House Standing Committee on Economic Development & Technology

Welcome to our Committee on Economic Development and Technology. It is Friday, January 31st, 2025, and it is today 10:01. We are at Conference Room 423. Everyone, I just want to ask you to be civil. I read the guidelines on our previous Committee, and I hope that I won't have to ever read these guidelines again.

But we'll—midpoint of our legislative session, I'll read those guidelines, just to remind everybody. But from here on out, we're just going to start on with our testimony. Going to HB 671, and our first testifier for HB 671 is going to be DBEDT. Eugene Tian, can you please come up, with comments?

Aloha. My name is Eugene Tian, Economic Research Administrator with DBEDT. We are happy to do the data tabulation and just need a little clarification for Native Hawaiians. If we use the Census Bureau Data, we can already tabulate for pure Native Hawaiians, which means Native Hawaiians—only race.

But for the Native Hawaiians with other resist data are not available, but we can do special tabulation. Just need a little bit clarification. Thank you.

Thank you. Is there any other further testimonies? Any on Zoom? At this time, we don't have any further testimonies. Let's move on to any questions. No questions from the Committee. We'll move on to the next item, HB 639, and our first testifier—we have DCCA, Radji Tolentino, in support.

Good morning, Chair, Vice Chair, Members of the Committee. I'm Radji Tolentino with Office of Consumer Protection. OCP, Office of Consumer Protection, has long been charged at bringing civil enforcement actions to enforce Hawaii's Consumer Protection Laws. Existing remedies, under HRS Chapter 480 and 487, serve as strong deterrence to businesses that may harm consumers using chatbots.

OCP should be able to access these remedies in a civil action, to enforce the new law created by this Bill. And for these reasons, should this Bill advance, amendments will be necessary, to look at, more closely, provisions in this Bill that may conflict with Chapter 480, particularly Section 480-2, the Consumer Protection Law that OCP enforces.

Thank you.

Thank you. We have three testimony in support, one in opposition. Is there any other testifiers wishing to testify in person? How about in Zoom? With no further testimony, Committee Members, would you like to ask any questions or any statements? None at this time. We'll move on to our next item, HB 1391.

We have DBEDT Director, the representative for DBEDT. Go ahead.

Aloha Chair, Vice Chair, Committee Members. Dennis Ling with the Department of Business, Economic Development, and Tourism. DBEDT stands on its written testimony offering comments. This commission, it establishes a Hawaii Ireland Trade Commission. And this commission would help identify opportunities for trade and investment and it helps solidify Hawaii's role in the international affairs. So thank you very much.

Thank you. Is there any others who wish to testify? Go ahead. Please state your name.

Good morning, Representatives. My name is Russell Honma. I did prepare a written testimony on this bill, and I don't want to reiterate what the Director of the DBEDT said, but in terms of just Irish, I don't want to create any prejudice with the other European countries and their descendants that live here.

And my concern is we should go with the United States, Hawaii, and the European Union Trade Commission. And that way it kind of puts everybody in the same boat and there won't be any prejudice in that way. Because, you know, Hawaii, we're a melting pot here with all these nationalities. So I think in those kind of measures. And I didn't write a book called the Blue Print and that talks about the geographics, and I know that Lauren Matsumoto has a copy, so I'm sure she can share with the community here with the Committee. But thank you for testifying.

Thank you. Mr. Honma from APEC Hawaii with comments. Any other further testifiers in person? Any on Zoom? With no testifiers, is there any questions or comments from Committee Members? With no comments or questions, we'll move on to the next item. We have HB 1361, and our first testifier with comments from DCCA, Ty Nohara. Thank you.

Any others who wish to testify in person? With no others testifying in person, any in Zoom? With none in zoom, Committee Members, do you have any questions or comments? With no questions or comments, let's move on to our next Item. We have HB 1384 and our first testifier is from ETS, Christine Sakuda, the CIO, with support.

Aloha, Chair, Vice Chair, Members of the Committee. Christine Sakuda, Chief Information Officer for the Office of Enterprise Technology Services, in the Department of Accounting and General Services.

