Tourism and Gaming Working Group

Good morning, everyone. Thank you. My name is Jimmy Tokioka. I'm the director of DBEDT. Welcome to the Members who are here in the audience.

We are in Conference Room 309. It is 10:02, and we're convening the tourism and gaming working group. I'm gonna ask for introductions of the members and whoever is sitting in for the designee of the member that's connected to the group, and then we'll start with the co Chair.

We think that one. Recess.

Oh, recess. Thank you. Thank you, IT, Matt, and team. Small kind technical difficulties, but we were at the introduction stage of the meeting. So I'm gonna start with the cochair.

You can introduce yourself and we'll work definitely. I'll go back this week.

Hi. I'm Senator DeCoite, co chairing, working community. Thank you.

Hello. Brandon Makaawaawa, nation of Hawaii.

Hi there. Kent Caputo with the, Marnell Companies. Marnell Gaming.

Alright.

Aloha. Stanford Carr with Aloha Halawa District Partners.

I'm Paul Anderson with Boyd Gaming.

K. We'll go to the screen. I cannot see that far. Very good. But why don't you guys start there?

I'm a I I guess

I'm Jim Dillion. I'm a psychiatrist for DOH, adult mental health.

Okay. Thank you, Jim.

Mike Lambert, director of Department of Law Enforcement.

Thank you, Mike.

Kurt Gissane, Aristocrat Gaming.

Oh, you wanna you wanna come again? There was somebody else. Go ahead.

Kurt Kurt Gissane from Aristocrat Dining.

Thank you.

Hi, everyone. Doctor Bo Bernhard, University of Nevada, Las Vegas.

I will.

Good morning. Gary Suganuma for Department of Taxation.

Okay. Are there any other members or designees that are on the screen?

Jennifer Anderson for Fanduel.

Thank you, Jennifer.

Good morning. My name is Helene Keeley, and I am the director of the Delaware Lottery.

Andrew White, executive director, NASPO. Anyway I'm

George Wall, the Campaign for Fair Gambling.

I'm Jessica Wellman. I'm also with the Campaign for Fair Gambling.

Okay. Okay. Anyone else on the screen before we go back to committee members in the room? Okay. If not, Representative.

No. Hi. I'm Adrian Tam. Tourism Chair.

Michelle. Hi. Good morning. Michelle Puu from the attorney general's office.

Okay. Thank you. Thank you very much, everyone. So Representative Ilegan could not make it, today, and this is his meeting. So I'm filling in for him, running the meeting.

And so we'll just start with the, second item on the agenda, which is an overview of the lottery industry's trans trans legislation and economic impact. Do it. We have Andrew White listed as the first presenter. Andrew?

Good morning. I'll bring up my presentation, and we'll get started.

I think for the members who are in the room, this is the presentation. Yeah. I just wanna make sure everybody Andrew, before you do your presentation, I don't have your bio. And normally, Senator, if you could use the bios of the speakers, if you wanna just give us a sort introduction of yourself, who you represent, and then you can take you can start the presentation after that.

Sure. I I represent NASPO, the American Association of State Provincial Lotteries. I'm entering my twenty eighth year, working for the association, and I am the newly appointed, as of two months ago, executive director of the association. I've had, experience in standards and best practices, meeting and and and trade show planning, educational track sessions, responsible gambling. I've headed up the responsible gambling program for NASPO and and the lotteries.

So a wealth of experience from beginning to end over those twenty eight years, which should really defined Mike and and been able to really talk today about the lottery industry as a whole.

Okay. Go ahead with your presentation. Thank you. Okay.

Okay. So those of you who may not know a lot about the lottery industry, the modern lottery lottery industry began in 1964 with the launch of the New Hampshire sweepstakes. Previously, the lotteries had had been outlawed before New Hampshire had passed their sweepstakes. In Canada, 1970, lottery tickets were first sold in Quebec. And the reason NASPO was formed actually, NASPO was a a stateside association, and it was the it was the National Association of State Lotteries.

But when Canadians came to the first aid, and it was came to the North American Association of State Provincial Lottery. And early on, there were three pioneering lottery directors, that had gone to DC. There were three lotteries in existence at the time, and they had gone to DC to advocate for releasing the restriction on advertising so the lotteries could begin to advertise their products.

They were successful in that initiative, and that is how NASPO was formed by them really kinda seeing the future of, you know, more lotteries are going to join, and and we should probably have an association to really, work for those lotteries that are in existence. Today, the membership consists of 53, lottery organizations across North America.

That's, also includes, the District of Columbia, Puerto Rico, Virgin Islands, and Canada. NASPO is governed by 11 Board Members of sitting directors of which one will be participating today, and that's director Kielis. They are sitting lottery directors, and they're they're invested in running the association and making sure that the nonprofit runs correctly from financial and direction, and they're listed here. Brian present or Brian Rocky for the Nebraska lottery director is our current president.

There are two notable lottery organizations that I'd like to highlight, and that's you've probably heard of them.

They're Powerball and Make a Million. All of our lotteries participate in selling Powerball and Mega Millions. Well, not all our Powerball members and not all our Mega Millions members. They are cross selling in each jurisdiction and work together to do so. As I said, the first modern day lottery was founded in 1964.

In Hampshire, you can see by decade, this is just a a nice graphic to show you how many lotteries and and when they came on from the start up of of '64 all the way until today. Our last lottery that joined NASPO was the Mississippi lottery. And these are the Canadian lotteries, the five provinces that are also represented and and operating today as part of NASPO. So just a quick overview to on on on lottery and and the dollars and and where they go.

On average, about 95% of funds generated from a traditional US lottery gains go directly back into the economy through prizes, public beneficiaries, and retailer commissions.

Lotteries on average, 64% of those dollars, go back in prizes to players, 25% to the public beneficiary programs. And so, you know, a beneficiary program could be, if you're talking about a lottery, what you designate those funds to go to, 6.2% to retailer commission, and the remainder supports lottery operations providing direct and indirect employment and other benefits. So just a some information since 1964. About $1,260,000,000,000 in prizes have been awarded since start up in 1964 in

the New Hampshire lottery. 125 billion in retailer commissions and bonuses. 1.3 Trillion have been reinvested in communities. That's in The US. In Canada, 1.44 billion in prizes awarded, 19.0 billion in retailer commissions and bonuses, and $1. 3.6 billion reinvested in communities.

