Tourism and Gaming Working Group

Sorry about that. Good afternoon, everyone. I'm Jimmy Tokioka. I'm the Director of DBEDT. Senator DeCoite had an unforeseen emergency, so she won't be attending today. She apologizes for that. Up until a little while ago, she was going to be running the meeting. So I will be chairing the meeting for today.

And we're just going to go through the agenda that was prepared for her and we'll go through introduction of the Members. So what I want to do is start with the Members who are on s creen joining us virtually some from the mainland, some from the here on Oahu, and some I think from the neighboring islands. So foreign.

Let's see. We'll start from the top left of the screen. I believe that's you, Paul. You want to introduce yourself?

Sure. Thank you. Paul Anderson with Boyd Gaming. Thanks for letting me join.

To the top right of the screen, I believe that's Director Lambert.

Good afternoon, folks. Director Lambert, Department of Law Enforcement.

Okay, on the bottom middle I see Director Suganuma.

Hi, Gary Suganuma, Director of Taxation.

Good afternoon. I can't really see some of the other Members on the screen and their names and I know I haven't met every single Member by per. By name. I see in the blue jacket, Bo BART. Bo, you want to introduce yourself?

Hi, this is Bo Bernhard, professor at The University of Nevada, Las Vegas.

Thank you both. Okay. In the middle, I see the fanduel in the back and you want to introduce yourself. I see the fan duo in the. I don't. Every single Member by per. By name. I see in the blue jacket, Bo Bar. Oh, what's going on? Can you guys hear me on the screen? Fanduel.

Is that Jennifer Anderson?

Yes, Jennifer Anderson with Fanduel.

Middle. I see the. zero no.

Yes, Jennifer Anderson with FanDuel.

I see the FanDuel. I, I, I don't. Every single Member by, by name. IT help. There's a, there's a delay and it's coming out on one of the screens. I'm not sure how if we can fix that. Okay, well, it's not doing it now, so let's continue with the introductions.

Anyone on screen that I haven't acknowledged to introduce yourself yet, please raise your hand and introduce yourself.

Darrin Sato.

And you're with Darren. I know who you are, but other people don't know who you are.

Social worker Khalil Palama Health Center, recommended by Director Yamane.

Yeah, thank you. Anyone else on skate? You just raised your hand, sir. Go ahead. You're Muted, sir, You're muted. You're still muted. There's one other gentleman in the middle of the screen. You want to. Sorry.

I got it. Sorry about that. I'm Jim Dillon. I'm the medical Director at Kauai Community Mental Health. I'm representing DOH. Adult Mental Health.

Sorry, I did not recognize you. Mr. Dillon. Thank you.

Aloha. Lui Hokoana. I'm the Interim VP for The UH Community Colleges.

Zero, sorry, but I never recognized you. You didn't have your chef coat on. Thank you, Lui. Anyone else online that we haven't recognized yet? Okay, so we'll start in the room. We'll start from my right to my left.

Aloha. Brandon Makava, Vice President, Nation of Hawaii.

Good afternoon. Michelle Pu from the Attorney General's office.

Hi there. And Kent Caputo with the Marnell Companies and Marnell Gaming.

Sorry, but I never recognize you. You didn't have your chef called on. Thank you. Anyone else online that might be Jennifer's we haven't recognized yet? Okay, so start in the room. Start from my right to my left.

I'm gonna mute her mic.

Gotta mute her mic.

Brandon, Vice President, Nation of Hawaii.

Good afternoon.

So we're gonna. We're gonna take a short recess.

Sorry, we're having technical difficulty.

Thank you very much IT for the assistance. Chair Ilagan, just entered the room. We're actually right on you for your introduction.

Welcome everyone, and thank you for being here. I apologize, we had a meeting and I'm a bit late for this meeting. But thank you for being here and being part of our working group. At the top of the agenda, we have the introduction. We already did that.

Well, we're not done yet. We're going this way, so.

All right, let's start continue with our introduction of Members. Go ahead.

Mark Tolentino representing labor.

Stanford Carr representing Aloha Hālawa District Partners.

Daniel Holt Representing State House.

Okay, are we good?

Yeah.

Are we doing any introductions again?

You're so.

No, I think he did. Yeah, he did. Yeah, he did introduce himself.

