House Standing Committee on Economic Development & Technology

Okay. Good morning, everyone. Thanks for joining us for this morning's hearing of the Committee on Economic Development Technology as Representative Gregory Iladan. I'm Vice Chair Ikaika Hussey, and we're joined this morning by Representative Joe Gideon. And let's see. It's Wednesday, February 11th.

It's 8:30am we're in Conference Room 423 at the State Capitol at 415 S. Beretanyon St. Because. Morning, Mary. Excuse me. Because morning hearings must adjourn prior to floor session, not all testifiers may have the opportunity to testify. And that event, please know that your written testimony will be considered by the Committee.

For those on Zoom, please keep yourself muted and your video off while waiting to testify. And after your testimony is complete. The Zoom chat function will allow you to chat with the technical staff only. Please use the chat only for technical issues. If you are disconnected unexpectedly, you may attempt to rejoin the meeting.

If disconnected while presenting testimony, you may be allowed to continue to type permits. Please note that the House is not responsible for any bad Internet connections on the testifier's end. In the event of a network failure, it may be necessary to reschedule the hearing or schedule a meeting for decision making.

In that case, an appropriate notice will be posted. Please avoid using any trademarked or copyrighted images and please, profane. Excuse me. Please refrain from profanity or unsold behavior. Such behavior may be grounds for removal from the hearing without the ability to rejoin. We're going to start first with HB 2603 relating to permits.

And our first testifier in person is Mary Alice Evans from the Office of Planning and Sustainable Development.

Morning, Chair. Vice Chair. Reginald King from the Office of Planning and Study for Government. The office stands on its testimony with comments. Okay, we have available for questioning.

Thank you. We have three in support. One, I'm sorry, none in opposition, and two, with comments. Does anyone else like to testify in person on this measure or on Zoom? Any questions? Sure.

D ved if I could have someone from dvev. Hey, Dan. Morning, Chair. So you're aware of this program, and I wanted to first ask, how long has this program been in the books?

Good morning, Chair, Vice Chair, Members of the Committee, Dan Wicker, Deputy Director at DBEDT. So this program. I don't have the exact date, but we did go back trying to understand and look for projects that were done under the facilitated permitting process. And even through archive research, we have not found any project.

Our thought is that given the time, there were projects out there statewide, like broadband and that does touch several departments which would require the coordination of state permits.

So my question is not what projects were done under this program, but how long was this program under hrs? I'll have to get back to you on the date. It's probably decades if not. And since then, DBED hasn't utilized this program.

No, we have not.

There's probably things that need to be tweaked in this program for DBED to utilize it fully, and some of those changes are in the Bill. Do you feel like those changes, including the county, would actually help utilize for big projects to actually apply for the program Chair?

It would be helpful if DEBED could understand maybe what type of projects so we could assess what the. We have no capacity right now to do this type of structure, even permits within DPED outside of HCDA or hhfdc.

But if we were project specific, we could look at how we could maybe look at some of our attached agencies and then what other capacity would require for coordination, both state and local, but the projects would be helpful to understand. Yeah.

Well, I think you and I both know that when this program was enacted, the Legislature and DBED worked together to try to figure out those projects. And the report showed that those projects were looked into. However, this program was not used since then.

And now after looking through all the statutes, realizing that this is under dbed, it can really come back to life. Would you be willing for DBED to at least assign one position that's existing to work into this program and figure out how we could actually work?

We could probably. Yeah, we could probably ask a staffer or staff to put together what that would look like. Yes.

Okay. With that said, have you ever heard of the FAST41? Not in detail, no. So FAST41 is a federal program and Department of Transportation use it to expedite permits. I would ask that staffer that you're going to assign to see if we can include projects under FAST 41 similar with state projects.

So we have an existing federal program that expedites permits with Department of Transportation and maybe what we could do is focus infrastructure projects that helps out economic development with this program. Is that something that you'd be willing to do under your Department? Yes. You also asked for staffing for this project.

As you know, we're in a dire fiscal. Is there a bare bone staffing that you could live with to try to start this program? Not started, no.

We don't have that capacity to start a new program right now.

How many positions do you need to start this program?

We Rounded. So in our testimony, we looked at examples and structure to stand up. It would require full scale, 7 to 9 FTEs.

7 to 9? Why would they. Why would this program need 7 to 9 employees?

So in the Bill, it's asking us to do an IT structure. We don't have that skill set set up within DBED outside of our General it. If you want to talk about permitting policy, you need a specialist there. Interagency coordination, data reporting analyst, systems administrator, and if needed, legal. If. If the AG doesn't have.

If we don't have capacity with our deputy ag.

Thank you.

Thank you.

Thanks. Any other questions from our Committee?

Okay.

And just to confirm, there's no further testifiers? Going to move on then to HB 2140 relating to essential permitting positions. We have testimony first from the OPSD.

Morning, Chair, Vice Chair, Members of the Committee. Reginald King with the Office of Planning and Development. Our office stands on its written testimony in support with comments. Thank you.

We have three in support, zero with opposition, five with comments. Would anyone else like to testify on this measure? Any questions from our Committee?

I have a question.

Is there anyone from the county by chance? No? All right, then, Reggie, would you mind coming up? If you don't mind, could you state your name and your role?

Reginald King and I'm the Speed Task Force Coordinator.

Under the Speed Task Force, this Bill addresses quality, or I should say, making sure that staffing for permitting in the county are adequately paid. Is that something in the Speed Task Force—was that a common problem or?

Well, yep, trying to make it competitive to other places, as far as salary goes, that was an issue.

And was it a issue in the county or state, or was it just on the county?

On both ends. There was a need for competitive pay so we can actually get and fill these positions.

Do you know what this Bill does?

Yes.

What does it do?

Starts like a pilot program to do just that, to fund some of these positions. But it's temporary. As we stated in our testimony, that something more permanent would be better to drive people towards this kind of work pipeline.

This only, this only affects the county, right?

Just says within participating counties, yes.

And how would the county be able to fund increasing staff salary?

I'm not sure. That's not my...

So, under this Bill, it's the surcharge. Have you asked the county if they're willing to use their surcharge to increase permitting staffing support? Would you reach out to them and see if that's something they would support?

I can do that.

Thank you. Any other questions? We'll move then to HB 2598 relating to the Hawaii Technology Development Corporation. First up, we have Bonnie Kahakui from the State Procurement Office on zoom.

Thank you.

Good morning, chairs, Vice Chair, Members of the Committee, Bonnie Kahakui, Administrator, State Procurement Office. I'll stand. I'll stand on a written testimony providing comments. Thank you.

Now we have the AG's office.

Good morning. Good morning, Chair, Vice chair, Members of the Committee, Nicholas Kito for the Department of the Attorney General. The Department submits comments on this Bill. Our detailed analysis is in the written testimony, but I'll briefly highlight our primary concerns. First, the residency based certification requirements when tied to procurement use raise dormant Commerce clause concerns.

And second, the requirement, the required 1% contribution tied to state contracts raises concerns under unconstitutional conditions. Principles addressing these concerns would likely require structural revisions to the Bill. Thank you. I'm happy to answer questions. Thank you.

And now we have Trung Lam from the htdc. Good morning, Chair, vice chair, Members of. The Committee, Trung Lam with htdc. And we stand on our written testimony providing comments. Thank you. Thank you very much.

Okay, we have, let's see, one testifier in support, zero with opposition and three with comments. Would anyone else like to offer testimony on this measure?

Okay.

Are there any questions from our Committee?

Sir, could I have the AG up? So the Commerce clause is a problem, which criteria is it? The God.

So the issue with the dormant Commerce clause is. And when you say which criteria are you referring to, like within the Bill? Sure. It's the residency based certification requirements. So the headquarters in Hawaii and I believe the 2/3 requirement.

That's a problem.

And even though this is a voluntary program that is not mandated, it's a preference that still triggers.

It raises concerns because it's tied to procurement and because the goal of the Bill is to promote competitive advantages to these, to these companies.

So anything tied to procurement with those types of criteria would trigger this clause. It raises concerns. Yes. What does raises concern mean? Is it, is it a risk or is it automatic lawsuit?

There's no, no, no automatic lawsuit. It's a risk.

It's a risk. Are we talking about low risk, medium risk, high risk?

I can't. I can't answer that.

Has there been procurement lawsuits recently?

I can't answer that on the spot.

What about. Thank you. Thank you.

Any further questions? All right, let's move to HB2141. Hp2141 related to state enterprise zones. First testifier is Gary Suganuma from Dotax Army Taxation. Good Morning chair, Vice chair, Committee Members Garrison for a public half of dotax. We'll stand on our written testimony to write. Thank you.

TBED Chair, Vice Chair Danewicker dbed We stand on our testimony and support. And off the comments.

HCDA.

Morning chair, Vice chair, Members of the Committee Executive Director Craig Nakamoto for. Hawaii Community Development Authority. We stand on our written testimony in. Support of this measure. Thank you. Thank you very much. The University of Hawaii on zoom.

Dear Chair and Vice Chair and Committee Member, My name is Nawato Ueno. I'm the Director of University of Hawaii Cancer Center. From the University of Hawaii perspective, we stand on this comment of HB2141. HB2141 is extremely important for University of Hawaii. Considering the academic medicine leading into connection with the biomedical research and business component.

There is a great opportunity for workforce development and not just workforce development, but the total impact to the community and the patient is really a huge one. So this is a very important. Bill. Is how we see. So thank you very much for the opportunity.

Thank you. Next we have Tom Yamachika from the Tax Foundation of Hawaii.

Good morning Chair, Vice Chair, Members of the Committee, Tom Yamachika from Tax Foundation. I think the Committee should keep in mind that the enterprise zone incentive was designed for economically depressed areas to promote employment in those areas. And with that I would stand in our testimony and be available for questions. Thank you very much.

Trung Lam from hcc. Morning Chair, Vice Chair, Members of the Committee. Trung Lam with htdc. I stand on my written testimony but I want to highlight the fact that one of HTDC's facilities on Maui, the MRTC is currently in the enterprise zone.