Now most of these, beneficiary programs support a a a wealth of of programs and services and with 222,000 US retailers, 30,000 Canadian retailers. So a vast network of of retailers. NASPO and responsible gambling. NASPO and its lotteries are fully behind responsible gambling and preventing problem gambling. We work with the National Council on Problem Gambling to implement our programs.

We have a certification program and a 10 a 10 section responsible gambling framework that the lotteries are certifying under and and and working boards. We also offer training to retailers and employees. And we work we work very closely with the National Council on Problem Gambling in their gift responsibly campaign in December and their March problem gambling awareness in March. So when I mentioned beneficiary programs, these are some of the types of programs that how or that water dollar support. And the first one is education.

I just wanna talk a little bit about that. There are many ways that education supported in different lotteries, whether it's a pre k program, elementary, secondary, and college scholarship programs. Most of the modern lotteries over the last twenty years, I would say, have have implemented their beneficiary programs and the proceeds go to college scholarships. So in Georgia, Georgia was really one of the first and it's called the Hope Scholarship.

So, basically, if a student goes to college, whether they've their parents have bought lottery tickets or not or they support the lottery, those students get to go to college for free as long as they maintain a three point o average and they go to an in state school.

It also supports trade schools and and workforce training. You'll see general funds, local government, senior citizen programs, economic development, and tourism, the environment, when I mean the environment. So for instance, in Colorado, their lottery dollars go to support parks and green initiatives, to support the maintenance, the the purchase of of land, and those types of things, property tax relief, veterans, and and other causes, and funds.

But interestingly enough, before 1964, the Berkeley Lotteries have been used to fund the establishment of many major including universities like William and Mary, Harvard, Yale, Princeton, and Columbia. They were even used to finance canons during the Revolutionary War, which is just kind of a fun fact.

Before we get into the next few slides, I just wanna talk a little bit about jurisdictional variance and and why I think that term is important. Jurisdictional variance means that that no lottery is the same. While I'm going to show you some examples of lotteries, there are there are some nuances and differences to those lotteries. For example, different product mixes, different designated beneficiary programs, different statutes or laws, funding of RG work, price payout limits, required percentage of return back to beneficiary programs.

So while we'll we'll be showing you some numbers here in the next few slides, what I do wanna raise is that we don't really compare lotteries to one another because they are different. You know, in in in 53 lotteries, things can be different. Yes. We have standards and best practices of of doing things the same way, but, really, as I'm sure you know, in Hawaii, there there are different cultures. There are different populations.

There are different ways of doing things in in each of these lotteries, and that's something I just wanted to highlight before we go to the next slide. So our first lottery I I've chosen four lotteries of which director Keeley will will speak probably a little bit more in-depth to when we get to del or after I talk about Delaware. New Hampshire Lottery is is close to Hawaii in population, one one million four hundred and fifteen thousand three hundred and forty two people.

Their sale is 600 little bit over $604,000,000. The retailer commissions, $30,000,000. Prizes paid to player, $318,500,000 and transferred to beneficiary program of 208,000,000, almost $209,000,000. These are f y 25 numbers. Their beneficiary program is education, and you'll see their product mix, down down on the right side. What I wanna kinda highlight is keynote. So New Hampshire and and the next lottery would consider traditional lottery game offerings.

So we're not talking about table games. We're not talking about VLTs. We're, you know, we're talking about instant and online games and and keynote. So this is just a snapshot of of what New Hampshire does for sales, population, retailer commissions, prizes paid to players. All of these numbers, by the way, are audited numbers from each lottery's annual report.

Those are those can be found online. They are public, so they are available to review and see. The next lottery is the Maine State Lottery. Their population, 1,414,874. Their sales are $40.02, almost four zero three million dollars The retail commissions are 26, almost 27,000,000.

Their private beta player is $278,000,000 Transfer to the beneficiary program, 79,000,000, just over 79,000,000. The beneficiary pro program is a little different. It goes to the general fund and the out outdoor heritage fund. And the product mix is is really probably along the lines of a more traditional product lottery mix, instant, lucky for life, make it millions, Powerball, Tri State Bucks, and their their in state numbers games. The third lottery I'm highlighting is the Rhode Island lottery.

Their population is about 1,114,521. Their sales are 1,470,802,000. So you're you're gonna see in a minute why I referenced your jurisdictional variance. The retail commissions are 384,000,000. Their prizes paid to players, 636,000,000.

They're transferred to beneficiary programs for 433,000,000, and their beneficiary program, you'll notice that they were established in 1974. The practice, what early on when lotteries were created, was to was to allocate the money to the general fund and let the legislatures figure out where they wanted that to be appropriated. Like I mentioned prior, our latest lotteries that have joined at the legislatures had had decided to allocate that to a certain beneficiary program like college scholarships.

So in the product mix of of Rhode Island, you'll notice that they really do everything. There's bingo, there's Iwatering, there's cool tabs.

There's sports betting, table games, and numbers, VLTs. Just a an increased product mix. So while their population is similar to Hawaii and the and the other two previous lotteries, they really do offer all sorts of of gaming jurisdiction. And finally, we'll highlight Delaware. Delaware population, a little bit smaller than the lotteries I've experienced. 1,000,000,000 in sales, 270,000,000 in retailer commissions, 346,000,000 in prizes paid to players, $2.90 almost 294,000,000 in transfer to their beneficiary program.

And their beneficiary program is a general fund, the health and social services, problem gambling programs, and agriculture. But you'll notice there and and I'm sure director Keely can can speak more to this, but they're they also have a a very good product mix. So there's table games, there's sports lottery. They're also offering traditional lottery products and Mega Millions, Barbell, Numbers games, Lucky for Life, but they also have Kinom.

So in these four lotteries, you what you'll notice is while there is a a difference in sales for for similar populations, there are also increased product mixes to achieve those sales, and the lottery is responsible for overseeing those gains and and implementing those gains.