We are in support of this Bill and we offer some comments. To establish a AI Advisory Council, to really look at and explore the opportunities and the benefits that AI can provide, and also, to provide some governance structure and guidance to our state and how we can responsibly use AI.

There is, in fact, a state Data Task Force within ETS, and that's chaired by our Chief Data Officer, Rebecca Cai, who's here today. The Data Task Force has spent the better part of the year creating a mission and vision to address data in AI and also create data and AI use standards, for the state agencies and guidelines.

And so, we feel like this is a great—was a great starting point, and we are happy that the state is actually considering to build out a more robust council. Happy to answer any questions. Thank you.

Thank you. We also have, in Zoom, Kingdom of the Hawaiian Islands, Master Shelby Pikachu Billionaires. Is he there? Shucks. All right. Next, is any others who wish to testify in person? And is there any testimony in Zoom? With no testimony, Committee Members, do you have any questions or comments? None at this time.

Let's move on to our next Item. We have HB 1292 and our first testifier with HCDA, Craig Nakamoto with support, in support.

Aloha, Chair, Vice Chair, and Members of the Committee. I'm Francine Murray from the Hawaii Community Development Authority. Our Executive Director apologizes he couldn't be here, he had to go to a family funeral. But we stand in support, and I'm available for questions.

Thank you, Francine. Moving on to our next testifier with HGEA. Randy Perera, the delegate, the representative.

Hello, Chair, Vice Chair. Members of the Committee, Nui Sebast here with HGEA. We'll stand by written testimony in strong opposition to this measure. We do have serious concerns and we view this measure as an open door with little oversight to privatize and outsource government services that are currently provided by government employees, our union members. Mahalo.

Thank you for your opposition. Moving on to our next opposition by UPW. Do we have a representative for UPW? All right, is there any others who wish to speak in this Bill? With no others in person, in Zoom? No one in Zoom. Committee Members, do you have any questions or comments? No questions or comments.

Moving on to our next bill, we have HB 1308. First testifier from Office of Information Practices, Carlotta Amerino in person. Moving on to our next testifier, Department of Taxation with comments. Moving on to Zoom, is there Honolulu Police Department? Moving on to the Iron Workers Stabilization Fund. Cody Sula is in support.

Hi, Chair, Vice Chair. I'm Cody Sula with the Iron Workers Stabilization Fund. Just wanted to offer support for this bill and also to make a few comments. You know, for a long time, when we talk about this sports wagering, we got to think about all the people that's been leaving Hawaii over all these years because they need financial relief. They go to other states that's cheaper. For years, we've always heard people talking about diversifying the economy.

I think this is a way that it's going to be is a good step to diversify the economy and help bring some money into the state coffers to provide relief to Hawaii because the residents are suffering. We've, we talk about sports wagering. We've seen a lot of our money in Hawaii build other economies, such as like in Nevada. But this thing is a pervasive problem. Already there's illegal gambling going on. Everybody in this room already has a phone, and we all know people who's already gambling or wagering or doing whatever they do on their phone.

But the money is not staying here. The money is going elsewhere. So this is a good step to bring some money in so we can fund things like education. They just had in the news about the school lunches is going up to $9, and they gotta bring money in for that. And all these other tourism isn't jumping up. So the main thing is, when you guys consider this bill, we got to do it right, but we got to make sure that this is the money is going to come in to help the people of Hawaii. That's all I have. Thank you.

Thank you. Moving to our next testifier, do we have BetMGM in support in Zoom? We have Jeremy Limun.

Yes, Chair.

Proceed.

Thank you. Dear Chairman Ilagan and Members of the House Committee on Economic Development and Technology. My name is Jeremy Limun, Director of Government Affairs representing BetMGM, a top online sports betting company with active operations in 29 markets across North America.

I appreciate this opportunity to provide testimony in support of HB 1308 and would also like to thank Representative Holt and Representative Todd for filing and sponsoring this important piece of legislation. As this Committee knows, until recently, federal law prohibited legalized sports betting outside Nevada and a handful of other states.