Without the necessary changes written this Bill which is basically allowing the state to designate census tracts with innovation centers belong to the state. MRTC is slated to fall out of. The enterprise zone program due to rezoning. In a couple months.

Okay, thank you very much. Okay. Would anyone else like to testify on 2141? Any questions from our Committee Members?

I have a question. Sure. Dane. I was looking through the annual reports and it looks like the enterprise zone, the amount of not only applicants but the amount of money that we're actually putting into it is just getting lower and lower every year.

So it sounds, it looks like from my viewpoint is that the enterprise owned program hasn't been utilized as effectively. Would. You say its mission of trying to increase labor in these repressed areas. Do you feel like the program is doing its job and would this Bill actually help increase that participation and engagement with the program?

Chair so the program does have its current parameters and you can't force businesses to come into a specific enterprise zone.

What we're seeing is where the state does make investment, whether it's in aerospace, healthcare, tech value, add that infrastructure facilities may not necessarily be an enterprise zone, but it's the infrastructure and facilities that help the small and medium businesses anchor and expand.

So by the state reassessing where These enterprise zones are and potentially designating where the state's made investments could be a different way to attract businesses. What I'll also note is that what's in our testimony here. So I apologize. We are looking at the Senate Bill.

There is kind of a game changing approach we're looking at as well with enterprise zones for existing businesses that could help scale up that specific industry. In this case, it could be healthcare tech. In Kakaako, we can lean on some of our manufacturers who are already established outside to benefit from the enterprise zone.

Again, this strategy is to start looking at ways to attract and help the small to medium businesses in Hawaii. It is hard and what we're learning that some businesses may not necessarily be willing to relocate or move into a current enterprise zone, whether the distance or just the lack of accessory infrastructure facilities to help support their needs.

There's some county benefits here enrolling into the enterprise zone. Has DMED taken any proactive measure of communicating with the counties to try to work on those benefits or have we solely focused on state benefits like the 100% get exemption?

Mayor Colopam So Jason Ushijima is from our Business Development Support Division and Overseas Enterprise Zone Program.

Good morning Chair, Vice Chair, Members of the Committee. Jason Ushikima, BDSD with deep, Program Manager for Enterprise Zone. So every year when we do go through the redesignation process for the various zones, we work very closely with the counties. Each county has a designated county Enterprise Zone coordinator and they're usually through the economic development offices.

And those are the offices who work closely with the mayor to come up with what the county benefits will be.

When I was going through their website, I noticed there was a fast track for permitting. Could you expand on what that entails?

That would be for Maui County and Kauai County. Right. Both offered that benefit. I don't know the exact details of what that is or what that entails or what type of permitting that allows for. I would have to defer to the counties for that.

Could you reach out to the SPEED Task force coordinator and maybe work collaboratively to figure out how to beef up that fast track and permitting, if that is an incentive to go into the enterprise zone, sure.

And maybe it doesn't have to be just Maui and Kauai, Kauai island and Oahu or City and county of Honolulu might benefit from it as well.

Yep, absolutely. Happy to talk to them.

I also have a question about the program. So it's seven years, right? Correct. Hear me out. We're trying to help emerging business, right? With this program, however, I think there's a labor requirement to increase. The applicant's workforce. Was it by 5%, 10% first year?

If you're an emerging industry, new business coming in, come to Hawaii, let's say aerospace, and your first year you have to increase your labor force by 10%.

I think as a first to three year business anywhere, not even in Hawaii, but anywhere you're trying to just become profitable, let alone increase your expenses for the company, which means if you increase labor, you're going to increase expenses.

Have you ever considered for a new business that just started up to waive the first three years and correct me if I'm wrong, but is there any national data that the first three years is where a company is just trying to establish itself and then maybe kick that employment increase at the 4th, 5th and then all the way to 7 year?

Has that been a consideration?

I wouldn't say necessarily a consideration. Unfortunately, I'm not familiar with national data. There are other states with enterprise owned programs, but each state tends to do it a little differently with us. And what me and our economic development specialists do is we counsel the businesses to make sure they understand the program.

The 10%, the employment increase is something that's written to the statute and would be up to the Legislature to change if you saw that. But we do counsel the businesses and we look at every application when it comes in and we let them know that that's the first requirement or what they need to do.

So if they should choose to withdraw and come back at another time, that's an opportunity available to them and make sure that they understand that they need to increase their job numbers by at least 10% for their first year because their time in the program, like you said, is finite.

It's seven years with a three year extension for agriculture, manufacturing, so that they can make the most out of their time in the program with the benefits.

Yeah, you're held by statute, so unfortunately you just can't change it. So let me ask you this then. Do you think, well, one, do you track the graduation rate of this program? Like for example, once they go through that seven year mark, they graduated, is there a high graduation rate?

There is every year. So with our last report, you probably said we had about 129 companies, we had about seven graduate within that within the next year.

Whether we're not necessarily tracking, because once they graduate, we don't have data from them anymore as far as income and their job numbers, whether in the program is when we're collecting the information from them.

I think what I would like to know in the future is that once they graduate during that seven years, they haven't been playing, they haven't been paying get. So they haven't been paying 100% get and they meet the requirement of increasing the workforce by 10% of their company.

And so all that time they haven't been paying into the state. Assuming that on the eight year mark that they keep all the workforce and that they don't just immediately fire all this workforce that they built up and then they continue paying into the state taxes get.

So what I hope that you could possibly do is maybe just track their first and second year to just see if that's. As a business person, I'm just trying to think like a businessman is I assume they would just fire their employees and I hope they don't to cut the expenses and then don't pay as much taxes.

I hope what they will do is actually keep their employees and pay more into our taxes. But I think you should keep track of that just to ensure that the program is doing what it's supposed to be doing and to have that grow. It's 10 year. It's 10% every year. Right.

It's 10% within the first year and they must sustain that 10% amount.

Zero, so they have to sustain that. And that's not just for ag, it's for all the.

For all business activities. Yes. So it's a 10% increase in the first year. There is another option that is the case. If an enterprise zone is designated and then a business moves into that enterprise zone, their requirement is a 10% increase in the first year.

However, if a business already exists and the county and the state designate an enterprise zone on top of it, in addition to that 10% increase after their fourth year, they have to see a 15% increase. It's because they're not necessarily moving into the economically challenged area. They're kind of.

They're not necessarily by default, but they're there by default and taking advantage of the program benefits. There's very few companies that have that because they would have to have been established many, many years ago since the designation for an enterprise zone is 20 years. But those are the General requirements.

So I was in the wrong impression. I thought it was 10% every year. But to meet a 10% increase of workforce to sustain that for seven years is actually manageable.

It is, yeah. It's our interpretation of the statute. It's an increase in the first and then maintain that increase for their seven or 10 years in the program.

Then I guess my last question is what is the Department doing to promote this program? Since the requirement to even just sustain in this program is very doable, there's.

A lot of nuance in the program. So we've learned in my time with this program, I've been branch chief since July of last year, that in person. Thank you.

I appreciate that the in person works the best because there's a lot of nuance and a lot of qualification requirements for this program and it's best if the business owners understand it.

So we do go to every county every year to promote this program and then we do two to three various in person events every month, whether it's partnering with other agencies or the counties or the or other economic development community organizations to go out into the community to talk about the program and promote it, along with some of dvet's other programs for small businesses.

And you also have enterprise zone coordinators in each county that's also promoting it, Right?

Exactly. And part of what they do not only is helping to manage the program, but they're also helping us to market the program and talk to their constituents and counsel the various counties and small businesses about the program.

I'm shocked that more businesses are not aware of this program. Thank you.

Any other questions? Sure. Thank you. You know, in the, and I understand what this program does and in the big scheme of things, you know, and the testifiers stated that this is for like suppressed areas to help that kind of thing. But it was also to create jobs in General. Right.

And our state's problem is at the end of the day, unemployment is low. Right. And it's more a cost of living issue. And as you know, reads information and reports and things, you know, the workforce, age demographic in our state is shrinking. Right.

So if you move, if you increase employment, increase the enterprise zones in certain areas and employment grows in those areas, those employees need to come from somewhere. And my assumption is as long as cost of housing stays high, the likelihood of people moving back is low.

So all you're doing is taking jobs from someplace else in some other business. Because everybody's fighting for employees. Right. First age demographic is shrinking. So in the big scheme of things, what's the outcome for the state?

So thank you, Representative. You know, there is always an impact for every government decision we make. We looked at this as a way for businesses that we are helping to establish or expand, how to get them anchored to certain areas or communities where the infrastructure exists.

But now I understand that, but you know, and I appreciate it because I've heard you say that. But at the end of the day, the employees will come from somebody. Right? It may be us, it may be come from state government. Right. And we're looking for employees.

And you know, all the departments right now are touting how great they're doing and filling their vacancies and things like that, you know, and we create these other opportunities they may take from us or somebody else or. And create other problems for the state at the end of the day. Right. We don't have an employment issue.

We have a cost of living issue and we have inflation is outpacing income. Right. So while I appreciate these programs and what the purpose is, I think what we're supposed to be doing is also kind of understanding the total impact to the state. Right. And if you're just shifting employees around and. Right.

We have limited resources when we subsidize any program. We have to be very strategic when state resources are slim. So what is the, you know, what is DBAD's plan as far as the long range? Big picture. I understand this program, but what's the big picture?

So one of the top metrics for businesses is the cost of business, the high cost to do business. When we looked at studies and reports that were done that were either asked of this body or in the past, it's housing, it's lack of access to facilities, and then it's also other costs.

So when we look at what's in dbed, the enterprise zone, the layering of incentives, that's just one opportunity to lower costs. If we put in the facilities, I mean, we do do subsidized housing collectively, that chips away at lowering the cost of business.

Now, for dbed, we're not trying to create, you know, one pocket to another pocket with employees. That's up to the employee. If they want to leave a profession or work somewhere else or start their own business, great.