So I just wanna highlight as well that while we don't have enough time to cover everything that I want or should be giving you an an information of lottery, this is a good snapshot of of what the lottery is, what NASPO is. NASPO has many re resources to build this meeting, including research. We also have the experience of 53 lotteries that have already gone through this this process and are operating and and can provide a network of professionals that can offer valuable knowledge like director Keeley.

She has unique perspective of sitting on a legislative body and being in your Chair while also being able to run a lottery, and that's her current position. And we're lucky to have her guide us at NASPO as our NASPO treasurer and and participate by testifying with you today.

So thank you. Thank you very much, Andrew. I know that I'm not sure if you guys are presenting together. I'm just assuming you are because you're side by side. But would members wanna ask Andrew questions now or wait till Helene is done with her presentation and ask questions then?

I get I get a couple of questions for Andrew, but I mean, if everybody like waiting, I can wait.

Yeah. Well, it's on it's on, lottery. So Yeah. Helene, are you are you ready?

Yes. Yes. So, thank you very much. Helene Keeley, I'm as mentioned, I'm the director of the Delaware lottery. I don't I don't have a formal presentation.

I really just wanted to, to share, some history and to let let you guys know that, you know, NASPO's here to help. There's so many resources out here for you as a legislature as you debate and consider, starting a lottery and possibly even being the regulator of casinos. And as mentioned, I served twenty two years in the Delaware House of Representatives.

Eighteen of those twenty two years, I was either Chair, Vice Chair, or was on the committee of the gaming and pari mutals committee in in in Delaware. In, like, 2018, then governor Carney asked if I would consider I filed a run for reelection, and I got called to the governor's office.

And he asked me if I would be interested in in going over and helping the lottery. They needed a deputy director. I served as deputy for two years and have been the director now for a little bit over five years. And having a organization like NASPO as you debate these issues in front of you, I I really want to just make sure that you guys are aware. You can see from the information.

I know the representatives legislative aide, JB, has a lot of other information that Andrew has sent. Hopefully, that information will be shared if it hasn't been already. But even just going through the RFP process, the NASPO has information and seminars available for all of you to watch or when you hire a lottery director. They have the the ability to to learn. All of us are here for them, when when and if, you know, a bill passes that there's a lot of support out there.

You know, I know some of your members are also involved in the National Conference of Legislators from Gaming States. You know, that's another great resource as you debate these these issues. But when it comes to the legislation in Delaware, we I was elected in '96, and the legislation had passed in '95. It was called the Horseman's Reinvestment Act, and it allowed for casinos to go and be developed on the three racetracks that we had in in in Delaware. And since that time, the lottery has grown.

We started out in 1975 with the traditional products. In '96, they added the BLTs at the three racinos. So in Delaware, we are the we you are the regulator and the operator at the same time. We added table games. We added Igaming.

We have added Ilottery, and we have also added online sports. And through all of that, the majority of the legislation, I was there to to vote on it. And responsible gaming, at least for me, was very important. You know, we in in all of our states, we sell alcohol, we sell cigarettes, you know, we have all these, quote, unquote, vices. But when it came to the gambling and our gaming side of it, it was the only legislation ever passed.

And I'm happy to say that we've made sure that it was included where something was added to support the council. And, again, as you deliberate these conversations, we are here for you. We are here to support you as you make those decisions. And, you know, we also have an arm and I and pretty much every well, I guess, if there's a commission and a lottery that it's set up differently. But, again, we deal with, our law enforcement arm, Delaware Gaming Enforcement.

They are our partners. We fund them as well. And, you know, when when you make these decisions, I guess the biggest point, and I've said it a couple times now, but I can't emphasize it enough, that when you do, you have a plethora of organizations who are here to help you. And then if you decide to start a lottery. And at that, I'll just stop and and try to answer any questions for for the panel or the audience.

K. Thank you. Thank you very much, Charlene. Members, questions for

I have a a question. Looking at the Delaware figures

Wait. Who who's who's who's talking? Jim.

Jim Dylan from DOH.

Yeah. Can you can you identify yourself before you start? Because we I can't see from here.

Oh, okay. Sorry. Yeah. Can you see me now? No.

I can see you now.

Okay. Sorry about that. Thanks for

The television is small and my eyes are not good.

Alright. That's that's because I have two screens. I'll try to look at the one that

Go ahead.

You can see. So so Delaware, it looks like they spend or sales are about $1,000 per resident, and it it would be higher than that for each adult resident and probably much higher for each participating adult. Those sound like huge numbers. Can you say something about the impact? It must be very large on the economy of the state.

I'm not sure where you're where are you referencing those numbers from?

They were from the previous speaker slide. It was based on about a a population of a million and sales of about a billion.

Right. So you have to understand that that includes all of our casinos as well. So if it if it was just traditional lottery, and I think that's why he was showing you the variances between the two. If you look at that slide and the slide that he had for Rhode Island, which has a similar makeup as we do, they were much they were much closer, in comparison.

And what are the impact on the total economy? Is that sounds like it's big and it sounds like some people must be losing a lot of money.

Well, we have a a a specific percentage of that has to be given back to the players, which is anywhere between 879092%, and those are strict guidelines. The majority of it is actually higher than the 87. It's closer to the 92. But I will say per based on population, we support our council at over $2,000,000. And based upon population, we are one of the highest providers of funding to problem gaming.

I'll know math, please, but the numbers don't make sense.

Okay. So for members on this coming in on Zoom or virtually, we're gonna start with the members in the room first. You know, they some of them flew here to be here. So we're gonna start with that, but everybody will have the opportunity to ask questions. So, Brandon, I see you, Hannah.

Hi, Hailey. Thank you. I got one question for Hailey and one for Ashley.

Sure. Go ahead.

Hailey for sharing. You know, Delaware was one of the first states to look at sports betting and iGaming. Looking back at how gaming has evolved there, is there anything you would have structured differently knowing where the industry ultimately went?

I I have to tell you, and and I really mean this in all sincerity. You know? And and when I make these next statements, it's it's you know, they're out there already. Right? DraftKings and and the Sports Betting Alliance, and they want in on the act.

Right? But Delaware decided to go with one vendor. And we did that, and we have control over everything that they do. We have control over their advertising budget. We have control over their media.