Yet illegal sports wagering has continued to flourish across all mediums, in person, over the Internet, and most recently through sophisticated mobile applications. While you may be familiar with offshore online gaming operators like Bovada Sportsbook that continue to capitalize on existing demand for sports betting and the lack of a legal regulated alternative, there is also a growing presence of online social sports books and sweepstakes.

These platforms, many of which are onshore with headquarters in the United States and whose apps are readily available on major online stores for download, take advantage of legal loopholes around sweepstakes and provide customers the ability to wager on sports.

While advertised as social sports books, these platforms are anything but and run multimillion dollar marketing campaigns, including through social media and celebrity influencers that often target teens and young people. This illicit industry in recent years has grown at an astonishing rate, and this year expects to see $11.4 billion in player purchases and $4 billion in net revenue.

Yet despite their rapid proliferation, the illegal online sports betting industry, including this latest crop of illegal online sweepstakes, is not subject to any gross sports betting taxes, does not offer any meaningful responsible gambling tools, and does not employ sophisticated know your customer identity or age verification processes. To the contrary, most of these platforms allow prospective customers to simply check a box and self certify that they are of gambling age.

Hawaii now has a chance to fix this, and today's hearing is an important first step in that direction. If adopted, HB 1308 would create a legal licensing framework for online sports betting that will be subject to taxation, consumer protection requirements, and regulation. HB 1308 would also create a new stream of revenue that would earmark a percentage of legal online sports betting tax proceeds specifically for problem gambling treatment programs and resources.

I have submitted a written testimony to you, Chair, and the Committee that you can read to learn more about BetMGM and the specific responsible gambling tools and integrity processes that we employ deployed on our apps. But other than that, I welcome any questions and really appreciate this opportunity to weigh in.

Thank you. Your written testimony has been received. Moving on to our next testifier in Zoom, we have DraftKings, Rebecca London in support.

Good Morning, Chair Ilagan and Members of the Economic Development Committee. Thank you very much for hearing this bill today. My name is Rebecca London. I am a Senior Government Affairs Manager for DraftKings, one of the leading sports wagering operators in the country.

I echo a number of the comments made by my colleague, Jeremy, from BetMGM and would welcome the opportunity to answer any questions that you may have about the regulated gaming industry and the opportunity to bring legal sports wagering to the State of Hawaii and residents of Hawaii who may opt to partake in this form of entertainment.

DraftKings and other members of the SBA have reviewed some of the testimony submitted by the departments and the issues that they raised, which we believe are all issues that we can all work together with as stakeholders, including the Legislature, to address these concerns, and we look forward to finding resolutions to those questions as this bill moves through the legislative process. Thank you again for your time today. I have also submitted further written testimony, and I make myself available to any questions the Committee may have.

Thank you. Moving on to our next testifier in person, we have individual Dwayne Bautista proceed. In support. Take your time. No worries.

Good morning, Chair, Vice Chair, and Committee Members. My name is Dwayne Bautista. I represent the Iron Workers Stabilization Fund, Local 625 under the direction of our Managing Director, T. George Paris. We support House Bill 1308. The reason for is Hawaii needs gaming. This could address critical needs within our community.

Hawaii faces a significant challenge in funding essential services. The revenue generated by this bill offers a potential solution to address these funding gaps without placing further burden on our local taxpayers. The additional revenue can be strategically allocated to the vital areas, such such as education. Investing in our keiki's future is paramount.

Increasing the funds can support our public schools, improve education resources, and provide our children with tools they need to succeed. Next, affordable housing. The lack of affordable housing is in crisis in Hawaii, driving many of our residents, including our skilled labor, to seek opportunities on the mainland.

Revenue from gaming can be directed towards developing affordable housing projects, keeping families together and strengthening our communities. Next, health care. Access to quality health care is fundamental, right. Increased funding can help improve healthcare services, expand access to care, and ensure that all residents can live healthy lives. And then last, child care.

Affordable and accessible child care is essential for working families. By providing for child care programs, we enable parents to participate in the workforce, boosting our economy and providing children with enriching early childhood experiences. Hawaii residents, including skilled trades, are being forced to leave Hawaii due to the high cost of living living and limited opportunities.

