Editors Note: This is the first installment in a new series, “Rolling the Dice,” which will take a deeper look at the perennial question of whether gambling should be legalized in Hawaii.
Oahu resident Sandra Okihara has vacationed multiple times a year in Las Vegas for decades.
Okihara says she would fly there about six times a year before the pandemic and stay five nights each time. On Sunday, Okihara and her friends Susan Akana and her husband Moses had just returned from a weeklong stay at the California Hotel and Casino in Downtown Las Vegas.
The Akanas like the Cal because it’s one of the few places in the tourist district that serves food from home. Susan Akana — who describes Las Vegas as an “adult Disneyland” — said it’s more comfortable staying downtown because they are surrounded by other Hawaii residents.
But the main draw for the trio is the gambling. They all recall the hours drifting by while on the casino floor or seated in front of a slot machine.
“Well, yeah. What else is there to do?” Okihara said.
About 300,000 passengers have flown from Hawaii to Las Vegas in each of the last five years, according to the Las Vegas Convention and Visitor Authority. In 2019, before the pandemic, that number reached 335,488.
The destination is so popular that it has become known as the “ninth island.”
Visitor spending in Las Vegas totaled $36.9 billion in 2019, the LVCVA says. It’s hard to say how much of that money comes from Hawaii residents because the agency said it doesn’t track that kind of data.
It’s also hard to say how much of that money would flow instead to Hawaii’s coffers if gambling were legal in the islands.
Hawaii and Utah are the only two states that have no form of legalized gambling.
Every year, the Hawaii Legislature sees a handful of bills seeking to change that with proposals ranging from a casino in Waikiki or on Native Hawaiian lands, a lottery, sports betting and even shipboard gambling. The debate seems most intense when the state is suffering budget shortfalls, as happened last year, making the millions of dollars in likely gambling revenues most attractive. But so far all efforts have failed.
This year, lawmakers may again consider some proposals that failed to gain traction last year such as measures to legalize sports betting or others to create a lottery system that could be used to fund public education. However, any gambling measures face slim chances of passing the Legislature, which has declined to advance those proposals in past sessions.
While tens of thousands of Hawaii residents fly to Nevada each year to spend their money on games of chance, others find ways to play here at home.
Honolulu police conducted raids on 50 illegal game rooms last year on Oahu. And that doesn’t include other unregulated forms of wagering like betting on a football game or a cock fight.
“It’s not a question of should we have gambling or should we not,” University of Hawaii economics professor Jim Mak said in an interview. “We already have gambling here.”
In a blog he wrote for the University of Hawaii Economic Research Organization Mak agreed that the debate over the issue is most intense when the state is suffering budget shortfalls, making the millions of dollars in likely gambling revenue more attractive.
A key argument for legalizing gambling in Hawaii is to keep the money that otherwise would be spent on the mainland in the state’s coffers.
The state Department of Hawaiian Home Lands put forward a bill this year to study how much money leaves the state for the purposes of gambling.
Last year, DHHL proposed building a resort-casino in Kapolei to generate funds in an effort to construct more homes that could be used to whittle down the waitlist of Native Hawaiians seeking housing.
But that proposal was struck down by lawmakers, and Gov. David Ige has refused to include the study proposal as part of his administration’s package of bills this year, DHHL chairman William Aila told a Senate committee last week.
Air travel from Hawaii makes up just about 1.8% of the total number of passengers arriving in Las Vegas each year. However, per capita, Hawaii sees more air passengers fly to the southern Nevada city than any other state, for gambling, of course, but also vacations, sports tournaments and pageants. Many people from Hawaii have made the area home.
The average Las Vegas visitor spends $1,494.72 per trip, including gambling expenses, according to data from the LVCVA.
Mak estimates that Hawaii visitors may spend on the lower end of the spectrum. He and others said that Hawaii residents tend to stay in downtown Las Vegas, where there are cheaper room rates and more affordable dining options than on the Strip.
“Most people in Hawaii aren’t spending time at the most expensive hotel,” Mak said. “They aren’t staying at Caesars Palace.”
Hawaii residents likely spent at least $159.7 million in Las Vegas in 2019, according to a Civil Beat analysis of visitor spending data from the LVCVA.
That amount assumes that tourists from Hawaii all stayed downtown, traveled in groups of two, got the cheapest rates on hotel rooms, stayed three nights and spent about average on food and drinks, transportation, entertainment, shopping and sightseeing. It doesn’t take into account each person’s gambling budget.
The estimate could be much higher. If Hawaii residents are treated like most other visitors from the U.S. West, the estimate for Hawaii visitor spending in 2019 could be as high as $388.5 million, according to spending data.
If gambling budgets are considered, that total rises to more than $411 million.
Understanding how much money is leaving the state is important if the Legislature ever hopes to seriously consider legalizing gambling in Hawaii, Aila said.
“It’s good information that we’ll use in the future should some other chair be crazy enough to try it,” Aila told the Civil Beat Editorial Board in December. “I think Hawaii is almost ready for gaming. I think we came closer than anyone has ever come.”
While it’s hard to say how much Hawaii residents actually spend or where they stay while in Vegas, one company in particular relies on frequent visitors from the islands.