And I believe that we did it right because we do not see twenty four hour a day advertising from, you know, the big guys, so to speak. And if there's wording that we do not like in their advertising, we ask them to change it, and they do it right away. Because, again, we have we are the regulator and operator at the same time. If we gave up that control and allow for any of these folks to come in, we would see commercials constantly.

And I think that's where some of the problems come into play.

I'm not saying that we don't have some issues. Every state does, just like every state have alcoholics. Every state have have drug addicts. Every state have you know, we have problem gamblers, but we have not seen a dramatic increase with that.

And what we did when we started online, we actually added funding to the council specifically for middle school programming and to go to the the the state universities, Delaware State University and the University of Delaware and a couple other smaller colleges gave them additional funding to go in and talk to fraternities about problem gambling and online sports betting.

So we are structured differently than, say, my neighboring state of Pennsylvania, right, where they have 20 skins or 16 skins of online sports providers vendors. We only have one.

Thank you, Helene. And then a question to Andrew. Hello for your presentation, Andrew. In your opinion, should the conversation about a lottery start with the revenue opportunity or with what the state is actually trying to accomplish with it? And I've seen the beneficiary programs and how they set up different funds.

But are there examples where states have done a particularly good job of connecting lottery revenues back to the communities or people they were intended to benefit.

Yeah. I think well, you know, I think every lottery, all 53 members do a great job of of connecting their dollars back to the beneficiary programs and highlighting those aspects. You won't find more dedicated professionals and and lottery directors serving a cause of a beneficiary program. Because, look, these these directors aren't doing it for the fame, the money, or the glory. You know, they're operating multimillion multibillion dollar organizations for the beneficiary that they serve.

I would say, you know, to answer your question regarding how you would set it up, you know, in my experience over the last twenty years, the reason a lottery comes into existence or is voted into existence is because of a need. And that need, like I mentioned prior over the last few lotteries, have have been college scholarships. Right? They wanna they wanna do they wanna keep their kids in state. They wanna educate their kids in state, and they feel like that's a worthwhile cause.

You know, there are kids that are going to college and never would have had a chance without lottery dollars, and they're doing it and coming out of college without loans college loans, you know, a huge expense, getting a a huge leg up in training and and and and in life. Our our last lottery that joined NASPO and and became a lottery was Mississippi. Their need was for roads and infrastructure.

So all of their lottery dollars go to build new roads and repair new roads and and the infrastructure that goes along with that. It doesn't that need and that's why they passed the lottery.

So I I would say, you know, the need has has really driven starting the lottery or voting it in.

Wow. Okay. We're gonna go this way. So and then we'll go back. Yeah.

Thank you. Andrew and Helene, thank you very much for participating this morning. This is really educational. I have a question for Helene. On the product mix in Delaware, did it did you start with any particular form of of gaming or or the lottery and then it it evolved into adding more diverse programs?

Yeah. So as I mentioned, our Delaware lottery last year, we celebrated our fiftieth anniversary, and it started in October 1975. And with that were our simple draw games, our our play three, play play four numbers and and a scratch off ticket. From there, it evolved. There which is now a millionaire for life.

Recently, the they they combined Lucky for Life and and, Cash for Life, and they created the game Millionaire for Life. Delaware is one of the states that were part of the original 13 Northeastern states that started Lucky for Life. And then from there, Paraball was born. Mega Millions was born. In 1996, 1995, the Delaware legislature passed the horse insurance reinvestment act, which allowed these three race tracks that had horse racing to establish the BLT, basically, a casino.

And then from there, they had they added table games. And from there, they added Igaming, sports. We were actually grandfathered in for sports from back from the nineteen seventies. We originally had a parley card. We still have that Parley card in our retailers, and then we went online in three years ago, and we added that to our Igaming platform.

So it was a it was a gradual growing the business, so to speak. But, again, I will highly emphasize because I really do wanna get this point across. Every single piece of legislation made sure that responsible gaming was part of the equation. Because when you do this, you have to take that seriously. Just as you're taking very seriously who the beneficiaries will be of the funds that that may come out of this, we have to protect those that need the assistance.

K. Thank you. One follow-up question. Is there any particular product generates more revenues than the other? Is there one particular product that stands out as a high revenue generator in comparison to?

Well well, in Delaware, I I I you know, our two highest forms of revenue are the video lottery in the casinos and our art and our iGaming.

IGaming. Sorry for my ignorance. Can you elaborate what I

It's online. It's basically an online casino.

I see. Okay. Thank you. Right. Thank you very much.

That's that's not that's not lotteries, though. Right, Helene?

It is. So in Delaware, everything falls underneath the lottery. We are the we're the regulator and operator. So the casinos that we have, we regulate them, and they are our partners.

Okay. So we'll go back to the other side. Kent?

Yeah. I just one, I just wanna say thank you. Between these two

directors, we have half century or more of dedicated experience before us here. I think we're very grateful for that. I think Aye, at least personally, am comfortable with the idea that the policymakers at this table as they consider this are gonna are are probably gonna be comfortable with the idea that they will be able to direct or help direct where these funds will go. I'm really interested as I think about the name of this group, the tourism and gaming work group.

The impacts in your view on where this revenue comes from.

Is it going to be, you know, primarily from residents here in Hawaii? Is there a lift for finding more, you know, tourism dollars and a lift for the tourism industry with the kind of products that they could look forward to from a lottery? And and then just, you know, generally what that mix would be and if there are other jurisdictions that you think are more comparable.

I understand the concept of jurisdictional variance in terms of the products offered, but, you know, is Florida, for instance, gonna be more like Hawaii as we look at those impacts or opportunities from tourists as compared to the population comparison? So and this is for either or both of you, but I wonder how you could speak to the panel about that.

Well, I think I can I can take the first part of this? You know, you have nine nine and a half million visitors to Hawaii a year. I think that's your average with a population of 1,400,000. You know, I look at it this way. You know, I when why when Wyoming lottery came into existence, one of the one of the reasons and and I'm talking about the person at the time who served as their their board Chair.