But if we're looking at the ways to lower the cost of the business, we're looking at current policies and incentives and then how do we layer them and then centralize them into an area where the state's made investments?

So if we have the sandbox, we have, uh, Cancer Research center, what other incentives can we put there so we can hopefully see businesses?

Right. And, and I appreciate all of that, but at the end of the day, I think it's. It's limited resources of the state. Right. It's all the components that concerns me as far as where we're headed right now. Just because, you know, Normally when we go through uncertain times, we turn to the Federal Government for help.

This time I don't know if that's an option. Right. So we have to be very strategic on the limited resources the state has in how we push the big. And you're right. You know what you stated at the end of the day, I think the biggest problem is the cost of housing. Right.

And that's why people are moving. Anyway, I just wanted to have that conversation with you. I think at the end of the. Day. That's our biggest challenge is that get all these moving parts. This program is great.

But again, When we first talked about this and when I first heard about this 20 years ago, it was we were trying to create jobs. Right. And our problem right now is if we create jobs, there's not enough workers. That's the problem.

There is this chicken and egg where we have certain industries here, but is the P20CT alignment there producing a skilled workforce and vice versa. We have great programs within P20 CTE but all those jobs here and that's also Dvet's responsibility. And we're having those discussions trying to align the case stem certain workforce development.

How do we get those industries here? So Robert's getting your treatment.

Thank you, Chair. Thank you. Any other questions? Let's move then to HB2411 relating to Department of Business, Economic Development and Tourism. First testifier is Christine Buell from the University of Hawaii.

Good morning, Chair, Vice Chair, Members of the Committee, my name is Christine Boley. I'm the University of Hawaii System Director of Workforce Development. We stand on our written testimony and are happy to answer questions should you have them.

Thank you very much. Sorry for the mispronunciation. Next up we have DBEDT. I'm assuming it's Dane.

Aloha Kakou. Chair, Vice Chair, Members of the Committee, my name is Thomas Chalk. I'm a program specialist in DBEDT. And on behalf of Director Tokioka and the DBEDT, we stand on our testimony as submitted and I'll be available for questions.

Thank you very much. Sherry Menor from Chamber of Commerce. Thank you.

Good morning Chair, Vice Chair and Members of the Committee. Vanessa Rogers, Vice President of Workforce Development at the Chamber of Commerce, Hawaii. We do stand on our testimony and would like to provide a little bit of more context.

So sector partnerships are industry led collaboratives bringing together industry leaders, educators and community Members all within one sector to focus on the industry's most pressing challenges. When each sector is started, we start with data.

So there is a workforce analysis completed that looks at what are the projected in demand jobs and where are the gaps in that kindergarten to career talent pathway that the sector can focus on. The Chamber is privileged to lead a community of practice for seven of the active sector partnerships in the state.

And while we are focused on the pressing challenges of the industry and they are all industry led workforce remains a main challenge for many of our industries here.

Through this we work with the employers to think through what are those critical skills and credentials that need to be attained in order for people to move into jobs and not only stay in entry level positions but continue on a pathway to family sustaining careers. In 2025 alone we have made a significant impact.

So through the seven sector partnerships we have 900 employers engaged. We have committed to or served over 2,500 students in meaningful workplace learning experiences and supported over 150 educators with professional development and educator externships.

This platform is really critical for employers to engage and learn about many of the amazing state run programs that are available to support things like internships, credentialing and entry level jobs. One of the other main things that our sectors are focused on is out migration.

So we know that this is a challenge for the state and we have launched in tandem with Hawaii Island Economic Development Board a Kamaaina Come Home program.

Through this we have series of focused events and also the opportunity for local professionals to serve as mentors to Kamaaina that are on the continent studying or working that are looking for opportunities to re engage and come back home.

Just last night we had a sector partnership convening for all of our sectors with over 200 people there to think through and work on sector agnostic challenges that can support Hawaii's broad workforce. We thank you for your consideration and we are in strong support of this Bill and I'll be available to answer any questions.

Thank you very much. Up next, Anna Kelly from AE Consulting LLC. I think on Zoom.

Aloha, Aloha everyone. Anna Kelly, President and CEO of AE Consulting. I stand on my written testimony and am in strong, strong support of this initiative.

We have been working in partnership with the Chamber of Commerce and many other organizations in the state to continue moving forward these sector partnerships and they not only help cultivate our local talent pipelines and create new pathways for residents to these in demand Hawaii jobs, but they are also nationwide best practice and really help bridge that gap between education and industry to ensure alignment for the state. Thank you.

Thank you very much. We have 13 testifiers in support, none in opposition, one with comments. Would anyone else like to testify this measure. Are there any comments or questions from our Committee Members? Sure.

If you can come up, please. Say your name again.

Christine Boley.

Christine, I'm looking at how this special Fund is funded, but it's not very clear to me. Could you explain how this special Fund is other than us just appropriating money into it? Is it self sustaining?

Is it self sustaining beyond. So the way that they have been funded to date include a variety of mechanisms such as the federal grants that uh, Good Jobs Hawaii program got. They have been, for example, the new transportation Sector Partnership, the workforce analysis and logistics. To establish that sector partnership, identify a steering Committee, recruit a chair.

So is the UH willing to put their money that they secure into this special Fund?

Uh has only supplied funding through grants and those grants, particularly at the federal level, are increasingly difficult to get and unstable sources of funding. The university itself has no dedicated funds for this kind of work.

So it looks like a General Fund appropriation and I wanted to see if we can make a stronger case for that funding. I have a personal question. Have you ever heard of the Enterprise Zone?

I have heard of them. I don't know much about them.

Could you talk to DBEDT and see if you can promote the Enterprise Zone since it's supposed to work in increasing workforce for those companies in line with your mission? Yes. That aside.

So I believe I've been to one of these meetings at the county level and I like that it brings all these different sectors together and they start talking. What is. I want to ask what has been the biggest takeaway for our problem on workforce? Because that should be highlighted.

So in the year and a half I've been in this position, I've been to every Sector Partnership meeting and I serve on the steering committees of them as well. Cross sector workforce development barriers often include a lack of work based learning opportunities.

So students don't know where the internships, where the apprenticeships, et cetera are, and then they are. More generally there is a misalignment between curricula and between employers. Needs on both sides. Right. So the DOE and UH, for example, have put an enormous amount of effort into aligning curricula with the perceived needs of employers.

Employers are not always willing to give new grads a chance, frankly. And so where the MQs for positions that have been chronically vacant have a minimum of two to three years of work experience in them, UH, can, can crank out as many graduates as possible.

But if those graduates do not qualify because they don't have that work experience, they leave. They Go to the mainland, they get that experience and they don't come back. And so programs like Kamaaina Come Home are particularly important in trying to attract those former community Members home.

But it also is a chronic contributor to UH's sky high underemployment rate where 57% of our Bachelor's degree holders still do not have a college level job within five years. Sector partnerships are a proven national model for addressing that misalignment. For making employers on the one hand aware of the need to adjust MQs. Right.

In order to be able to hire new college grads for college grads to increase career awareness of the different work organizations, the different kinds of positions that are out there, including in the public sector. Right.

So what I'm hearing you say is that Hawaii does not provide enough opportunities for positions that are grad level. That's correct. And if Hawaii were to provide those opportunities, then these students who graduated would have these jobs.

Correct.

But those positions are certain jobs in this certain industry. For example, I can't think of what graduate jobs other than maybe acc like community college jobs with a restaurant provide. And so I can only see higher level.

So are we in Hawaii focusing in the right industry to generate college positions or are we solely focused on low level jobs?

We are overly reliant on jobs that don't require higher education, that don't have clear career development pathways.

You kind of need both for employee. We do. So how do we concentrate on college level jobs and also concentrate on those low level jobs?

There are several methods. So economic diversification through entrepreneurship, through legislation, for example, that reduces the tax and regulatory burdens on new businesses for the kinds of really creative workforce solutions and small business incubators like the value added product development centers. Right. Like shared advanced manufacturing facilities.

Investment in entrepreneurship and small business startup and business expansion is how you take these really creative kids in UH classes and help them find a way to, to chart their own path. Right.

Well, thank you. You're welcome. One more question for DBEDT please. DBEDT, what sort of entrepreneurship programs do we have under DBEDT?

Specifically? We don't have, to the top of my head, specific entrepreneurial programs. What we are doing though, going back to the prior speaker, it's about 40% of our high school students don't go on to post secondary within the first year. We visited campuses and we have our eyes on agriculture and film and value add.

And what we're doing is at the post secondary level those facilities exist. You have the academy for creative media, you have the value Add product development centers on Maui as well as Oahu. You also have assets that DBEDT attached agencies own.

The cliff for high school students is if they're going to go into entrepreneurship they can't afford the cost of these facilities. So if we're teaching students how to do vertical ag at the high school when they graduate, where do they go? ADC is actually exploring what the cost is to put up those facilities.

We're working with the school for adults on their career foundations. They teach the soft skills through and give certificates such as build your biz, build your bank, build your farm. If we teach the students the entrepreneurship at the high school level when they graduate, the idea is that then they get access to these non credited facilities.

It's still operated by the UH system but they'll get access to continue their business model and they can go on and start their small business. But we're focused on the film.

DBEDT I believe also or under DBEDT which maybe is HDDC provides funding to accelerator programs which accelerated programs help out entrepreneurs as well. So what I'm hearing you say Dane is that DBEDT's focus are on these industries that you mentioned and we're selecting industries to be winners out of all the different climates.

I want to encourage you to focus on programs that helps out all industries and I'll give you an example. Permitting is definitely one. Permitting helps out whether you're in ag or film or any other industry.

If you can focus your resources and time and energy into programs that helps out all industries, I think it will do better than selecting winners in Hawaii. I want to just plant that seed in your mind because I believe that permitting helps all industries and it's just one of the different programs that you can focus on.