David Strow, a spokesman for the Boyd Gaming Corp., attributes much of the company’s success to the relationship its founder, Sam Boyd, was able to build with locals.
Boyd Gaming operates three downtown hotels that are favorite haunts for Hawaii residents: the California Hotel, Main Street Station and the Fremont Hotel. It also runs 26 other hotels across nine different states.
“The honest truth is, had Sam and Bill Boyd not made that pivot to the Hawaii market in the late 1970s, and had they not been so successful, everything else that came after would not have happened,” Strow said. “The company would not have survived those initial two years.”
Strow said the company is focused on maintaining the relationship Boyd built with Hawaii decades ago, adding that employees often remember frequent guests by name.
“It’s our focus on the market and offering them an authentic relationship,” Strow said, describing the California as a visitor’s “home away from home.”
That relationship, and continued marketing through the company’s local travel package agency Vacations Hawaii, has paid off.
In 2019, Boyd reported its three downtown properties earned revenues totaling $257 million, according to an annual report filed with the U.S. Securities and Exchange Commission. That contributed to the company’s overall revenues of about $2 billion that year.
That same year, Hawaii residents made up 67% of occupied room nights at the 781-room California Hotel, 35% at the 447-room Fremont Hotel, and 46% at the 406-room Main Street Station.
Historically, the Hawaii market has accounted for at least half of each hotel’s yearly occupancy, Boyd reported.
Those downtown properties still cater to Hawaii guests, serving local dishes like oxtail soup, Zippy’s chili and loco moco.
Still, why would people from Hawaii fly nearly 3,000 miles to a desert only to eat the same foods they could get at home, surrounded by the trappings they might find at home?
Anthropologists Cynthia Van Gilder and Dana Herrera have tried to answer that question. Their theory is that Las Vegas, and the Cal specifically, offer an escape from longstanding issues in Hawaii while still providing all the comforts of home.
“The state’s current political reality is beset by ethnic tensions, gross economic inequalities, and struggles for political sovereignty and control of lands,” the researchers wrote in a 2018 paper.
They add the burden of playing host to tourists — who crowd beaches, stores and roads — to the list of Hawaii’s troubles. While on vacation in Las Vegas, Hawaii residents don’t need to worry about that.
Strow agrees. And while visitor traffic from Hawaii dipped during the pandemic, he anticipates Hawaii visitors will flock to the Cal again when the situation becomes more stable.
“I think you’ll see a heck of a lot of pent up demand from Hawaii,” Strow said.
If Hawaii were to legalize gambling, it could learn a great deal from Nevada’s mistakes, Greg Gemignani, an attorney who teaches gaming regulation at the University of Nevada Las Vegas, said.
He detailed the tumultuous history of gambling in Nevada.
Gambling in the state first took hold during its era as a territory and remained largely unregulated through statehood. The Nevada Legislature didn’t pass a law allowing for open gambling until 1931 in an effort to boost revenues for local governments struggling to recover from the Great Depression.
Even then, regulations were weak or nonexistent until the 1950s, when then-Nevada Gov. Grant Sawyer pushed for a bill that set up the Silver State’s current regulatory structure. The Sawyer proposal established two independent state agencies: the Gaming Control Board, staffed with former FBI agents and forensic accountants, and the Nevada Gaming Commission, a panel of citizens tasked with approving gaming licenses.
Still, the system took years to implement, while the state dealt with organized crime figures that had taken hold of the gambling industry.
Now, most states that have legalized gambling have looked to Nevada’s example, Gemignani said.
But none has seen the growth of resort-casinos explode the same way it did on the Strip. That’s because, unlike most states, Nevada does not cap the number of gaming licenses it allows.
Nevada also has a relatively low gaming tax of 6.75% on gross gaming revenue exceeding $134,000 in a calendar year, a threshold almost all licensees, and certainly all casinos, exceed ever year, Gemignani said.
By comparison, taxes on casino revenues could range from rates as low as 9.25% in New Jersey, to as high as 74% on electronic gaming machines in Rhode Island, according to the American Gaming Association. The DHHL casino proposal that died last year would have taxed gaming revenues at a rate of 45%.
Gemignani said Hawaii has potential for a lucrative gambling industry given the number of international visitors who travel to the islands. But Gemignani emphasized that the industry could only be successful if there is an effective regulatory regime to oversee it.
“The question for the Hawaii Legislature is, ‘Do you want a form of legal and regulated gambling, and if so, what structure do you want? What’s going to fit for you?’”
Mak, the UH economist, doesn’t think Hawaii will ever be a gaming mecca on par with Nevada or other states. The way he sees it, tourists would still come to Hawaii to see the tropics, not to spend their time in a casino.
“Gambling and Hawaii are inconsistent,” Mak said, adding that Hawaii tourism tends to be more “family oriented.”
He also doesn’t think the thousands of Hawaii residents that fly to Las Vegas every year will suddenly start flocking to a local casino should one ever open.
He noted Las Vegas offers more than slot machines and roulette tables.
“There’s entertainment and shows you don’t have here in Hawaii. Discount stores to go shopping at that we don’t have here in Hawaii. It’s more than just gaming, it’s a whole package deal of entertainment,” he said.