He was a a a radio Disc Jockey, actually, and he was very in front and and and really kinda yelling it

out there that he wanted a lottery in Wyoming. And the reason was because all of the people in Wyoming were going to border states to buy Powerball and Mega Millions tickets. And I use that example as kind of a a a way to kinda tie it to Hawaii in the form of of tourism. Right? Right now, if if tourists come to Hawaii, they can't get a Powerball ticket, they can't get a Mega Millions ticket, they can't play an in state game that might be unique.

You know, we have peep players out there that collect instant tickets because of the game that it is, the the brand that it is, the the style. The lottery, you know, probably, you know, launches a a a ticket unique to their jurisdiction that I would imagine the Hawaiian lottery would do something like that. So, you know, I think there is appeal for that. I think there is appeal to buy those types of tickets as a tourist. I don't have numbers to to substantiate that comment.

That's just my opinion of it. You know, I don't have any research towards that. But, you know, other lotteries have come on board over the last at least my twenty eight years because their dollars were going outside of the state. Right? I'm sure you have Hawaiians flying to Las Vegas or wherever they go to spend their gambling dollars.

So it was a way to keep those dollars in the jurisdiction.

I would the only thing I would add to that is, you know, I sit here in Delaware. I live in the Southern part of the state, which, is Rehoboth Beach, Delaware and Dewey Beach, Delaware. And during the winter, our total population is probably under 30,000 with the combined two towns, but maybe even less than that. But during the winter excuse me. During the summer, it escalates to almost a million total during the summer months.

Right? So you've got people visiting. They stay for a week. They leave, you know, Airbnb, hotels, everything else. And it is without a doubt, especially with our online product, we see an increase during the summer months of people and our sports our our online sports product as well as our our iGaming product.

We see an uptick also during those months on our you know, especially when the Powerwall and Mega Millions, the jack jackpots are higher, we absolutely see an increase as well. So, you know, we have NASCAR here once a year. We see an uptick when when NASCAR's in town. So, you know, I'm sure my counterpart in Georgia would tell you when, you know, the oh, gosh. Why am I forgetting the name of the golf tournament there?

You golfers are gonna kill me for not remembering it, but somebody will help me. I know that they see, obviously, an uptick in uptick in sales there.

Thank you, Kurt.

K. That's it?

Yep. Thank you.

Paul? Thank you.

Thanks for the presentation. I appreciate the information. On the Delaware side, do you have numbers of what are just the more traditional lottery revenue numbers? Because it the before the presentation, as you mentioned, is a is a billion dollars, little over a billion.

But you mentioned that it includes a lot of other games and such or other what would maybe be considered casino style games.

Yeah. So if you give me one second, I'm gonna open up our our year end sales our year end So this is total contributions to the general fund.

So this is your net net after operation and everything? Yep.

Yep. Net to the general fund. So for traditional shoot.

I'm sorry. I pulled up the wrong thing.

Yeah. I'm sorry to put you on the spot. That's that's okay.

Oh, no no no.

That definitely, I've had everything up still for one. So just give me one sec. So our traditional, which would be play four, play five, kino, mega millions, Power Ball, and Scratch Off Tickets, it was 60 million dollars to the General Fund.

And then you do you get your budget from that 60 million, do you get General Fund dollars for your budget, or do you operate out of the gross and then that's net into the General Fund?

That is 100% to the General Fund. We pay our expenses. We fund ourselves first. We get no General Fund contributions at all.

So we fund our staff. We fund DGE. We fund the Council on Problem Gaming. We fund the Horsemen's Breeder's Fund. Otherwise, that number would be a lot more.

But there are certain things in our legislation that we're required to fund.

Thank you so, sorry to interrupt. So the 294 million, that's on this slide, and I realize it's not your slide, so I don't wanna hold you again.

No. No. No.

Sixty million of that would be traditional lottery, and the rest of that would be what the average person would consider maybe casino-style gaming. Is that...

Sports, I gaming, table games, and video lottery.

Okay. I appreciate that. And my understanding of Delaware is you guys have, you did an RFP for an exclusive sports better. I think it's Rush Street Interactive, if I understand correctly. And that was just a path you took that's different from maybe how some of the other states approached it. Correct?

One hundred percent. And that's why I'm saying it's like, that's just what Delaware decided.

Yeah.

Because we own our data. Right? And that's, you know, that's how we wanted it to be. We wanted to, we wanna keep our data.

I appreciate that. I think that's a key point that every state will do something a little bit different and cater to their needs. Yeah. Andrew, on your end well, and maybe and just to clarify, on the video lottery terminals and I gaming, and I think you mentioned this, but those look like slot machines. Right?

If if you were to walk out to a VLT in most markets, and they could be kiosk, maybe in in some markets that just look like a lottery kiosk, but VLTs typically look like a slot machine. Is that a fair statement?

They're not...game play, yeah.

Okay.

So, I mean, I guess well, that says what it needs to say. In lottery mixes and just for clarity, we operate in states that all have lotteries except for Nevada. So in Mississippi, in fact, we are a lottery vendor as well. Is there a typical capital investment or any job creation that comes around with lottery, or is it typically retailers that you're tapping into to sell the tickets?

Or what is the infrastructure that gets built around a lottery setup?

Well, I think...go ahead, Helene.

I was gonna say, specifically, here in Delaware, you know, we're a very small state. We're, like, 102 miles long and 32 miles wide at the at the bottom of the state. But up north, it's only about 8 miles wide. And we have a network of 600 retailers, that we work with that sell our products. And on average, on average, the average commission for a retailer is about $35,000 a year.

Yeah. I think in Mississippi, we get 3% of that. So that, that's of the lottery ticket.

Ours is 7% commission.

Okay. Man, we're getting gypped. Okay, and then on the Mega Millions and Powerball, we have the same conversation in Nevada all the time because as soon as those get to, you know, big numbers, a billion dollars, people drive to the state line and buy from California and Arizona.

But that money, if I had it in Nevada, wouldn't necessarily stay in Nevada. Right? Don't those dollars get exported amongst all of the participants? How does that part of it work? And I apologize for using Nevada, I'm in Hawaii, but we just had this this conversation in Nevada as well.

Yeah. So that is governed under MUSL, which is the multi-state lottery, and we can provide you information on that. And, I mean, as a director, we are automatically part of their board. You know, there are funds, but and it goes back and forth. Right?