I think helping entrepreneurs at all level, whether they're 6 years, 10 years or 1 year experience will also develop them which I believe you are already doing in those certain industries.

But if you could figure out how to level set it and help out all industries and invest those resources, time and energy, I think you're going to help out industries that you don't even see coming.

Because I'm tired of government thinking they know better in the private sector and we really need to cultivate those private creative industry minds and intelligence and really have them start leading the way. So that's just my thoughts. Do with them what you will. Thank you. Thank you.

I do like the intent of this Bill. I like how it lets the private. Sector steer the ship. zero, sorry, sorry. I like how it lets the private. Sector Steer the ship in telling what it thinks would be most effective. My question, which I don't think has. Been brought up yet is do we know what the expected annual cost would be or an idea

I'd actually need to turn to the chamber who operates that program on what the annual cost is.

Thank you for the question. The annual cost for each sector is around $100,000 and that contributes to to the personnel cost of doing the data management analysis, project management, facilitation, coordination and then also all of our initiatives that fall within each sector. So helping them move forward.

Initiatives such as Kamaina Come Home or some of our work based learning experiences supporting educators traveling to this is statewide so travel traveling to neighbor islands do support as well. This is there also we partner with UHCC on as Christine mentioned on the Good Jobs Challenge.

So they had coordinated staff that were supporting with this initiative as well and then many. But they are all employer led. So our steering committees and our lead containers really drive the direction of the partnership.

Thank you.

Any other questions? Okay, I'm not going to pose this as a question right now, but I would love more data, I guess and you're welcome to transmit it at your own leisure.

But on specifically how many jobs would be available to local residents if the companies were simply to adjust their NQs, because that seems like a low hanging fruit. And I am concerned with the notion that the state should that the public should subsidize unwillingness by private companies to adjust their MQs.

Just one last one, please. Chair, I'm not sure who can answer this, but how much funding does this program need? I didn't find in the testimony or anywhere I would like to put into the standing Committee report.

Thanks for the question. And so as Christine also mentioned that prior to or previously this has been fully grant funded and we've been privileged to have a number of large federal grants that have supported the work.

I just need the number, Ma'am.

Okay, sure. So for each year for the seven sector partnerships, it's 700,000 this for the remainder of this year we have a $200,000 gap that we will be filling through foundation and employer partners.

And I'm assuming that you can provide like a budget for what that $700,000 would go to?

Absolutely. Thank you. Thank you.

Okay, any other questions? All right, that was HB 2411. Let's move to 2138, relating to economic development. First up, we have—actually we have no one signed up to testify in person or on zoom. Would anyone like to testify? Okay. We have four in support. None in opposition. One with comments. Any questions from our Committee? Sure.

DBED. So, this Bill is focused on workforce. I represent Puna and I know Hawaii county very well. Puna has a lot of labor. They have a lot of housing, not enough jobs. Hilo has jobs. Kona has jobs.

Is there a way for this program to help with workforce to be able to provide transportation from the east side of the Big Island to the west side? And I'm not talking about just their mass transit, because the feedback I've gotten that it's not consistent.

I'm talking about reliable transportation for businesses to be able to count on that workforce when they need them. And what I want to ask is, has there ever been, in DBED, where DBED leads some sort of workforce initiative to help for economic development? Because this is kind of what this pilot program does.

Initiative to help workforce development, not specifically to transportation, we have not. If this Bill were to move forward, there are things that DBED could do to help support maybe some data gathering or studies, but we're not the subject matter experts in transportation or modes of transportation. We have been approached on gathering data from different hubs.

And there are—like our state Department of Transportation is looking at different technologies that could be offered as a type of taxi service or a mode of transportation.

So, if you need data, the data already states that there's no jobs in Puna and all the jobs are on the west side, what sort of data do you need to just understand that all the jobs is on the west side and all the labor and workforce is on the east side?

Okay, so, that's a different way for DBED to address that, when we look at communities and what the strengths and weaknesses are for economic diversification. For that district, we've looked at energy as an opportunity for workforce in that community.

You mean geothermal, correct?

Yes.

Issue that's very controversial in that area and the community has always voiced out that they don't want it, but you're looking into that for that community.

When you have communities of population, with our state agencies, we can look at what type of job creation we can create in those districts where the key is to prevent, to reduce the driving or the community—of the communities for jobs.

So, okay. I guess I'll end with this question. Does DBED feel like this role is not within their purview of actually helping workforce get to an opportunity that's in existence, or does DBED feel that their main role is to create new industries that's not in existence?

We always are asked to diversify our economy. Every time the state hits a snag with our primary industries, it's a quick turn to DBED—where are we with diversification? So, I think we do have to be intentional if we're going to be serious about economic diversification. What are the geographical strengths in that area?

What is—how do we build up that workforce and what investments the state has to make. If, if we're going to keep saying no to everything but yet go back to diversification, then we're just continue, continue to just take things off the table.

I mean, I think that's an earlier question where if we were to focus on everything and we should, we have an emergency emerging sectors report that outlines what sectors the state is strong in, but it comes down to government deciding that through policies as well as resources is, and we do mandates.

And I mentioned those three areas earlier because the state mandated us to double food production, 100% RPS, and increased housing. And so, when you look at this from a macro level, it comes down to land use and what one of our key industries are, is exports. So, either we're going to export things domestically or national.

That's the big picture. Now, if I come back to look at, okay, where we are with workforce, you know, there are, for Hawaii island, there are a lot of strains there. And I mean, granted you need the community to support that. However, it's also, I think, this, with the Administration, the policy of this body, if we really want to help with economic diversification, we have to look at what those strengths are.

If, you know, if it's aerospace, if it's geothermal, if it's agriculture, aquaculture, we then yeah, it's on DBED to ask for those resources and put together that plan.

I mean, going back to the context of this Bill, we have not looked at different modes of transportation to move people from place one place to job centers. We actually look at where the job centers should be established.

I just have one more question. Thank you for that, DBED. Can I ask you just one more and then I just want to make one comment? Does hotels already invest in transportation for buses or vans, for workforce on the east side to go to the west side?

I have to get back to you on that. Let me get back to you on that on the shuttling of their workforce.

Okay, so you're not aware that hotels are currently shuttling workforce from the east side to the west side?.

With DBED and our 17 programs, tourism—I don't sit on the tourism side. So, I'll have to get back to you on that one.

Just be mindful that there's also economic development in the neighbor islands and that not everything is on Oahu. So, hotels, I believe, are shuttling people from the east side to the west side, because they have the appropriations, the funding, to be able to do that.

If it works for hotels, I'm sure it could work for small businesses on the west side who needs employees, because the cost of living on the west side on the Big Island is relatively high.

So, I just want to leave that comment because how I got this idea for this Bill was from business owners on the west side meeting with me who needs employees to run their business and what Puna in the east side has to offer our employees.

And if DBED can be the facilitator and be that link for those jobs to be accessible for the east side, I think you would be doing a lot for economic development, especially on Hawaii County.

I'll take a look into that, Chair.

Thank you.

Any other questions? Okay, let's move down to H-- thank you. Thank you, Dane. Move to HB 1843, relating to tax credits. Our first testifier in person is the Department of Taxation.

Good morning, again. Garrison Turner for the Department of Taxation. Excuse me. We'll stand on our written testimony, providing comments.

Thank you. Okay. All right. I'm sorry. We're going to recess and-- we're going to recess.

Okay. Thank you. We're now moving into the Committee on Economic Development & Technology and the Committee on Labor Joint Hearing for 9:30 a.m. We're in Conference Room 423 of the State Capitol. I'm just gonna read. Okay. Because morning hearings may adjourn prior to-- must adjourn prior to floor session, not all testifiers may have the opportunity to testify.

In that event, please know that your written testimony will be considered by the committee. For those on Zoom, please keep yourself muted and your video off. The Zoom chat function will allow you to chat with the technical staff only. Use the chat only for technical issues. If you're disconnected unexpectedly, you may attempt to rejoin the meeting.

If you're disconnected while presenting testimony, you may be allowed to continue if time permits. Please note that the House is not responsible for bad Internet connections on the testifier's end. In the event of a network failure, it may be necessary to reschedule the hearing or schedule a meeting for decision-making. In that case, an appropriate notice will be reposted.

Please avoid using any trademarked or copyrighted images. Please refrain from profanity or uncivil behavior. Such behavior may be grounds for removal from the hearing without the ability to rejoin. This morning we have members of ECD and Labor. So thank you all very much. We're going to start first with HB 2118 HD 1, relating to Department of Business Development.

Up first, we have Karen Ewald for the State Foundation on Culture and the Arts.

Hi. Good morning, Chair Ilagan, Chair Sayama, and members of the committees. Karen Ewald. I'm the executive director of the State Foundation on Culture and the Arts, and we stand in support of this bill and are happy to answer questions. Thank you.

Thank you. Next, we have Angela Young on Zoom. Okay. Any other testifiers on this measure? Any questions from our Joint Committee? Okay. We'll move now to HB 2473. Mary Alice Evans from OPSD.

Morning to all, Chairs, Vice Chair, members of the communities. Dawn Kuliano from the Office of Planning and Sustainable Development. We stand on our written testimony that was unfortunately submitted late, but we have printed copies that <inaudible>.

Thank you very much. Up next, we have Madelyn McKeague from Hawaiian Council. Okay. Any other testifiers on this measure? For this measure, we have three in support, none in opposition, one with comment. I should mention for the previous measure, we had six in support, none in opposition, one with comments. Any questions from our committee, our joint committee on HB 2473? Okay. Recess?

Recess.

Okay. With that, we're going to recess. Thank you.

Okay, we're back for-- yeah.

Okay. Thank you, Vice Chair. Chair's recommendation is as is for HB 2118. This bill aligns arts and cultural programs with economic development by moving key cultural agencies to DBEDT. We're going to just keep the bill as is. Any questions, members? All right. Vice Chair, please take that.

Okay.

The vote.