So for. For those who have not introduced themselves, could you. I think everybody has. Yes. Okay, so let's move on to our next item of the agenda. And this is going to be. We have some presenters. Correct.

So this is what happens when you're the backup. And right now the main event is on. So let's move on with a proposed schedule. Meetings going forward on our. On the second Thursday of the month except June 11 due to Kamehameha Day Holiday.

So we moved it to Thursday, June 4 at 1pm however, they fall on various deadlines dates during the session, so they may need to be rescheduled to other dates. Does everybody have a copy of this? So what you see in front of you are some of the meeting dates all the way from February to September 10th.

And is there any discussions regarding these dates with our Members?

So some of you had mentioned to us that you needed time to block on your calendars. So this is a draft and you know, as it happens here at the Legislature, we may have to make some changes, but this is the best draft that the chairs came up with for now. So on the top is the date.

So if you can calendar so everyone knows. And we will get this calendar out for people who are following this meeting online and in the audience as well.

And mind you, these dates I have not reviewed as well. So this is definitely tentative. And if you do have any concerns of these dates, could you please contact my office office and as well as Senator DeCoite's office. That way we can make sure that we can fulfill these dates and we can confirm everything.

So thank you for that. Let's move on to our third item of the agenda, which is the recap of goals and deliverables. The goals and deliverables for the working group are laid out in the Senate Concurrent Resolution 121 that established the working group. The working group was requested to address the following.

The first is review gaming experiences and programs of legalized gaming in other states, including revenue generation and costs, including social problems associated with gaming. The second is review gaming legislation in other states. Third is examine the potential for gaming activities at the new Aloha Stadium entertainment district.

Fourth is to develop a comprehensive tourism gaming policy framework that includes economic benefits, regulatory controls and social programs to address problem gaming. And last, which is the fifth, is examine how gaming activities may support the work of DBEDT and HTA.

So these goals and deliverables will be a challenge to accomplish in the short time we have to consider all of them. This work we will need to support and provide good insight from everyone on the working group.

If we need additional expertise as we move along, we will not hesitate to call on others, not on the current working group who may have the experience we need. So in other words, we will reach out to you and if you have any questions regarding these goals and deliverables, please speak now. Okay.

Well, thank you for your cooperation in this whole thing. So at this moment I'm going to call on Director Mike Lambert to Speak on our next agenda item. For our new Members who came in online. Would you do us a favor and please introduce yourself?

I believe Brennan Morioka is online. If you can turn your cameras on so we can see you. And. Well, he texted me. He was. Is he in the waiting room? Don, is anybody in the waiting room?

Well, we were wait on our technical difficult. Okay, go ahead.

You want to introduce. Yeah, this is Brennon Morioka. I guess I'm on behalf of the NASA project.

Thank you for those are. For those who have joined in online. Thank you for joining on online. We'll go back to the present room and we have a new Member. Could you please introduce yourself?

Hi. Ryan Yamane, representing Department of Human Services. Thank you.

Thank you. Now moving on to Director Lambert, let's move on to our next item on the illegal gaming and current status.

Okay, so I actually invited the current gambling sergeant of the Hon Police Department. So he was with me when I was still with hpd. So I want him to kind of give us the temperature as of now. And then I'm going to. I'll piggyback on the information that he shares.

Can you guys elevate Leland so that he can speak. If. I think the question for this group is what is the current amount of game rooms and what is the average gross that a game room? And we know there's a range, so I don't want to give them my data from, you know, 24 and beyond.

So if you could kind of give some numbers as of late.

Yeah. So currently we're about 50 game rooms island wide for Honolulu. And from our investigations, the average of each game remote, I guess acquire from these gambling machines is about 10, anywhere from 5 to 10,000 a day and an average for weekly, they bring in close to or about 15,000 to 20,000 a week.

Anywhere from that much higher.

Yeah. So thank you. Yeah. So, and then question for Leland. You know, when we compress the game rooms down from like 120130. And again with the help of prosecutor Amon team, did you guys see an increase of the daily play? In other words, less rooms, but the same amount of players.

In other words, they found another hole or was it just kind of a flat decline? In other words, when the gambling was not available, it didn't seem to trend elsewhere.