So, like, you know, we, if somebody back in April, we had a multi-million-dollar winner. And so the organization, MUSL, transfers the money to us. You know, if that $2 ticket, a percentage of it, we keep a bit, we keep it, a percentage goes back to MUSL, and that pot grows for when they're, you know, the big one win. You know, somebody wins the big pot, and then the money's transferred to that state.

So that's kinda like, the gist of it. But if you wanted more information or the panel wanted more information about that, we can definitely get that for you.

Yeah. Leave that to the Chair's discretion, but I think it would be informative to be sure.

So thank you, Helene and Andrew. I was happy to have got to talk story with you while I was in San Diego. I just have to follow-up. You know, earlier, as you guys talked about, you guys are the regulator and the operator. On the operator side, what is the investment of your state to being the operator?

Honestly, it's the way the law is written, but it gives the state the ultimate control. Right? We control the advertising. We control you know, if one of our local casinos wants to put on a table games tournament, and, you know, we think that it's really not that great of an idea we can tell them no. Right?

And, again, it's each state is gonna have to make that decision on how they wanna operate. Some states are very happy. They just wanna be the lottery, and then the state creates a gaming commission, and they handle all the stuff regarding casinos, online gaming, and everything else. It's just how we are structured. And when I you know, being in the legislature, I only knew really Delaware.

And then, you know, I started going to ... and I have learned more from that organization. Then then I become, you know, the Director of Lottery, and I'm understanding, I just thought everybody operated the way Delaware operated. And then I realized, wait a second. Some of these folks are just dealing with just lottery tickets and draw, you know, and draw games.

And yet, you know, we have all this responsibility even though it's a small state. So I think, you know, ultimately, you all are gonna have to make the decision about how comfortable you are with hiring somebody to do all of it, or do you separate it and have two organizations? And there's pros and cons to each of them. Right? And I talked a little bit about, you know, how, you know, we control the data for our iGaming and our sports players.

And that when we talked to the Governor's office when we started that, that was their ultimate number 1 concern. Okay? They didn't want their stuff to, they wanted the casinos and the lottery to own that data. And, you know, that's where we went. So I don't know if I answered your question.

I hope I did.

No, you never, but so I kinda wanted, I'm looking more towards as the operator and Delaware being the operator, was there a financial investment that the state made to operate?

No. We did not. No. No. No. That was all in the room.

So, in this case, would be, whether it be a license issued with the ask of this is what I expect If they were to bid on it and so forth. Is that the model that Delaware used?

No. So, ultimately, at the end of the day, back in 1995, when that piece of legislation passed, we were one of the first, we were the only state, besides Nevada, and I think Mississippi or Louisiana had the river boats. We were the only state that allowed for VLTs. We were one of the, in the area, it was the only oh, excuse me. How can I forget New Jersey?

Besides New Jersey and Nevada, we were the only state that had VLTs. Right? And so when the legislature debated this, there was never the thought about licensing. Right? But then as West Virginia came on and Pennsylvania came on and Maryland came on and Connecticut and Rhode Island and all these other states, they developed the idea of charging for a license.

Right? We did not. The purpose of the bill was the Horseman's Reinvestment Act, and that did exactly what it was supposed to do. I can provide you guys the language. It talked about purchases.

It talked about Jockey Health. It talked about, you know, making sure that the equine, the, business and operations in Delaware stayed in Delaware because all of our horsemen were going out of state to the other tracks in Mammoth, New Jersey and up in New York, and then they weren't racing anymore in Delaware. So the tracks were almost on the brink of bankruptcy, but we allowed them to have the VLTs.

And they you know, I don't know who, because they were all privately-owned at the time. They got investors to help them, and they started the casinos.

Thank you. Thank you. Thank you.

Okay. So we'll go online. I can see someone's hand up on screen, but I cannot see your name. Jennifer?

Yes. Thank you. Jennifer Anderson. My question is, it sounds like you have a very large portfolio of products, and this is for the Deputy Director from Delaware. Can you tell me or at least describe some of the differences between the responsible gaming and consumer protection controls that you are able to offer online versus brick and mortar?

Sure. So with our vendor online, which is Rush Street Interactive as someone mentioned, you know, we have established with them our comfortability of, because it's easy access right, to go to a casino you gotta get in your car, you gotta drive, and you're there. Right?

And so we know that, again, because of how easy it is to go online. We've developed with our partner, I believe, to be more stringent. When you're sitting in a VFT and you put a thousand dollars in and then you go and, you go to the Mac machine, and you pull out another thousand, and you spend that again. We're creating limits as a partner. They used to be somebody who's trying to up their limits in a very short period of time.

We freeze them or we have the ability to freeze them and have them kind of hold off for a little bit. Right? And we don't allow if, say, for instance, they have a weekly budget of $500 to spend online, and they wanna increase it, it's twenty-four hours before that increase can actually go through. And so I personally believe we have a greater control with online products than we do in the casino. Right?

We have staff that are, they are inspectors. They're, because table games are cash, so their priority is strictly just the table games. But they see things, and they bring it to casino management's attention. And they aren't good about it because when the regulator's bringing something up to them, they, you know, they act on it and they usually ask somebody, you know, to maybe walk away and, or maybe they need to leave for the day.

And it is something, again, that I'm not saying other states don't, or it's not as important to them as it is for Delaware.

But, again, you know, it's like a bartender behind the bar. You're not gonna serve somebody who's slurring their words, you know, let you know that drink for the road. Right? That's not good. We know what happens when somebody gets in the car after that.

And so it is our responsibility. And, but there's someone, to a certain extent, anonymous to us. Right? Yeah they may have a player's card, but we don't really know their circumstances.

Right? But online, we actually know who they are because they have the KYC in order to join. And we have the ability to have, in my mind, tighter controls than at the casinos. Does that answer your question, Jennifer?

Yes. Yes. Sorry. Yes. That answered my question.

Thank you very much.

Yeah. So, Michelle, I said we were gonna go here.

Yes. Sorry.

Yeah. So people online, if you can just raise your hand so I know who to call for the next question. Okay.

If not, then I'm gonna bring it back into the room. Michelle?

I'm sorry. When you're talking about the ability to have higher controls digitally with players online. Are you not seeing instances of fraud?