The recommendation on Bill 2118, HB 2118, is to pass as is. Chair and Vice Chair vote aye. [Roll call]. Okay. Chair, the recommendation's adopted.

All right. For the Labor Committee, we'll be adopting the same recommendation, passing this measure out as is. Members, any comments? Seeing none, Vice Chair for the vote.

Thank you, Chair. Voting on House Bill 2118 HD 1. Chair's recommendation is to pass unamended as is. Chair and Vice Chair vote aye. [Roll call]. Thank you, Chair. Recommendation is adopted.

Thank you.

Moving on to HB 2473. This bill protects Hawaii's identity by embedding Hawaiian sense of place. Chair's recommendation's to defect effective date to Year 3000, technical amendments for purpose of clarity, consistency, and style. Any questions, members? No questions, Vice Chair. Please take the vote.

Okay, we're voting on HB 2473. Recommendation's to pass with amendments. Any votes in opposition? Any votes with reservation? Chair, the recommendation's adopted.

All right. We're Labor Committee. Same recommendation to pass this measure forward with amendments. Members, any comments? Seeing none, Vice Chair for the vote.

Thank you, Chair. Voting on House Bill 2473. Recommendation is to pass with amendments. No votes? Reservations? Noting the excused absence of-- the excused presence of Representative Reyes Oda. Thank you, Chair. Recommendation's adopted.

Thank you.

Thank you, member--

Actually, before you-- also noting for the previous-- for that bill, I excused the absence of Representative Holt.

Thank you, members. We are now adjourned.

Okay, we are reconvening the ECD hearing with the 8:30 a.m. agenda. We're on HB1843. The next testifier is the Hawaii State Energy Office.

I'll stand on unlock you old with the Hawaii. Oh, sorry.

Not you. Is HSEO present? Okay. Hearing none. Okay, we're going to move then on to Tom Yamachika from the Tax Foundation of Hawaii.

Morning, Chair, Vice Chair, members of the Economic Development Committee. Tom Yamachika from Tax Foundation of Hawaii. Our concerns is that the bill, if enacted, would basically kill off the credits that we have. It wouldn't do anything for future credits because new legislation, by default, takes precedence over old legislation.

So if a new bill were to be enacted with a credit that was passed with neither a sunset nor a phase out, it would be effective with neither a sunset nor a phase out.

Notwithstanding anything that this bill says, we also note that the state auditor is required to review existing tax credits on a five-year ruling basis under chapter 23. Happy to answer any questions. Thank you for the opportunity to comment.

Thank you very much. Trung Lam from HTVC. Is anyone else from HTVC going to testify? Moving on then to Marisha Palma Elmore from SAG-AFTRA.

Hi. Mericia Palma Elmore, Executive Director of Screen Actors Guild and American Federation of Television and Radio Artists. And we're going to stand on our testimony in opposition. Thank you.

Okay. Christopher Wiecking, IATSE Local 665.

Good morning. Chair, vice chair, Members of the Committee. My name is Christopher Wiecking. I am the President of IATSE Local 665. I have a 37-year career in business and I stand on my testimony in opposition to House Bill 1843.

Thank you. Rocky Mold.

Thank you. Sorry for that confusion. I'm Rocky Mould, Executive Director of the Hawaii Solar Energy Association. I'll stand on my written testimony in opposition.

Thank you very much. Okay. Jacob Aki, Alaska Airlines and Hawaiian Airlines. Okay. Irish Barber, Hawai'i Film Alliance.

Aloha. Chair Ilagan, Vice Chair Hussey, and committee members, Irish Barber, President of the Hawaii Film Alliance. And on behalf of all of our Members, we stand on our written testimony in strong opposition to HB1843 and just want to highlight that this tax credit brings in more state tax revenue than it pays out.

It builds high union jobs and wages. And for that reason, we respectfully request that the Committee not pass 1843 or carve out the film industry from this devastating bill. Mahalo.

Thank you very much. Nahealani Parsons from the Hawaii Renewable Fuels Coalition.

Chair, Vice Chair, and members of the committee, Nahelani Parsons, Executive Director for the Hawaii Renewable Fuels Coalition. As a coalition of farmers, airlines, and fuel producers, we are working towards building up our local resiliency and supporting farmers for the option to diversify and grow fuels as a rotating cover crop with their own food crops.

Placing a sunset of four years would destabilize the market at a time we are trying to build it. And for that reason, we respectfully oppose this measure and ask to the Committee to further measure. Thank you.

Thank you.

Mark rRsner. Is Mark in? Okay. Julia Medeiros. Henry Fordham. I have no one else scheduled to testify. Would anyone like to testify in person or on Zoom. Please?

Good morning, Chair, Vice chair, Members of the Committee, my name is Jonathan Makue. I'm the lead negotiator on behalf of Local 996 and we oppose this bill. Mahalo

Anyone else like to testify?

Aloha, Chair, Vice Chair, Members of the. Committee, Munashe Chando with the Hawaii State Energy Office. And sorry about the confusion earlier. I happen to have just missed the window. But I'll be here if you have any questions.

Thank you. Anyone else like to testify? Okay, for this measure, we have three in support, 158 in opposition. So good job, everybody, and seven with comments. Any questions from our Committee chair?

Could we have someone from the solar industry come up, please?

Sure.

I wanted to ask, I believe the federal tax credit expired.

The federal residential tax credit expired, yes, at the end of last year.

Is there other federal solar credits that your industry are taking advantage of?

There's a commercial tax credit that is on a four year phase down now with the law, and so businesses can claim the credit and that can sometimes flow through leasing companies to the residential space.

So a leasing company would lease a system to a residential homeowner and the leasing company would actually own it, so they could actually claim that credit. How much of that gets passed through to the resident is an open question. It depends on the business model.

Does the state subsidy for solar is that, I believe it's not enough, but how much of an offset will that be?

It's a 35% offset for if you have tax liability. If you don't have tax liability, you can claim it at 24.5%. The federal credit that was lost is 30%. So.

is that on top of it?

That's on top of it, yes.

Will the state solar credit do what it's intended to do without the federal.

Yes, it will. It's very important as an economic driver for our industry. We have very ambitious renewable energy goals. People are realizing that rooftop solar is really important to achieve that goal. This credit supports that goal. Without this credit, it will be very difficult for Hawaii to achieve its own policy goals.

Okay, thank you.

Thank you.

So, Rocky really quickly, what's the current penetration rate on rooftop solar?

We have about 50% of single family homes on Oahu and it's about 35-40%. Sorry, it's 50% statewide and it's about 35% or so. Don't hold me to those numbers exactly. But it's about 35%. But it's 50% statewide for single family homes.

Okay, thank you very much. Any other questions, Members?

Thank you. All right, we're going to move then to HB1611 related to taxation for this measure, first testifier is Department of Taxation. Thank you, Hawaii Food Industry Association.

Thank you, Chair, Vice Chair, Committee Members. We are in strong support of this measure. Been supportive it for probably 30 plus years at this point. Hawaii is one of only four states that fully taxes essential groceries. Numerous studies indicate that this is extremely aggressive. One in three people in Hawaii cannot afford to buy enough groceries to eat.

That is alarming. We should really do everything possible to help with that situation. There are studies that show that increasing grocery taxes increase food insecurity by nearly as much as you increase the tax. Decrease the tax, which actually makes a lot of sense if you think about it.

We've provided that this bill provides a proposed very graduated decrease so it can be worked into the budget in numerous ways. We actually, in our recent research have found that we think that this bill is actually a lot less expensive than it had previously been projected to be.

So if you go to the USDA spreadsheets on food at home sales without taxes, and you take 4% of that, it comes out to 183,000. So much lower than previous estimates had been. And that's 2024 data. So that's pretty recent. Yeah, we are in strong support. We'll be available for questions if you have any. Thank you.

Thanks very much. Tom Yamachika from the Tax Foundation of Hawaii.

Good morning, Chair, Vice Chair, members of the committee, Tom Yamachika from Tax Foundation. We have technical comments and will stand on our testimony be available for questions.

Thank you. Matt Prellberg from Holomua Collaborative.

Aloha Mai Chair, Vice Chair, members of the Committee, Matt Prellberg from the Holomua Collaborative, local nonprofit founded to advocate for policies that will keep local working families in Hawaii by making sure that they can afford to stay here. You have our written testimony in strong support of this measure.

There is just one point I really want to drive home that is included in our written testimony. Every year, Holomua puts out a survey to understand the affordability and cost of living. things that are affecting our local working residents.

This year in our survey of 3,200 local workers, the top issue and continuing to be the top issue affecting local working residents, of course, is housing prices, which we talked a little bit about earlier from Representative Yamashita.

And then also the second issue that is repeatedly brought up is the cost of wages, which all of the conversations around economic development all bring up. But the third issue that's come up is either taxes or the cost of food. This is the thing that is most affecting our local residents.

And if we do save them money on their taxes on their cost of food, both of which this measure address, it will allow more of their limited wages to go towards the cost of housing. Thank you very much.

Thank you. Mike Duyn from Aloha Care.

Okay.

Sherry Menor from Chamber of Commerce. Thank you. Any other testifiers on this measure? We have 18 in support, none in opposition, two with comments. Any questions or comments from our committee? Okay, thank you very much. We'll move to HB 2570, related to sports wagering. First testifier is Department of Taxation.

Thank you very much. Department of the Attorney General.

Morning. Chair, Vice Chair, members of the committee. Deputy Attorney General Jordan Ching on behalf of the Department of the Attorney General, who strongly opposes this measure. The department strongly opposes this measure primarily due to the well studied public health and safety concerns associated with legalized gambling.

I think, particularly, the department is concerned that the bill provides for limited regulation and minimum consequences for unregulated and unlicensed sports wagering activity which may leave an ambiguity as to how unlicensed and non traditional sports wagering would be enforced.

The Department is also concerned that the bill exempts fantasy football sports contests from existing gambling laws without establishing any regulatory oversight or enforcement framework in place for fantasy football operators. The department notes that under existing Hawaii law, certain certain social gambling is allowed and legal which may include certain forms of sports wagering and fantasy football contests.

