Bill Text: HI SB2365 | 2022 | Regular Session | Introduced
Bill Title: Relating To Gaming.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2022-01-24 - Referred to JDC, WAM. [SB2365 Detail]
Download: Hawaii-2022-SB2365-Introduced.html
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THE SENATE |
S.B. NO. |
2365 |
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THIRTY-FIRST LEGISLATURE, 2022 |
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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:
SECTION 1. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:
"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 Hawaii lottery and gaming 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
Hawaii lottery and gaming
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 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 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 such
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 such 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 such 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 contracts for major
procurements with a value of over $75,000 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 operation of
the gaming operation, including costs related to geo-location, age verification,
payment processing and banking, web hosting, and bandwidth, and any amounts
necessary to 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, 2022.
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INTRODUCED BY: |
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Report Title:
Gambling; Hawaii Lottery and Gambling 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.