No. I mean, no. We haven't. Have we seen people who are trying to start an account after we have blocked them, and they try to start an account in somebody else's name? Yes we have.

I'm just curious. In this digital age where things are spoofed, like, relatively easily, I'm not sure how, what kind of controls you guys have set up for that? How do you establish the digital player's card? I'm not sure what you're referring to that would have tighter controls than an in-person player's card in a brick-and-mortar casino?

Okay. So maybe I didn't explain it correctly. So if somebody, when somebody goes online and they download the, you know, the Bent Rivers app, Rush Street, and they sign up for the account. Right? There's all these questions that you have to answer, and it asks you, you know, to set a limit of what your weekly spend would be.

And, I mean, if you're talking about possible money laundering, our vendor is clearly aware of that. But if you're talking about somebody who has blown through their 500 dollar a week limit and they wanna increase it to $2,000, that to us is a red flag. We do not, based upon the parameters that our vendor has placed, you can't increase your spend until at least forty-eight hours.

And then after that, because that increase may have gone up or doubled, On the back end, the customer service is actually monitoring that account.

But the limit is self-imposed. Correct? The limit is self-imposed. Correct?

It is self-imposed. Correct.

And it's created by the person who creates the account?

And how do you verify who the person actually is?

It's all ID Verify. I mean, if you really wanted to see how something like that would happen, live and in person, I'm sure we can make that happen for you. I'm sure there's somebody here is from DraftKings or FanDuel. Right? Yes. Jennifer is.

Correct.

Yeah. Oh Jennifer. Okay. I am sure that they have the facial recognition of how that would happen.

If not, I'm sure that we could help you.

Is that how you see that, Helene, is facial recognition?

Yes.

Okay. Thank you.

Thank you, okay.

Yes. Just to yes. Just to follow-up. So I guess what you're saying is in a brick and mortar casino, there are no limits. Like, someone can come to the casino and plan to only spend $500, but there's nothing that would necessarily cut them off if they decide to spend more. Is that sort of what you're saying in terms of control on the digital online space where there'd be a cooling off period for others?

I mean, I feel like the answer is yes and no. Right? So, like, it is ultimately the casino's responsibility if they see somebody there and they, like, the person's been sitting there for twelve hours. Like, what are you doing? Right?

I mean, we've heard these, I mean, to my knowledge, it has not happened because I have asked this question. We've heard stories where people are in casinos, and they're sitting there and they, you know, they don't wanna leave their machine. And so they wear undergarments that would allow them to sit there for that long. And, you know, it's you know, it's the casino's responsibility to tap that person on the shoulder and say, hey.

I think you need to leave for the day. Right? And I get reports, and I'm sure other casino commissions or if it falls underneath the lottery.

I'm sure they get reports too that says, hey, we had to tell Mrs. so and so or Mister so and so they had to leave today because they were here for six hours, and we don't want them to be harmed. Right? And I'm sure that there are times where somebody sat there for seven hours and they didn't catch them because maybe they hop from machine to machine. And even though there's all cameras all over the place, they may just not get scanned by it.

Right? So But I think there's greater control online.

I'm gonna have to, we're gonna have to cut this off because we have another presenter. The community would certainly like to see the video of the person with the Depends on sitting there sitting there for several hours.

I've only heard the stories. I've only heard the stories. I have not seen it, but I hear.

So we're gonna go to the next presenter. Certainly, Andrew and Helene I'm sorry.

I'm sorry, can I just add just one more thing? No. One is No.

No, you cannot. We gotta move. We have to move. I'm sorry.

Do you guys still need us is really my question.

If you want, if you want, you can stay on. Members may have questions later, but this meeting is two hours. And so we're going into the time of the next presenter, and I'm sure you don't wanna do that. So and I apologize to, Brianne who is, are you online, Brianne?

No apologies necessary. I understand. It was a great presentation.

It was it was, and we really appreciate the data, but it's your time now. And just so that you know, I would ask, what your request was before the meeting, and we cannot accommodate a new slide of 40 more slides. So, we're gonna have to stay with your old one.

But if you wanna bypass the slides and just do a presentation, ad lib, that's up to you. But the screen is yours now.

Okay. Well, first, thank you all so very much. I'd like to introduce, the Deputy Director of the Campaign for Fairer Gambling who's here with me, Jess Welman. We, do want to begin by, sincerely apologizing. It appears that you only received one report that we were hoping to speak to today as a part of the greater deck.

I have sent across the deck that we had prepared for your reference and records. We'll speak about it briefly through the conversation, if that's okay. But the report you received speaks to the illegal market concerns that we try to address here at the campaign. But before I go further, Jess, would you like to introduce yourself for the group? Yeah.

My name is Jessica Welman. I work with Brianne at the Campaign. I've worked within the gambling industry for almost twenty-years and then started with the Campaign in February.

We're very lucky to have her. And as I said, my name is Brianne Doura-Schawohl. I'm actually based out of Washington, DC, where I run my own firm that specializes in problem and responsible gambling policy. I've been in the field of problem gambling since 2013 when the DSM five defined problem gambling as an addiction the way we're gonna talk about it here and today.

I proudly serve as the Director for the National Campaign for Fairer Gambling as well as serving as Chairwoman for the Board of Trustees for Cambridge Research Institute.

A little bit more about the Campaign for Fairer Gambling, we aim to advance a politically bipartisan and scientifically evidenced agenda for gambling reform. There are three main pillars to our work. The first one is protecting online borders. In 2023, 67% of Super Bowl bets happened in an illegal market. The report that Jess and I are gonna speak to briefly here within, that you received, continues to reinforce that the illegal market is growing, and we think this is quite concerning.

We believe in fiercely defending the economy. We know that gambling can be a form of entertainment for many. However, it does remove that expenditure from something else that's in the economy, and it also grows cost to state in the social consequences that come for many individuals. And then our job is to raise awareness to the real public health issue of gambling disorder, doing everything we can to prevent and reduce the harms.

In fact, actually, one report NEAR stated that New Jersey incurs about 350 million dollars a year just from the social cost, and their prevalence rate of addiction is three times that, the national average.

But to be respectful of everybody's time and only being able to go over the report that we sent you, I think it would be helpful to talk about some of the major conclusions that this dataset found. So Jess, I'll turn it to you to start.

