes of this chapter;
(18) Advertise
and promote
games; and
(19) Adopt
and amend regulations, policies, and procedures as necessary to exercise its
powers, fulfill its duties, organize and operate the corporation, regulate the
conduct of games, and as otherwise necessary or desirable for the efficient and
effective operation of the corporation and effectuation of the purposes of this
chapter; provided that the corporation shall be exempt from chapter 91
regarding the adoption of bylaws, regulations,
policies, and procedures or in the exercise of any regulatory power.
§ -9 Corporation authorized to borrow money; restriction on use of money in
state general fund; lottery and gaming special fund. (a) The corporation, in accordance with this
chapter, may borrow or accept and expend moneys received from any source,
including income from the corporation's operations, for effectuating its
corporate purposes, including the payment of the initial expenses of
initiation, administration, and operation of the corporation.
(b) The
corporation shall be self-sustaining and self-funded. Moneys in the state general fund shall not be
used or obligated to pay the expenses of the corporation or prizes of the
lottery, and no claim for the payment of an expense of the lottery or prizes of
the lottery may be made against any moneys other than moneys credited to the
lottery and gaming special fund.
(c)
There is created within the state treasury a special fund to be known as
the lottery and gaming special fund.
Moneys authorized under this chapter may be deposited into the special
fund.
§ -10 Reports by the corporation. To ensure the
financial integrity of gaming operations, the corporation through the board of
directors shall:
(1) Submit quarterly and
annual reports to the governor and legislature, disclosing the total revenues, prize disbursements, operating
expenses, and administrative expenses of the corporation during the reporting
period;
(2) Adopt a system of internal audits and controls;
(3) Maintain regular
records of transactions; and
(4) Contract with a certified
public accountant or firm for an annual financial audit of the corporation;
provided that the certified public accountant or firm shall have no financial interest in any vendor with whom the
corporation is under contract.
§ -11 Bidding requirements and procedures for
contracts generally. (a) The corporation
shall enter into major procurement contacts only after engaging in a
competitive process. Procurements
conducted by the corporation shall not be subject to chapter 103D but shall be
designed to allow the selection of proposals that provide the
greatest long-term benefit to the State, the greatest integrity for the corporation,
and the best service and products for the public. The requirement for a competitive process shall
not apply in the case of a single vendor having exclusive rights to offer a
particular service or product.
(b) The corporation shall investigate the
responsibility, security, and integrity of any vendor who is a finalist in
submitting a bid, proposal, or offer as part of a major procurement. The corporation shall not select a vendor
with questionable integrity for any major procurement.
(c) A solicitation,
request for qualification, or specification for a contract shall not require,
stipulate, suggest, or encourage a monetary or other financial contribution or donation as an explicit or
implied term or condition for awarding or completing the contract.
(d) No
vendor or applicant for a major procurement contract shall pay, give, or make
any economic opportunity, gift, loan, gratuity, special discount, favor,
hospitality, or service, excluding food and beverages
having an aggregate value not exceeding $100 in any calendar year, to the chief
executive officer, any board member, or any employee of the corporation or to a
member of the immediate family residing in the same household of the chief
executive officer, board member, or employee.
§ -12 Adoption
of gaming rules. Within one hundred
eighty days of the appointment of all initial members of the board, the board
shall adopt rules and policies governing its gaming operations, consistent with
the requirements of this chapter. The board
may retain a neutral advisor with expertise in gaming to assist the board in adopting its
rules.
§ -13 Responsible gaming
measures. The corporation's website
shall provide information on problem gambling, including a problem gambling
hotline telephone number that a person may call to seek information and assistance
for a potential gambling addiction. The
corporation shall offer responsible gambling services, such as self-exclusion,
limits on losses, amounts wagered, and playing time, and other services as the corporation
reasonably may determine are necessary and appropriate to reduce and prevent
problem gambling.
§ -14 Selection of the
gaming provider. (a) Within one
hundred eighty days of appointment of all initial members of the board, the board
shall commence a competitive process for the selection of a qualified and suitable
gaming provider. The selection of the
gaming provider shall be done through a request for qualifications, which shall
take into account the following factors:
(1) The provider's knowledge and expertise with regard to:
(A) United States regulated gaming and lottery operations;
(B) Interactive
digital media and entertainment; and
(C) Internet technology; and
(2) The suitability of the
provider's executives and key employees to
operate a legally compliant gaming enterprise with honesty, fairness, and
integrity; provided that a provider that has engaged in any of the following
activities shall be deemed unsuitable to serve as the corporation's internet
gaming provider:
(A) The provider has
accepted or assisted in the acceptance of any wagers of money or other
consideration related to gambling activity, including internet poker, lottery,
or casino games, from an individual located in the United States, prior to the September 20,
2011 opinion issued by the United States Department of Justice pertaining to
the interpretation of the Wire Act, title 18 United States Code Section 1084;
provided that this subparagraph shall not apply to providers that have accepted
pari-mutuel wagers on races in compliance with the Interstate Horseracing Act;
(B) The provider has operated in violation of the laws of any country or state in
which it has operated; or
(C) The provider has been indicted or convicted of
a crime related to its gaming operations in any state or foreign jurisdiction.