They would definitely just move to another location. So they would just pop up to another location. It'll pretty much stay consistent.

Okay, so not the. Not the room, the players is the flow of players. Is, was my question.

It decreased.

Okay, so I think, I think when you play with those numbers, I think for the benefit of the group, you know, depending on how you calculate it up, it's, it's, you know, 400 million. And that's just for game room related play.

We've never really been able to have a meaningful investigation into sports betting, so that, that play number is unknown.

So the best we could do is overlay, you know, how many people actually attend illegal game rooms and then overlay that over General population for, you know, what are the similarities or what are the ranges for people that would then participate in sports betting.

So, I mean, if I had to guess total, I mean, total gross amount, I mean, and this is a very anecdotal statement, somewhere around 7 to 800 million in play. And that's being very conservative.

And we'll open up to questions.

So these figures.

Director Lambert, these figures, the 780, 700, 800 million is the impact of illegal gaming or the cost of revenue that, like, what, what does this mean?

We estimate that's how much is put into play in, in the state of Hawaii.

Putting into play it. Correct. So, like, that's not being tracked. And actually, the industry of illegal Gaming is producing 700 to $800 million potentially.

And with any black market, the best you can do is get an estimate of it.

And this estimate is particularly only on Oahu, or are you taking consideration in other neighbor islands? For.

I added on about 10%, 10 to 15% across to the neighbor islands, but bulk, bulk of the gaming. So, for example, some of the other counties only have like two or three game rooms. So I would imagine that sports betting may be high, but casino style gambling is low. But predominantly it's in Honolulu.

So this 700 to 800 million is now around 900 to possibly a billion.

No, I, I've already included that in there.

Zero, you have included in there?

Yeah. So I'm estimating 10 to 15 within.

The 700 to 800 million. Correct. Thank you. Appreciate that.

Okay. Okay.

I have a question.

Okay, yes, go ahead.

Thank you. For HPD, you know, what other kinds of things do you guys find when you bust these game rooms? You know, obviously there's machines and cash and, you know, what other kind of things and offenses do you guys find.

Unmuted? Hello? Can you hear me? Sorry.

Yes, we can hear you.

Okay, so predominantly we'll find illegal drugs, narcotics, from crypto messages to fentanyl to a lot of additional harmful prescription drugs. Okay. Temporary plans. So we are planning to occupy a plot on Whit in Whitmore Village.

At this moment.

We're going to take a recess. Recess. We are back.

And we have a Member who had a question. Can you please restate your question? Yeah. Thank you.

Thank you for HPD. Just wondering, you know, what other kinds of things you guys discover when you go into these game rooms and shut them down. You know, drugs and so forth.

So the most we find is illegal narcotics from Crystal Meth, Marijuana, fentanyl and cocaine. We also find firearms, ghost guns, and different types of firearms from ranging from rifles to lately. This year we found four ghost guns and two unregistered firearms.

And what would you say the percentage, like half of the time you find this every time you find this?

About. About 75% of the time we'll find narcotics? Well, with firearms, it's more towards maybe 10-15% of the time.

Okay, so, I mean, even 10-15% of time seems kind of a lot. Would it be a stretch to characterize these as, like, hubs of criminal activity in our communities across our states?

Yes.

Yeah. And, you know, I appreciate you guys, enforcement activities in recent years, we've been seeing them shut down, you know, across our state. Would you guys benefit from additional funding to. To address this problem?

Yes.

Okay, well, hopefully we can talk story about this in the future and try to get you guys additional funding, because I definitely appreciate it. And we can see the differences in our communities with the enforcement efforts. So thank you.

I appreciate that. Thank you.

Is there any other Members?

Yeah. I have a question.

Go ahead.

For Director Lambert. Director, how did. How did you. Do you have a study on how you came up with that 7 to 800 million dollar number? And is that. Is that a year or is that like it's annual?

So what we had. So how I arrived at that number, is that your average game room ranges anywhere from five to $10,000 of play a day. Right. And we can. We get that from analyzing devices.

So in other words, whenever a search warrant is served, we're able to kind of see more or less how much goes into a device.

Now, you could have a location that could be as low as, you know, a few hundred dollars of play per day, but depending on where you are, particularly in Honolulu, you know, I've personally seized 20,000 cash in the game room. And, and mind you, they're cleared every eight hours, depending on how they choose to run their establishment.

