Consider the following argument: “In a time in which increased taxes and other new revenue sources are unlikely to be made available for a state with a growing to-do list, a properly framed lottery, with appropriate restrictions and revenue dedicated to critical needs, could represent a real win.”

That is the concluding paragraph of a Civil Beat Editorial from January 2016 titled, “Hawaii Lottery? It’s Time To Reconsider The Question.”

The Hawaii Legislature didn’t bite. Nor did it nibble nearly three years later when we wrote this: “If lawmakers and the governor agree on legislation to allow the City and County of Honolulu to have a lottery for rail, they could look at killing the GET surcharge and scaling back the transient accommodations tax hike imposed last year to pay for rail.”

Now, in the midst of a dramatic drop in state revenues due to the pandemic, we are arguing once again for a state lottery.

More and more Hawaii lawmakers seem to be open to the idea. Senate Bill 816 would create a state lottery to begin operating as early as January 2023, with the revenue deposited into the state’s general fund and special funds for the University of Hawaii and Department of Education.

Half of the money from sales would pay for prizes for the holders of winning tickets, 10% would go to an administrative account and 40% would be divided equally for UH, the DOE and the general fund.

In her committee report on SB 816, Senate Vice President Michelle Kidani, the bill’s author, noted that Hawaii is the only state responsible for the “full cost and administration” of public education. And yet, she added, that funding is far from adequate, undermining the state’s commitment to providing a quality education.

Executives at UH and the DOE did not take a position on whether they support a lottery in their testimony on SB 816. But both reminded lawmakers that enormous financial woes continue, including “a severe” deferred maintenance backlog at all UH campuses in excess of $500 million and a total $270 million proposed budget reduction for the DOE that it deemed “dramatic.”

Predictably, the lottery bill is opposed by the Honolulu Police Department, the Department of the Prosecuting Attorney for the City and County of Honolulu and the conservative Hawaii Family Forum. They warn of the potential negative community impact — increases in domestic violence, divorce, bankruptcy, drug and alcohol use “and risky or illicit sexual behavior,” as the prosecutor’s office put it.

We acknowledged that there are reports that lotteries can be ruinous to state economies. A 2013 AlterNet story reported that lottery tickets amount to “a hidden tax on the poor” and “siphon up to $50 billion a year away from local businesses.”

Contact Key Lawmakers

Senate Judiciary Chair Karl Rhoads
senrhoads@Capitol.hawaii.gov
808-586-6130

Senate WAM Chair Donovan Dela Cruz
sendelacruz@capitol.hawaii.gov
808-586-6090

But there are very good reasons that 44 states have lotteries, representing “a small but valuable source of revenue,” according to a 2017 study by the National Conference of State Legislators. “On average, about 1% of state revenue comes from lotteries.”

Sometimes the states direct the revenue into the general budget, but most legislatures, says NCSL, use it to fund “certain projects, like schools, senior services or environmental protection.”

Nationally, state lotteries generated $66.8 billion in gross revenue in fiscal 2015, which NCSL says exceeded the $48.7 billion generated by corporate income taxes. After awarding prize money and administration costs, the net proceeds worked out to $21.4 billion.

It’s up to the states, of course, to decide where the money goes. Some examples:

• In Pennsylvania, the lottery has generated over $31 billion in funding to support programs that benefit older residents since the first ticket was sold in 1972.
• In Illinois, the lottery has contributed “more than $20 billion in revenue” to the state since its inception in 1974.
• In California, the lottery has provided public schools more than $37 billion since it began in 1985.

The odds of a lottery bill passing in Hawaii — one of only two states with no legal form of gaming — are not good. Such bills are introduced year after year but have always been killed.

As of Friday, bills calling for a casino to operate on Hawaiian home lands in Kapolei, a Waikiki casino, a state poker commission, a state lottery and gaming corporation, a state lottery division limited to Powerball and Mega Millions and a lottery and bingo enterprise for the Department of Hawaiian Home Lands are already dead for the 2021 legislative session or nearing death.

The lottery bill still stands but needs to be heard soon by the Senate Judiciary and Ways and Means committees in order to advance. Concerned citizens can contact the chairs and tell them to “Chance ’em, brah.”