(b) The request for qualification
shall not require, stipulate, suggest,
or encourage a monetary or other financial contribution or donation as an
explicit or implied term or condition for awarding the contract.
(c) The board shall
select the gaming provider that offers the greatest
integrity for the corporation, the greatest long-term benefit to the State, and
the best service and products for the public.
§ -15 Responsibilities
of the gaming provider. The gaming
provider shall be responsible for operating a legally compliant, secure, and
responsible gaming operation on behalf of the corporation. The gaming provider's general
responsibilities shall include, among other things:
(1) Providing
all the technology infrastructure, software, and operational support necessary
for the development, operation, and maintenance of any websites associated with
the gaming operation, including:
(A) Game
software and graphics;
(B) Computer hardware;
(C) Server hosting;
(D) Player account
registration and management;
(E) Geo-location
services;
(F) Age-verification
services;
(G) Responsible gaming controls;
(H) Anti-collusion
and security tools;
(I) Payment gateway
software functionality;
(J) Deposit and decline tools and services;
(K) Charge back reporting software;
(L) Network reconciliation
and controls;
(M) Financial reporting and player management; and
(N) Other related administrative
back office functionality and operational support;
(2) Providing
marketing services, including a comprehensive, customized marketing plan for
the corporation, consisting of both online and off-line marketing components
aimed at maximizing revenues in a responsible manner and attracting tourism for
the State through
the corporation's gaming operations; and
(3) Providing
customer support and trained personnel to respond to inquiries from players, investigate
fraud and collusion, and resolve any other issues that may arise.
§ -16 Compensation
of the gaming provider. The corporation shall
compensate the gaming provider with a percentage of the corporation's revenues,
in addition to reimbursement of ongoing costs associated with the gaming operation,
including costs related to geo-location, age verification, payment processing and
banking, web hosting, and bandwidth, and any amounts necessary for the
implementation of the gaming operation.
§ -17 Disposition of proceeds. (a) All proceeds of gaming conducted under this
chapter shall be the property of the corporation.
The corporation shall pay its operating
expenses from the proceeds.
(b) On or before the fifteenth day of each
quarter, the corporation shall deposit into the lottery and gaming special fund
all net proceeds derived from wagering and gaming activities during the
preceding quarter.
(c) Funds in the lottery and gaming special fund
shall be allocated as follows, with a priority on community betterment purposes:
(1) Department of education shortage
differentials: twenty-five per cent;
(2) Department of education
capital improvements: twenty per cent;
(3) University
of Hawaii system capital improvements:
twenty per cent;
(4) Scholarships and educational loan repayments
for medical students who commit to practice medicine in Hawaii for ten years
after completion of their residency: ten per cent;
(5) University of Hawaii John A. Burns school of medicine
family practice rural residency program:
ten per cent;
(6) Watershed
protection: five per cent;
(7) Problem gambling
reduction and prevention programs: five
per cent; and
(8) Administration of the program and special fund: five per cent.
§ -18 Tax treatment. The activities of the corporation shall be deemed to constitute an essential government function, and all operations of the corporation shall be exempt from any form of taxation under state law and, to the extent allowed, under federal law. In addition, the corporation shall not be required to pay any taxes or assessments upon or in respect to sales of lottery tickets, games, or any property or moneys of the corporation, levied by the State or any political subdivision thereof, except as required by federal law. The corporation and its assets, property, and revenues shall at all times be exempt from taxation of every kind by the State and any political subdivision thereof, including any special districts in the State with powers of taxation.
§ -19 Unlawful gambling. It shall be unlawful for any person to offer or play any gambling or wagering in the State that is not authorized pursuant to this chapter. Any violation of this section shall be punished as provided in part III of chapter 712; provided that nothing herein shall preclude enforcement of any other civil or criminal law for a violation of this chapter."
SECTION 2. If any provision of this Act, or the application thereof to any person or circumstance, is held invalid, the invalidity does not affect other provisions or applications of the Act that can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.
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. This Act shall take effect on July 1, 2023.
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INTRODUCED BY: |
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Report Title:
Gaming; Hawaii Lottery and Gaming Corporation; Lottery and Gaming Special Fund; Gaming Provider
Description:
Establishes the Hawaii Lottery and Gaming Corporation for the purpose of conducting and regulating wagering and gaming in the State. Establishes the Lottery and Gaming Special Fund and allocates certain percentages of the fund to various community betterment purposes.
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.