However, it's concerned that by allowing - by legalizing large scale sports wagering operations, this board would this measure would increase exposure to the known adverse public effects to health and safety associated with legalized gambling at a much greater scale.

If the Legislature does advance this bill, the department, despite the department's opposition, we recommend the committee to consider our comments and propose revisions relating to the criminal history record check provisions in this bill to facilitate the FBI's review of the measurements.

However, based on our concerns articulated in our testimony, the department respectfully states its strong opposition in to this bill and requests that the bill be referred deferred.

Thank you very much. Department of Prosecuting Attorney. Thanks for being so patient with us this morning.

Thank you. Good morning, Chair Iligan, Vice Chair Hussey. I'm Steve Alm, the Homeland Prosecutor. We do stand in strong opposition to this. Sports betting, I think, is already tarnishing sports. And we are having constant problems across the country with college players, NBA players getting involved in prop bets and the like.

Sports betting affects lower income folks more than upper income folks. Athletes are getting harassed by losing bettors online or in person. And research by the University of California at San Diego found that 96% of online betters lose, only 4% win, and then they soon find their accounts cut off or limited to dollar bets, $5 bets.

And that would mean essentially this would be a tax on our population, especially our low income population. And the Pareto principle or the 80:20 rule applies. A small percentage gamblers will be responsible for most of the betting. So they did a study in Connecticut: 7% of the gamblers there were accounted for 70% of the money spent.

So, what that would mean is that's where this tax money comes from. So, that would mean we'd be making our tax money on addicted gamblers in Hawaii. And I don't think we really want to be in the addiction for profit business.

And finally, in 2022, 34% of the public across the country thought sports betting was harmful to society. In 2025, that's up to more than 43%. So, I really think it's something we should avoid. And I would appreciate your committee not moving forward with this bill. Thank you.

Thank you, Mr. Prosecutor. Honolulu Police Department on zoom.

Hi, my name is Sergeant Leland Kudaishi with the Honolulu Police Department's Vice Gambling Unit. The Honolulu Police Department opposes the bill and I stand by the written testimony submitted. I'm available for questions.

Thank you very much. Let's see... Hawaii State Department of Health.

Yes, this is Jim Dillon, Aloha Chair, Vice Chair, and members of the committee. I was intending to be there in person, but my ticket had a problem at the airport and the airplane left without me. The the DOH stands on its testimony, but I'd like to just very briefly summarize because it's a relatively straightforward set of comments.

First of all, gambling disorder is a real thing, just as the that the prosecuting attorney said. It has the neurobiology of addiction to substances and it's now classified in the diagnostic statistical manual as an addict condition. It affects about 1% of the population at any given time.

That's 1% of the overall population not of gambling, and 2.2% a lifetime; we don't have good data on Hawaii, but we believe Hawaii has at least as much problem gambling as other states. The department chooses to take no position on bills of this nature.

We realize that there are many considerations in adopting a practice that's high risk, including things like cigarettes and alcohol and motorcycle riding and mountain climbing. There are a lot of considerations. Department of Health offers its considerations, but hopes the committee will look at the whole picture. And that's what departments of health usually do.

It is true that gambling will almost certainly - betting will almost certainly increase as a result of this bill, and it's equally certain that gambling disorders will increase as a result of the bill. That's a downside that can't be avoided, I'm afraid. On the other hand, there are many. There are a couple of things about the bill that we like.

Of course, we think it's a great idea to give DOH 7% of the proceeds to develop programs in mitigation of gambling disorder and other effects of gambling. We like, for example, the voluntary self exclusion framework that's adopted within the bill. Other than that, those are really our key points. And I'm glad to take questions.

Thank you very much. Okay. The DCCA Office of Consumer Protection, please.

Good morning, Chair, Vice Chair, members of the committee. My name is Dominic Jancaterino. I'm an enforcement attorney for the Office of Consumer Protection. On behalf of DCCA, OCP opposes this bill.

And the standard of written testimony would just note that, you know, in other states that allow sports wagering, namely City of Baltimore, Massachusetts and Pennsylvania, there's already litigation, ongoing litigation against companies like DraftKings for unfair and deceptive acts or practices.

I believe that, you know, gives you some insight into where this would go if this bill were to pass. Available for questions. Thank you.

Thank you very much. Brandon Maka'awa'awa.

Aloha Chair, Vice Chair, members of the committee. Brandon Maka'awa'awa, Vice President, Nation of Hawaii. The Nation of Hawaii stands in strong opposition to HB 2570. There's a lot of data out there. There's a lot of things to learn.

And I believe the legislature has already begun this work through the prior sports wagering study, and now through the Tourism and Gaming Working Group that I have the honor to sit on.

From our perspective, this process provides time to consider regulatory and revenue questions, but ultimately the focus must remain on how these decisions are experienced by our communities. Earlier working group did not reach a recommendation to proceed and important questions remain and revenue projections, local economic benefit, and social impact.

This is in addition to the legislature rejecting the proposal last year, and things have not changed.

Those questions are now being considered more broadly as part of the current working group's effort to look at gaming policy as a whole, not just a small revenue grab that would not be properly regulated. Online sports wagering does not create jobs, provide revenue back into our communities, or have a lasting economic impact in Hawaii.

Almost all activity happens on platforms based outside of Hawaii, meaning revenues leave the islands, while the responsibility for impacts remain with us. It is an export of our dollars.

Allowing the working group to complete its work gives Hawaii the opportunity to move forward with clearer understanding and in a way that reflects responsibility to our people, our community, and our aina.

Thank you very much. Hawaii Family Forum, Eva Andrade. Okay, we're let's move then to Les Bernal from the National Director, Stop Predatory Gambling, on Zoom.

Hi, good morning committee members. My name is Les Bernal. I'm the National Director for Stop Predatory Gambling, and we're a national nonprofit organization. We're in all 50 states and I'm testifying today on behalf of our members in Hawaii.

We submitted written testimony and I'm just going to emphasize three or four very quick points to highlight a couple which I did not include in my written testimony, but one of which is: this has been, this proposal before you, this has been a public policy disaster in other states. Like that's been the reality of it.

And that's why one book that I encourage you to read that was published in the last month was a Washington Post reporter named Danny Funt published a best selling book called Everybody Loses.

And I encourage every member of this committee and frankly the Hawaii Legislature to read it and understand like what this has unleashed across our country, especially in states that really embrace this. But so a couple of findings from his book that I think are highly relevant to this committee.

One is Funt's book found that 1 in 100 betters on these sports gambling apps make money over the long term. Okay, one in 100. So one in 100 of your constituents will make money, which means 99 out of 100 are going to lose cash. So this isn't about whether or not people can gamble on sports.

We can already have a friendly wage with each other on sports. This is about ripping off your constituents when 1 out of 100 are profitable over the long term. The second key piece here is a lot is made about illegal gambling, right? This is going to eliminate illegal gambling or reduce illegal gambling in Hawaii.

The reality is no one's produced none of these gambling operators produce data to you that show that illegal gambling has gone down in these states where they've legalized it because that data doesn't exist. The reality is when you legalize online gambling, it normalizes it for all of your constituents and your entire population.

And so illegal gambling dramatically increases. And again, from Funt's book alone, he showed that, you know, these criminal, these transnational criminal organizations, like, they're still using these illegal apps, like a huge amount of money laundering stuff still happening in our society, despite the fact that they've legalized online gaming, supposed to reduce, illegal, which are supposed to reduce and dramatically reduce the whole thing.

And the last couple quick points would be these companies before you, like, they sit here and lobby for sports gambling in your state, in multiple states across the country, these same exact companies, once they got sports gambling legalized, they're legalizing, they're advocating for Internet casino gambling. Because that's where the real profits is when you legal; if you legalize Fanduel, DraftKings, you're not legalizing sports gambling.

Over the long term, you are legalizing Internet casino gambling on any device in your state that has an Internet connection, and that's where the money is. So, state like Michigan, for example, the gambling industry was able to ramp through a bill that legalized online sports gambling and online casinos at the same time.

90% of the revenue, okay, 90% of the profits coming into the state of Michigan is coming from the online casino portion of the business. They use the sports gambling apps as a customer acquisition tool to build a database of players.

And then the last key point, I think it's really to emphasize here, I just testified before one of your other committees a week ago on prediction markets. These same - just to think what kind of partner these companies would be FanDuel, DraftKings, who are coming before you.

These same exact companies right now are offering illegal gambling in your state. They're in the prediction market business to deliberately circumvent your state laws. They're both in Texas, California, other states would have not allowed authorized online sports gambling to literally get into your constituents. They've violated your state laws right now.

So, if they're doing that right now, what kind of partner would they be? Why would any legislator want to partner with an entity that's blatantly flagrantly violating your state laws right now on an issue as important as commercialized gambling?

So, I think that's a testament to their values as a company, and it's the antithesis of what the aloha spirit represents. So, I appreciate the work you all do and happy to take any questions when this is over or contact us offline. Thank you very much.

Okay. In person, we have Myron Oshiro in opposition. Myron.

Yeah, I apologize that for some reason the machine that I submitted. My testimony describes me as Myron. I keep on typing in Marcus.

You look like Marcus. You look like Marcus was.

Yeah, yeah, yeah. So anyway, thanks for allowing me the time to testify this morning. For those who do not know, I spent like 23 years here in the state house. I enjoyed my work here and so I appreciate all the work you folks have to do and the decisions you have to make.

So, I come in that context of sharing some information that I think might be useful, some themes that you might be able to share with your colleagues or your constituents. So, I'll try and keep it below the two minutes. So, let me read it for you folks here.

So, aloha Chairman Ilagan, Vice Chair Hussey, Committee Members Holt, Tam, Gideon, and Templo. Congratulations. I know you're the newest member. Second newest member. That's right. That's right. But congratulations. I think you're serving in the Hawaii Kai district formerly held by our dear friend Gene Ward.