So it's just me trying to take a reasonable average and mean, in my experience, and then overlaying that by the amount of rooms active at any One time. And then of course multiplying that by 365. And in regards to the. So the game rooms itself is probably around 5, you know, 3 to 400,000.

And then in my experience, typically sports betting kind of trends along the same lines, but we've again, we've never. Because it's online and it's very difficult to crack because a lot of the hubs are in Asia. I couldn't actually tell you that.

So I'm just trending it along with again, national trends in regards to how many people sports bet versus how many people would bet in a. You know, and I'm very, I'm utilizing the term casino. Extremely loose but illegal gaming. Right. Is the closest thing we have. Okay, thank you.

Is there any other Members?

I have a question. Go ahead, Director or Sergeant, how often are these game room establishments linked to human trafficking activity?

In my experience, it's been rare as of late. The old time rooms, particularly your card rooms, it tends to be more prevalent with. That hasn't been the case recently. Unless Leland, that's changed since I left.

We've, we've entertained and looked into those, but not in like, in regards to more the employees coming in and maybe involved, but nobody has opened up. We, we suspected that type of thing occurring, but nobody has really stepped forward and told us and asked for assistance in that type of. In that realm.

To be clear, suspected with regularity.

What do you mean?

It's commonly linked together. Would you agree? It's just. They're reluctant to report it.

There's people who allege that that's happening and we try to reach out and speak to people, but nobody's come forward to say that that's happening.

Yeah, Michelle.

So I think what people are reporting.

Yeah, I think what Sergeant Kurishi trying to say is not necessarily is it the game room, but it does occur like. So, for example, many of the game rooms, because they have so much illegal trade, they will have women that will come there to prostitute themselves for the drugs, but not necessarily. Is it a.

Is it a function of the game room operator? In other words, the game room operator is not necessarily human trafficking, but it does occur within those locations, but independently from the gambling. It's just kind of. So to your point, it does exist, but not, not like it's a brothel attached to a casino, if that makes sense.

Thank you.

Thank you. Let's hold off on the question for a moment and let the prosecutor expand more on the prosecution process of illegal gaming.

Hi, Steve. I'm Hunter, the prosecutor and actually, I think Representative Holt characterized it really accurately that these are, are dens of crime. And we have pro working at hpd. We have prosecuted numerous murder cases, robberies, and anybody who robs a game room is really a dangerous person because they know the game rooms are connected, they have security.

We did one case, though, where the guy thought the security understood the security guy was unarmed, so he came in to rob. It turns out they got a new security guy, so he point a gun at him, he shot and killed him.

And we found it was self defense because you can have a gun in your place of business. But there's, but there's loan sharking, there's, you know, threatening behavior, but there are a bunch of murders connected with it.

And so, you know, that's why it's, it's so important we have a full time Deputy Gabe Hunting working on these cases with HPD and shutting down game rooms is a high priority. And I think we'll keep doing that and we'll try to, you know, do that.

If we ever see anything, you know, like, you know, sex trafficking and stuff, we sure jump on that and have our sex assault detail work on it. Thank you.

Thank you. Stay there while we ask more questions and you can chime in. We also want to recognize another Member on Zoom. Mr. Lewis, could you please introduce yourself?

Yeah. Aloha. Kuhio Lewis, CEO for the Hawaii counsel.

Thank you for being here. All right, Members, do we have any further questions for the three guests?

Chair, I, I do. So when. Maybe this is for Director Lamb. Lambert. When you, when you bust or do a raid on these gaming dens, do you arrest everyone that's in present in the, in the establishment?

Typically, no. Typically it's just the cashier or if the security is overt, then they may be arrested. But typically it's just the operator themselves.

I see. Why wouldn't we expand that so that they would be culpable or subject to arrest? I mean, is there.

We would have to, we'd have to broaden the law, because the issue is, is that you would have to prove that they're playing at the time the officer came in. So a lot of times when we're doing search warrants, obviously by the time they knock, all the play has stopped.

We could stretch it if there was on screen credits, but we typically don't want to do that. If the law were to be changed to say that anybody within an operating illegal game room would be of at least guilty of a violation, then of course, yeah, we would be able to do that.