Hawaii residents seeking better opportunities and affordable housing on the mainland. This exodus weakens our communities and deprives Hawaii of our valuable talent. Furthermore, a regulated gaming industry would create good paying jobs within the state. This will provide much needed economic stimulus and to keep Hawaii residents home where they belong, raising their family for future generations. We believe that House Bill 1308 offers a responsible and viable solution to address our state's critical needs. We urge you to support the bill. Invest in the future of Hawaii. Mahalo, and thank you.

Thank you. Is there any other testifiers? Go ahead, proceed.

Good morning. Russell Honma with APEC Hawaii. I think... I support this measure, but in terms of controlling this mechanism of a gambling facility, we've got to have it under the state control if we're going to do it in Hawaii. Good example is like maybe using the Hawaii Tourism Authority so that we have a casino kind of set up or a sports gambling kind of setup where with the TV screens like you go to Caesar Palace or you know the MGM in Vegas they have big screens so you go into that facility, you buy the tickets, you register your name, got your Social Security number, so they know that you're gambling.

If you win, you know the IRS gonna get whatever. So they gotta be a control mechanism there. And in terms of international. Going back to that past gentleman's testimony of e-commerce, in terms of using Internet, this was part of digital economy that we live in. So there's no control substance of what like Amazon, we had problem with them sending it internationally, but there's no way of taxing. But they found out a way because we have to. Each country's got to participate in the mechanism that the tax.

Please speak into the mic. Thank you.

Yeah, the taxing code's got to be in the same page. So what we're trying to do with the European Union, the Congress, APEC, we're trying to harmonize the taxing code internationally so that they can harmonize the transaction because each country has a different taxing mechanism.

But in terms of international transaction, import, export, moving goods and services, we've got to have a similar kind of framework. So that's what they're working on right now. And I just wanted to share that. But in terms of Hawaii's gambling, we should control a facility.

And I recommend that maybe using Hawaii Tourism Authority, we could do like a sports gambling or tourism in that nature. And if it works out, later on, we can expand to casinos, putting slot machines or roulette tables or poker tables and working that. But I think the state's got to be in control in that way.

Thank you. All right, is there any... Please proceed. Please state your name.

Cliff LaBoy, here on behalf of George T. Paris, Iron Workers Union 625 Stabilization Fund. I think we submitted a testimony. We stand by our testimony. And we also want to make aware that we have the Building Trade Council of 18 units in support of this bill also. And we'll be here for answering any questions. Thank you.

Thank you. Is there any others who wish to testify in person? Proceed.

Winston Wong on behalf of the Department of Taxation. I apologize I wasn't here earlier. I had to run from another hearing. But the Department has submitted written comments in testimony. We stand by those comments, and I will be here for any questions that you may have.

Thank you. Any others in person? Zoom? With no others testifying in person and in Zoom, is there any questions from Committee Members? With no questions, we are going to recess for decision making. Recess.

We are back from recess, and here we are for decision making. So we're going to start off at the top of the agenda.

And the first Bill, on the top of the agenda, is HB 671. And what the Chair is recommending for this Bill is, we are going to amend that the Department of Business and Economic Development and Technology is not the Department to conduct the research, but the department will be the Office of Hawaiian Affairs, so OHA.

We are also going to amend to include that the Native Hawaiian category will be Native Hawaiian alone, or in combination with other races, shall be used to identify the definition of Native Hawaiians.

The other amendment is to change "Native Hawaiian Majority Districts" to "Native Hawaiian Notable Districts," which defines "notable"—that 25% of the population is Native Hawaiian.

We're also going to defect the date to July 1st, 3000. So, these amendments—in hopes that we are able to use this information to secure funding for opportunities and hopefully, this will bring a lot of good resource to our communities. That is the Chair's recommendation. Committee Members, do you have any questions? Discussions?

Vice Chair, please call the vote.

[Roll Call]

Thank you. Moving on to the next item, we have HB 639. For HB 639, the Chair recommends that we focus on these amendments.

And what I will be amending is to add Section C under Disclosure Required, that liability under this section shall rest primarily with the developers or creators of artificial intelligence chatbots, as well as corporations or entities that knowingly deploy or utilize such chatbots, without required disclosures.