HB 2570 would legalize sports betting in Hawaii and open the door to a very powerful gambling industry dominated by mainland corporations who are tuning in right now. DraftKings, FanDuel, MGM Bets, etc. Companies whose profits will leave our state as soon as they arrive. But make no mistake, this is not harmless entertainment.

Mobile sports betting places a high speed gambling machine in every pocket, in every home. It is built for constant use. Micro bets in game wagers, push notifications, instant deposits. All deliberately engineered to keep people betting longer, faster, and more often. Losers become VIPs.

Winners are kicked to the curb, locked out of their apps, limited to bidding a few pennies. So, ask yourself: who really benefits when our Keiki's allowance and our neighbors paychecks are funneled into apps owned thousands of miles away?

And who pays the price when addiction is no longer confined to casinos, but embedded in living rooms, dorm rooms, bedrooms, classrooms? Supporters call this a revenue bill. It is not. It is a wealth extraction bill. Only a small slice of promised revenue is used to justify this industry.

But the losses will be borne by local families, local communities, local people. This may be the mainland idea of revenue generation, but it should not be Hawaii's revenue generation. Medical experts, and I think Mr. Bernal touched upon this, estimate that 1 to 3% of gamblers will develop serious gambling addiction.

In Hawaii, that means tens of thousands of our neighbors. So, ask yourself, are you willing to sacrifice them for any new tax revenue? And to get more personal, ask yourself: which of your constituents will pay the price? And let's be honest and I don't mean any offense to DBED or DCCA or any of the other state agencies, they're working their hardest, they got good people there. But honestly, we're not prepared. Hawaii has never had a gaming commission. We have no real time monitoring system and no infrastructure to police artificial intelligence. States with decades of experience, and they're listening to my testimony, are struggling to keep up. Starting from zero makes us not innovative.

It makes us vulnerable. Finally, keep this picture in mind. A young fan on his iPhone scrolling sports highlights between classes, high school, college, seeing betting props woven directly into the game. Is that the future we want?

Do we want iPhone gambling normalized as part of our Hawaii Hawaii sports culture, while our schools, hospitals, social services are left to absorb the human cause? Is that going to be a normal thing at the UH football game, volleyball games, triple crown pipe shootout, backdoor shootout?

This Bill is not just about dollars. It's also about values. It is about our Kuleana to protect families, protect our children, and ensure that aloha, not corporate profit, guides our decisions.

So I respectfully ask chair and vice chair and Committee Members to hold this Bill or in the alternative, defer this Bill pending the outcome recommendations report of the Senate Comp Current Resolution 121. Joint House Senate Tourism Gaming Working Group. This is all premature. You have a way of getting out of it.

I respectfully will stand for any questions. And this is the book that Mr. Bunnell talked about. I received it last week through Amazon. Jeff Bezos. Read it, it is good. It is worth $25 or whatever it cost me. Thank you.

Thank you very much. Okay. On Zoom, we have Linda Miyata.

Good morning, Chair, Vice chair, Members of the Committee, my name is Linda Miyata. Thank you for the opportunity to share. I strongly oppose House Bill 2570. I lost my home when I was five years old because my dad was addicted to gambling and had a huge debt.

My mom had just remodeled our kitchen and my dad forged her signature to sell our home. And this is a family home that my grandparents built and eventually gave it to my mom and dad. My dad probably innocently started with sports betting. This addiction is just another coping mechanism. And legalizing gambling doesn't solve the root problem.

Please do not pass this Bill. As I can tell you firsthand, it will cause more problems in our state along with gambling environments. It invites prostitution and immoral behavior. More band aids to masking real problems and inviting unhealthy solutions.

Perhaps we can focus on looking at a fruitful idea or fruitful ideas to help people cope with stress, disappointment and anxiety. Mahalo for stopping this Bill. I'm very concerned about Hawaii's youth and a thriving Hawaii. Thank you.

Thank you very much. We have Christine Otto Zaa. I'm not mispronouncing that name on Zoom not present. Okay. Thank you. Jay Wong on Zoom. Okay and Ian Chan Hodges on Zoom. Okay. Let's see. Okay. Jennifer Anderson from FanDuel. Okay. And Kathleen Owen from the Sports Betting Alliance on Zoom. Thank you.

Good morning, Chair, vice chair and Members of the Committee. My name is Kathleen Owen. I'm an attorney with the law firm Orrick. And I am here in strong support of this Bill on behalf of my client, the Sports Betting Alliance, the SBA. The SBA is a trade organization that includes five of the nation's leading sports betting operators.

Bet365 BetMGM, DraftKings, Fanatics and FanDuel I want to start by emphasizing that online sports betting is already happening in Hawaii. There is a robust illegal market that has thrived in the absence of a legal and regulated market.

Based on information published by the American Gaming Association, we estimate that approximately Hawaiians have People of Hawaii have wagered more than 680 million in the illegal market in 2025, an increase of over 140% since 2022. This money is being wagered with offshore websites and illegal bookies with no oversight, no consumer protections and no revenue for the state.

I also want to emphasize that the vast majority of people who participate in sports bettings see it as a form of entertainment that enhances their sports viewing experience and do so responsibly. But of course gambling can become problematic for some individuals.

It's important to highlight that the legal regulated of the SBA use responsible gaming tools and resources for all of their customers across the entire product journey. And SBA Members spend and send important reminders and share resources for problem gambling services for all of our customers.

And right now, the illegal and unregulated companies that have a monopoly over Hawaii residents offer none of these protections. We are grateful to the Members of the Legislature for engaging in a dialogue with us as part of that conversation. DraftKings and BetMGM actively participated last year in the Online Sports Wagering Working group that was led by DBEDT.

The working group also included all relevant state departments and a Member of the House and Senate. The working group concluded with a final report that was submitted to the Legislature before the end of the 2025 session.

We understand there are separate discussions happening about casinos in the state, but with our working group complete on online sports betting and online sports betting being a very different product and consideration than casinos, we ask that the discussion about casinos please not delay the debate over this Bill and we respectfully ask this Committee to please keep the Bill moving so that we can continue this conversation.

Thank you again for your time and I'm happy to answer any questions.

Thank you. Are there any other testifiers on this measure? We had seven, I'm sorry, we had 11 in support, 41 in opposition, five with comments. Are there any questions or comments from our Committee? Chair?

Thank you. Let's start with DCCA. You mentioned in your testimony that the sports betting companies have filed lawsuits in other states and then you reference to say that and what I assume they're not trustworthy. So are these pending lawsuits or are these lawsuits that have closed?

So thank you for your question. These are lawsuits against draftkings and sports betting companies brought by the city of Baltimore, for example, in Massachusetts.

Answer my question first. Are these lawsuits pending or are these lawsuits closed?

They're ongoing.

So are you saying you know the verdict of these lawsuits before they close?

No.

Then why are you saying you are assuming what the results of these lawsuits are? Just because someone files a lawsuit. Do you feel like that's a sign of this entity being untrustworthy?

I think it's a signal or at least one variable that you can take into account.

So anytime someone files a lawsuit, that's a signal that you can't. That you can say that, no, these guys are not trustworthy and not wait until the case is closed?

No, I'm not saying that, certainly.

Then what are you saying?

I'm saying that all three actions that I listed in my testimony are based on unfair and deceptive acts or practices, and they're all against the same defendants. That is more than a signal of what would happen, I think, if this Bill would pass.

Have DCCA have ever filed a lawsuit against an industry?

Not an industry, but certainly kind of.

Similar to what's happening with gaming.

I'm not sure what you mean.

What I'm asking DCCA is because it sounds like DCCA has made a position that they don't want to regulate this industry. Am I correct?

I don't know if that's correct. Our testimony is merely just pointing out anecdotes and pointing to civil litigation cases.

So maybe come up. Yes.

Zero, I'm sorry.

What's DCCA's position?

I think we did not submit. DCCA did not submit separate testimony with regard to this particular measure. But I'm Nadine Ando. I'm the Director. And I think because the questioning was specific to what DCCA is doing with regard to this measure. I think it's important to note last.

I believe it was last session, there was the legislation proposed to put regulation of this activity with DCCA. And in the course of that discussion, DCCA did present testimony in opposition to the Bill. And that was my assumption of your position right now. Well, we. This is not put with us this session.

The way I think the Bill reads is to put it with DBEDT.

So are you in support?

Oh, no. We continue to be in opposition to it. And then the testimony that was submitted through the Office of Consumer Protection, one of our divisions, set forth the basis for the opposition on behalf of the Department. So the department's position is still the same. We would be in opposition to this.

We didn't submit separate testimony, however, because it was not putting the regulation of this with DCCA. But I believe that, in answer to your question, I think what's significant about the lawsuit that was filed. In particular, I'm familiar with the City of Baltimore lawsuit because I did review it last session.

And I think what's significant is, you're right. Anyone can file a lawsuit. Anyone can make allegations. Anyone can include allegations of unfair and deceptive trade practice. But what's significant about that lawsuit is it's filed by the City of Baltimore.

That is not just an individual plaintiff saying that I was misled, and however, I was misled by these companies caused me to suffer damages. You're talking about an entire municipality. And I think if we look at the depth of what's being alleged in the City of Baltimore complaint, as I recalled, is very extensive.

It talks about all kinds of manipulation by use of algorithms to be able to identify which particular users would be likely to become addicted. And because that it pushes more betting, it pushes more notification to those that it identifies that will be most vulnerable to being addicted to this.

So, you know, I think that makes it a different. It's not. You're right. Anyone can file a lawsuit, and if the lawsuit is still pending, legal issues are still there to be determined.

But it's an indication, and I think a strong indication, when you have an entire municipality filing a lawsuit like that, that shows the breadth of the damage that they believe has been done by legalizing this in their community and in their state.

Thank you, Director. I do have further questions, but I want to bring in the AG. Sorry, Tim. Doing great. There was a mention by DCCA that AI algorithm was deceptive in their acts of conducting business. With AG's opinion, does the state have the right to ban the use of AI tools for an industry?