But right now we have to show that there was intent to play. In other words, they weren't just milling around or doing whatever else.

Understand? So without going into too much, you know, operational details and what HPD has to show, yeah, they would have to be going in there more often, you know, in order to make a case. But we do want to thank the Legislature for making it a felony to be working in these gambling places.

So when it does, you know, when it is possible, we're really happy to have that happen. And it's a question of do you want to hit more places quicker or do you want to develop longer term?

Part of the problem with doing longer term is even with a felony and a felony, I think is, is a really good step because I think a lot of employers, if they have people working for him, would pick up a bunch of misdemeanor gambling the case. They don't care.

But if it's a felony, that may have an impact. But it's been this way for decades. When I was a prosecutor in the late 80s, I'm sure Ms. Pu had the same experience. You know, you go to have a district court. Make sure that's on the record.

These guys have a laundry list of convictions, but it's like 50 fine. So it's a cost to doing business. So hopefully the felony will have a impact, you know, when we can make it. But in some ways, as you've heard, it sounds like the.

If there's no game room conveniently located, a lot of folks just aren't going to go. You know, if they're giving the same amount over that time, you know. You know, it's cutting down on the number of game rooms. Maybe people just don't go. It's convenience. It's everything else.

Sure. So when they are arrested and prosecuted, that's one offense. Right, Right. And I would imagine, I suspect that these guys just move shop and set up again.

HPD would be in the better position. But I think a number of times that does happen. I think in the, in an urban environment, you got a finite number of places. In the more rural communities, it's easier to do the other. But HPD has been very effective. And I think Director Lambert started this.

But the Narcotics Vice unit is keeping it up. Where even they would call a game room and say, hey, we've, you know, find out who the owner tax map key and then call the owner and say, you know, we have information that you're allowing illegal game room on your premises.

Do you want to cease and desist, or do you want us to take further action? And that has worked in a number of cases. I don't know how many. Director Lambert.

It's a very successful tactic. And again, credit to DPA Huntington for making those, because we would send out letters, and those are highly effective. But they do move around to your point. Answer. And from our informants, from the great work that Sergeant Kudaishi is doing, the game room operators are getting frustrated.

It's getting harder and harder for them to find places to rent.

All right, that's all the questions for the Member. I want to just follow up with the question. One of them, Director Lambert, is that you mentioned you had some suggestions on how to strengthen the law. If you don't mind, could you please send that to us?

So we are still early enough in the process to possibly introduce some of those measures and make sure that we have strong laws to enforce these illegal gaming. Go ahead. We don't have to pass it all out right now, but I just want to make sure that you send that information to us.

One of the laws you passed last year that took away defense because the law used to allow it unless the owner of the property made attempts to stop it, that, that made it impossible to enforce because they'd say, I just told these guys to stop it. That would be enough. Now that's gone. So Gabe has.

Recently it's been in the paper, a whole family got invited for this. Coincidentally, I guess the same families involved in fireworks and other things. So I think this is a fruitful area that we'll be able to do a number, number of cases like that. And that, that's really helpful going after the building owner, the property owner.

There was a, you know, a nuisance abatement case a couple years ago in Moili', ili, and that embarrasses the folks allowing this to happen. So they cease and desist.

Good. All right, is there any other questions?

Go ahead, prosecutor. Yeah, just. Just sit down. Yes, you can just. And I'll just put it out there for any of law enforcement to answer. And this is a follow up to Representative Holt's questions.

And I'm sure concerns are there specific areas, districts on the island that, that are prevalent in game rooms and those types of illegal activity.

I think it's island wide. I think there has been a focus with hpd and we fully support it. The west side and Kalihi have gotten a lot of the attention. You'll find them everywhere. But there have been a bunch in those two locations and we're fully supportive. We're trying to do safe and sound west side.

And so cutting down on the gamers is something the residents really want happening. So we're, we're pleased that HPD took the approach to focus on those two neighborhoods to begin with.

There's none in Puna. Right. Because Puna is great, great community, especially the representative.

HPD, do you want to comment on that question?

Like prosecutor stated, it is island wide and there are certain areas like Waianae and Kalihi area as well as the. Has the primary concentration of them. And we have been getting creative on different tactics on how to enforce these areas.