You also want to make sure that small businesses that unknowingly utilize chatbots in their operations shall not be held liable, unless the small business has been provided clear and adequate notice of the requirements, under this part, and has failed to comply, after being afforded a reasonable opportunity to do so.

We also want to include amendments to include the testimony from the Office of Consumer Protection, to summarize two items which is the potential harm...

First one is potential harms to consumers and second, amendments that would ensure that OCP, which is in charge with enforcing state Consumer Protection Laws, can bring civil enforcement actions for violations and obtain remedies, including penalties, restitution, and injunctive relief in appropriate cases. It also will defect the date. Members, do you have any questions, comments, discussions?

Vice Chair, please call the vote.

[Roll Call]

Thank you. Moving on to our next item, HB 1391. We will have a small HD on this one, which is going to be to defect the date. Members, do you have any questions, comments? Vice Chair, please take the vote.

[Roll Call]

Thank you. Moving on to our next item, HB 1361. I want to thank all the testimony. We definitely took it into consideration, and, at this time, we will be deferring this measure. Moving on to our next item, HB 1384.

For this measure, we will do an HD 1, and we're going to blank out the appropriation and FTE and add that information to the Committee Notes. We will also amend to include testimony from ETS, which includes the three items recommended for amendments. We will defect the date. Also, technical amendments needed for clarity, consistency, and style.

Members, do you have any questions or comments? Vice Chair, please take the vote.

[Roll Call]

Thank you. Moving on to HB 1292 and with this measure, we also want to say thank you to the testimony. We also took the testimony into consideration, and we are going to defer this measure as well. Moving on to our last measure, which is HB 1308.

With HB 1308, bear with me as I make some of these amendments. For our HD 1, we will amend the Bill to ensure that it's drafted to—for our mobile applications or digital platforms that accept wagers—is connected to the Internet only.

We also want amend to include testimony from the Office of Information Practice, that DBEDT—to keep the information about applicants and licenses confidential, only to the extent it would not be publicly disclosable under UIPA.

We also want to take into—or put into the Committee Notes—the percentage from other states that has sports, similar to what this Bill contains, and use that for reference for the next committees, so they're able to be able to work with what is currently a blank percentage for all the GET on the licensed sports wagering, collected to be deposited into the Problem Gambling Prevention and Treatment Special Fund.

So, that should help out the next Committee on deciding what is the right percentage. We also want to amend to include DBED testimony. The Chair also amends the Bill to change the regulatory responsibilities from DBEDT to DCCA. We want to add the comments from DOTAX to Committee Notes, as a reference for the next Committee.

There are a lot of things to work out with DOTAX and we want to make sure that we take those in consideration. We also want to defect the date and technical amendments needed for clarity, consistency, and style. Committee Members? Representative Todd.

Thank you, Chair, and thank you for your consideration of this measure, and to everyone who provided testimony. I'm going to provide a brief comment since I'm probably not going to speak much on the floor.

I just wanted to note that, in the discussion, in my eight years here, over this issue, but also a number of other issues that are controversial, that people have strong feelings on, I think the Legislature, advocacy groups, administrators, are, generally speaking, very good at understanding what potential negative outcomes may arise from legalization, but very bad at recognizing the current negative outcomes of prohibition.

Not just for gambling, but for a number of other social ills, if we may look at it that way.

Turning things over to a completely unregulated black market has its own set of harmful outcomes, not just for this, but for a number of other issues, that we can see across our communities. So, thankful for having the conversation.

Thanks.

Representative Matsumoto.

Thank you, Mr. Chair. I wanted to just note, originally coming in, I had a no vote on this Bill, but based off of the testimony that was given, I'm going to be changing that to a "Reservations."

I just want to make sure we're looking at the guardrails we put in, the regulations that we put in, as we move forward. Thank you.

Thank you. Any others? I want to say that this Bill is comprehensive, and I want to thank the introducer, Representative Holt, for working with me to make this work and try to continue working on it, because there is still a lot of things that needs to be done with this Bill.

So, I want to thank for his hard work on making this happen. Vice Chair, please take the vote.

[Roll Call]

Thank you, everyone. We are now adjourned.