Does that strike any sort of Commerce Clause? Is it constitutional?

I don't know if I can answer that question at this moment. I can go back and provide you with a response for azbar.

There's bills that I've moved forward that strikes prohibition for streaming and that apparently touches Commerce Clause, because as a state, we cannot ban AI artists in streaming platforms like Spotify or Apple Music. In your AG testimony, you may not be the person who worked on that opinion. However, that was a problem.

So I'm saying as an example, can we, as a state, do that for an industry, for their use of that algorithm?

Again, I'm not the deputy who was probably assigned to that testimony, so I can't. I don't know if I can answer that question at this time. I'd be speculating. So if you'd like, I can take that back to our Department. We can respond in writing, but I can't answer that this time.

So I'm going to just state that I tried to prohibit AI for an industry, and apparently the AGs has stated that triggers the Commerce Clause. And apparently right now you can't make that statement for algorithms for an industry such as gaming. Okay, Director, I have a question for you. Separate attorneys, separate opinions.

DCCA is made to regulate some of these, not some, I guess, some of these industries that we put in statute. If you were to think of an equivalent for gaming, what would be the closest thing that you regulate right now?

I think my answer would be I can't think of any. I think that I'm actually here to testify on the next Bill, which we did submit testimony on behalf of the Department for.

For the reason that, you know, our core mission really doesn't involve anything that would be in the nature of regulating industry, the gambling industry or the gaming industry. I mean, it's just not something that we do. And so honestly, I can't think of any. So this would.

Right now, the Bill doesn't have you regulating it. But I was very curious if there was something similar.

I think last year, probably my testimony was along the same vein when it was. Had it, you know, had identified DCCA as a regulating body in last year's Bill.

It's just not something that we do and it would be sort of antithetical, I think, to many of the things that we, our, you know, core mission is directed to do in terms of consumer protection.

So, you know, this is something that I can't think of anything that fits into any, any business that we currently regulate in any, in any way. And most of our regulation deals with, you know, licensing, and those are individual licensing for 52 different professions.

But this Bill also requires licensing. So why can't you do that?

Because it's licensing of a totally different nature. I mean, when we're talking about licensing of professions, professionals, I mean, you know, there's nothing that we do currently. We'd have to develop a whole nother body of workers, of professionals who have specialized knowledge to be able to even begin to figure out how to do this.

And I think part of the testimony, I'm merging it in a little bit to my testimony on the next Bill. But I mean, it makes more sense to, if you're going to really to stick it with an existing agency where it's like a square peg in a round hole.

It's not something that any, I think any of our current agencies do or departments do in terms of regulation. So it makes more sense if you're going to go down any route to look at putting, putting it with establishing a gaming commission, because this is something very different from anything any of our existing departments currently do.

Okay, thank you, DBEDT. So your Department is going to be in charge of regulating gaming. Are you adequately prepared for that? No.

What can your Department do to be prepared for it? Well, it depends what we've been asked to regulate and how it would stand that up. So I don't have a response clearly. Right now on that structure.

Thank you. Prosecutor, are you opposed to all gaming? For example, what about charitable lotteries?

I'm against everything except social gambling

Except social gambling,

Which we have now. And people bet a lot of money on it, but there's no house.

My concern is that I think in some other states, when you direct the money to go to a specific thing, whether it's education or otherwise, it ends up supplanting it and it doesn't add to it.

So, you know, and, and I really appreciate hearing all the testimony before this because you're trying to find ways to make money for the state which you desperately need. And I really appreciate all your folks efforts. I just hope it's not this. So social gambling is great. We people can do that and that's no problem.

I just see the, the same addiction issues will happen no matter what kind of gambling it is. You'll see poor people stand in line and buy $50 worth of lottery tickets when the chance of winning the lottery. You're more likely to get hit by lightning than that.

Whereas you and I might bet once thinking we'll retire if we win. Right. But you know, it just affects lower income folks more. Thank you.

Thank you. Is there, is the attorney still in zoom?

That was Kathleen Owen. Could you bring her up? Yes, sir.

Kathleen, you've heard the, you've heard the testimony from DCCA about those lawsuits. What's, what's going on with those lawsuits? What's your interpretation there?

Yes, sir. So at the SBA, we are not able to comment on pending litigation involving our clients. But what we can say very clearly is that legal regulated operators provide the most responsible and consumer protected environments for adults who choose to wager.

Ultimately, what our industry is committed to is responsible gaming, and this is a pro consumer measure.

What does responsible gaming mean to you?

Responsible Gaming means a number of things. So our clients. Let me give you an example. DraftKings has a Department of over 50 people who are fully dedicated to responsible gaming. So within the companies they have a variety of things.

So when you sign up to join one of our apps, you are given all kinds of responsible gaming tools to set wager limits, to set time limits, to otherwise restrict your own play. So deposit limits, time limits, wager limits, loss limits, reality check buttons pop up.

I live in North Carolina where sports betting is legal and I do participate in that. And when I'm in the apps, I frequently will get a pop up that says, you've been on here for this long, you've placed this many wagers, you know, do you want to continue? You get emails about responsible gaming resources.

There are also algorithms that are happening, you know, that, that I, that, that others can explain better than me. But there are things that the companies do to watch the activity of the people on the app. So they are watching for people who are exhibiting problem gaming behavior. They will reach out to them directly.

They can suspend an account, they can block an account entirely. They provide people with resources sometimes to mental health, behavioral health services like Kindbridge. They will do things to help people who need it, which is a very small percentage of people get the help that they need. But on the illegal market, they do not care.

They do not care about the safety of the information of the people that sign up. They do not care how much money somebody is wagering and they are not offering responsible gaming services. So that only happens in the legal and regulated market. And we are really committed to working with our regulators.

Some form of sports betting is legal in I want to say 39 states, but plus D.C. and Puerto Rico. We have close relationships with almost every regulator in the country. Yes, sir.

Kathleen, thank you for answering my question. What I heard you say is that responsible gaming, what that means to you is that your company puts safeguards and tools to allow those who are using your platform to be notified that one, hey, you're gambling too much or you're spending too much here.

Could you tell me, is there a limit where let's say someone spends 30,000 or 60,000 and then you mentioned that you have removed accounts before. Is there a standard on the amount that someone loses where it's time to say, hey, you shouldn't be gaming?

I defer to the companies if there is a specific dollar limit. I mean every,

There's no best custom in practice?

I am not aware of what that dollar limit is, but I'm happy to follow up with you on that.

So you're saying there is a dollar limit?

I'm not aware of whether there is a specific dollar limit. So I do believe the apps have some form. There is some limit on how much you can bet. But I need to look into that for you to make sure I have the right numbers. Make a note of that.

Okay.

Thank you, Representative Tam.

I want to piggyback on your question and ask how often does any company stop an individual or suspend an account if they're showing signs of problematic addictive gambling?

That would be on a case by case basis.

Can you give us an example of one of your clients on how they do it? Because you're telling us that every company does that, but I don't know if every company has the resources to do that.

So I am very skeptical about that idea that every company is going to monitor each person's gambling habits and just suspend an account if it. Like how long would that take? Like a couple days or it's like a couple months of problematic gambling. Or like when you automatically.

What is the average for DraftKings, for example, if they were to?

So I don't have an average, but I can give an example.

So if a person is routinely depositing, let's say $10 a week into their account and they're playing with $10 a week during the NFL season on something and then all of a sudden they start wagering $1,000 and they lose that thousand dollars and they put in another thousand dollars that's going to get flagged by the system and a person will reach out to that person and say like, hey, is everything okay?

Via email. And they will suspend the account if you don't respond. So it's not like they ask the question and the person ignores it and they can keep continuing.

So things that are outside of the behavioral norm of a particular customer who is exhibiting behavior that they might be chasing losses, that they might be betting outside of their means.

There are systems in place in the companies, and certainly in the companies like operators like ours, of the size and resources of companies like we represent in the SBA that are able to do that. So they take it very, very seriously.

So is it like an individual monitoring is that, or is it like an algorithm or is it AI that's monitoring it before it flags it for a real human being to contact an individual?

So I would defer to the clients on exactly how the technology works, but it will be technology based behind the scenes, given the volume of customers and wagering that you would have. It would need to have a technological element of it in order to flag that kind of behavior.

Okay. No further questions.

Questions for Prosecuting Attorney Al. Seemed like you had wanted to add some comments on that. I'd love to hear your comments.

Right. The people that are losing money are their prime customers. They want to encourage them to keep losing money. They'll reach out to them and say, are you having a problem? They'll say no and they'll carry on.

They have VIP hosts who if Joe had a bad weekend, they'll text you to say, Joe looks like you had a bad weekend. Here's $300 credit to get started again. It's that when I said the study in Connecticut, for example, 7% of the betters bet 70% of the money. That is their prime group.

The average person going in there betting 10 bucks, that's fine. It has no effect on the bottom line. The companies make money on the losers and that's partly why we find it so threatening to our local people. A lot of people are going to be able to make a little bet.

Big deal going down a little bit, but a small percentage are going to get destroyed. So that's my response.

I have one more question. I don't know if this is for. You or maybe it's for DOTax, but. Do we have any idea on how much money is going out of state right now due to lost bets?

I don't know. I unfortunately don't know at this point. They are doing in preparing revenue estimates so that might be a part of it and looking at it so we. Can find out for you then. I have a follow up question on that. Do you have any projections on how. Much tax revenue this would generate?

Not yet. I know there were numbers from last year but so much has changed. They're looking at that too. So we'll have a revenue estimate forthcoming.

Thank you.

Cost to make some the last year and I don't know if it's. I haven't had a chance to review Department of Taxation's testimony this year. But last year they submitted testimony they were estimating that it would gain only $5 million. Industry reps were saying 10 to 20.

But our tax folks in testimony like a year ago February, they estimated about $5 million. Going up a little bit each year. 5.1, 5.2, 5.3.