Director Lambert did state, in regards to how we, the how we communicate with the owners and everybody, basically, I'm just trying to get everybody else involved, anybody that's willing to assist us in different tactics of holding the owners accountable, of allowing these type of things to occur in their communities.

We have been concentrating more in the Kali area that they have significantly dropped in numbers right now. And we're expanding into other areas currently as well. Like I said, we started off with over 100 game rooms the previous years, and now we're down to around 50.

So I think how we're approaching it in a different types of ways, we're gaining ground.

And I want to applaud HPD because Mike Lambert was very aggressive when he was the major in narco vice and made this a priority. And when he moved on to dle, HPD has not skipped a beat. They're carrying on exactly the same way. They've got a good plan. They're keeping it up. So that's a.

You know, I'm really happy to see that because we can keep the continuity going and going after as many as possible. Getting. And it's residents that give tips on this. They don't want a game room next to their house like a drug house. It's. It's really terrible for the neighborhood.

So I'm, I'm really happy to see HPD is continuing on as I think Chief Vanik is supporting it and we'll keep doing it.

Thank you, hpd. Is there any other questions? Go ahead.

I just want to add. I will work with prosecutor too, because the heavy lift would fall on the county for these type of investigations. So with his blessing, I'll work with Gabe to see if there's anything legislatively we can do to support HPD in their investigation.

Thank you. We'll go with Representative Holt and we'll go to the Zoom.

Thank you. Spurt Director Sugonoma I don't want to leave you out and pretty sure I know the answer to the question, but just want to make sure that we're not receiving any tax revenue from these game rooms, are we?

Well, technically speaking, I mean even revenue from illicit activity is subject to tax. But my guess is that they're not reporting. So you're correct. We're not collecting.

Can we increase that tax rate? Thank you. Let's go on to zoom. Looks like Boyd Gaming.

Thank you. Hey, Paul Anderson from Boyd. Just a question to maybe to HPD or Director Lambert. Are there specific resources that you think would help? Is it just a dollar or manpower issue? Is it a statutory issue? What are some of the things you think would be helpful in your guys efforts to crack down on the illegals?

I'll chime in first Leland. So it's all of the above. Of course there's a 20% staffing issue with law enforcement which limits how large a team can be.

When I was a narcotics vice major, I don't know if it's improved in the last year we only had about 60 staffing and narco vice and I really had to leverage Leland harshly and heavily to get to where he is. And that's why he's one of my favorite people over there still yet so good job to him.

And I think that in previous sessions I think even Rap Holt has asked if money would help and it would to the extent of we have people that can utilize that over time because at some point there's only so many hours a person can work.

If you want to get creative, could you, if you were to change laws and attack it more from a property angle and a tax angle and you know, send some money over to prosecutor arm so that he can, you know, do duplicate or replicate, you know, DPAs like Huntington. Yeah, there.

There definitely could be some improvements that can be made with some investments.

Just to add into this conversation, I would like to request DBED to follow up on this. We should reach out to each Administration on how much they actually allocate for illegal gaming.

That way we have an understanding what is being budgeted for this issue and then with that figuring out a plan with additional funding and what that would be used for.

Because we would love to give you additional funding but if we don't know how it's going to be implemented, it just feels like we're just giving it out and we don't know what's going on. So I think we definitely need some metrics and some data and we can do that and support you as well.

Is there any other questions?

Go ahead.

I had a question. Is Department of Health tracking the communities, the impact that the game rooms are having on communities and, you know, that sort of thing. And is that available for people to see?

Don't be shy now, Mr. Dillon, I. Think that question is for you. And if you don't have the answer, you can get back to us.

Yeah, I. I don't know the answer.

Okay, thank you.

All right. Any other questions? Well, it looks like we don't have any other agenda items, so I want to just end with the fact that we have a prohibition in gaming in the state. And even though the prohibition of gaming is in place, we have illegal gambling happening.

And it's an industry that's up to 800 million and an annual basis. That is something we could simply ignore or we could figure out a way not only to control and manage what's happening now and figure out with our working group and with our expertise on how to improve the current situation we are at.

I really appreciate all the Members being here because I know you have more important things to do. Thank you. But you feel it. This is more important. So thank you for being here and I look forward to seeing you on our next meeting. We are now adjourned.