Yeah. So, we worked with a group, Gaming Compliance International, who was looking at specifically illegal markets. So some of these markets like sweepstakes, DFS that in some states are gray, those are are not part of these conclusions. And what it was looking at was, one, just the rapid growth of the unregulated market in those states with sports betting and regulated online casinos as well as without. And then also looked at how much of that gambling spend in each state was representative of average household revenues.

And I think the highlights of the report I mean, the most disconcerting thing is how rapidly the unregulated market continues to grow even though more states continue to legalize. So in 2024, we estimate the illegal market is 67.1 billion dollars and roughly, you know, 74% of the total addressable online gambling market moving up to 97.4 billion, last year, representing 77%.

The other major highlight to take away from this is that, on average, this per capita spend of gambling expenditure in states with both regulated online sports betting and online casinos, that average was a little over 1%, about 1.4%. States with only sports betting, that number was 1%, and states with neither came in at less than half a percent.

So what we're seeing is as you think about how to address the illegal market, which is a hugely important issue and something that should be, I assume, a huge part of of your discussions in this group, realize that regulating and and legalizing is not decreasing this spend.

It is growing new people and participants. And while there may be a little carryover, there are a whole new group of people that are considering gambling online for the first time. Brianne, did I hit the major highlights?

Absolutely. And we just like to say that, you know, oftentimes when we are in state houses across the nation and they are debating policies like the ones before you all, this question of should we legalize sports betting? Right? Only 40 jurisdictions have it.

Should we legalize online casino? Only eight states have it. Right? This isn't something that everyone has. This question becomes if we legalize, do we capture or address that illegal market?

And there is no evidence to suggest that legalization or expansion in any way dampens, the illegal market. In fact, actually, 22% of consumers are still gambling in the illegal market in New Jersey. Jess and I like to say the answer to your concerns around the illegal market are enforcement, and the...we saw today in Florida, right, the attorney general has recently gone after what we call sweepstakes operators saying that they don't have the right to be offering their products.

This is a form of illegal gambling. Trying to go after the bad actors, not legalizing.

The other thing too is that public perception around gambling has been very interesting to watch. Right? We're less than ten years after PASFA, but Pew Research showed that only about 8% of Americans think that this legalization of sports betting is a good thing for society. Now some of that has to do with something known in our world as the total consumption model. The more you introduce something, the more people participate, the more harms that can come.

I also think, you know, when we see the data point that 56% of Americans would be happy if we banned all sports betting ads, Maybe the advertisement has something to do with the public sentiment here. But nonetheless, people are gambling more and more, and we know that, unfortunately, more harm is coming from it. And there are certain populations that are being disproportionately impacted. Jess I don't know if you'd like to speak to a few of those data points.

Oh, I know she's having trouble.

Are you asking us-

Apology.

Nope. Sorry. There she is.

Yeah. Sorry about that. Yeah. So we've seen, you know, Pew Research has done quite a bit of polling around this issue. We've seen that, you know, I think no one's surprised, men are somewhat more inclined to bet on sports than women.

It's an activity that is more popular in the 18-29 set. But we also see that, Black and Hispanic populations are more likely than other groups to bet on sports as well. And with those, there's also what we've noticed about African American populations in particular is that, they are starting at a much younger age. A significantly higher, portion of African American young men, under the age of 18, they start gambling younger and at a more frequent rate than their counterparts.

So when it comes time to legalizing sports betting, we tend to see in terms of problem gambling prevalency. For example, in Maryland, the prevalence rate is, I believe, a little over 10% for African American populations compared to the roughly 6% statewide problem gambling prevalence rate.

And one of the components or points that we hear a lot, from lawmakers like yourself when we're talking about gambling policy, is vulnerable populations and then a consideration for the youth, especially when we think about how much our youth is digitally dependent. Right? A very worrisome report came out from Common Sense Media that highlighted that about 36% of 11-17 year old children had gambled.

I'm a mom to a 12 year old boy and a 5 year old daughter, and this fact is absolutely terrifying to me. Not only that, the children surveyed in this report cited 60% of them, forgive me, cited that they had learned about gambling content via their social media feeds.

They were not seeking this out. There is a normalization that happens in states and in cultures when they legalize these types of products that then become a part of these children's lives and they're fed to them through social media. So, we have seen certain states try and address this better. I'm not sure anybody has found the magic sauce. New York, for example, is talking about myometrics in order to get on these apps to try and curb youth participation, but this is a growing concern.

There are some new parents groups that are being stood up to say, we need to do better to protect our children after legalization.

To chime in, if I can. What we're also seeing is that the attitude around Gen Z, in particular about sports betting and gambling, it doesn't mirror the way that we necessarily thought about gambling when we were younger. There was a high profile piece of research that came out a couple of weeks ago, but there's also been Northwest Mutual has done similar research, BYU, and the conclusion across all three is that a growing percentage of Gen Z thinks that sports betting is an investment vehicle.

It's a way to make money. They feel like they are financially behind as they're coming out of college and that the way to catch up is to gamble and wager on sports. Which, you know, is a huge problem considering that gambling should be approached with, you should not be spending and gambling anything that you're not ready, willing, and prepared to lose. It's entertainment. It's not investing.

One of the most concerning data points, that Jess and I are confronted with, is the data that we're starting to get from the few states that have authorized online casino like you heard about earlier today. And actually, the prevalence rates of harm and in certain cohorts are significantly higher within those jurisdictions. For example, New Jersey, 6% of their total population has a gambling problem and they say about roughly 20% of 18-24 year olds have a gambling problem.

Pennsylvania, a neighbor, also has online casino and online sports betting. They're mixed mode gamblers, individuals who might participate in lottery, sports betting, and online casino.

They recently just unveiled a report that showed upwards 20% of mixed mode gamblers could have a gambling problem. We believe that the frictionless experience of the online gambling forum can actually accelerate the rate at which addiction can take hold, and we're starting to really see that manifest in these worrisome trends. There's also a trend right now that online forums will allow for, credit cards. There are very few states that explicitly ban such practices, although recently Colorado and Virginia passed laws.

While some operators make the choice to not accept credit cards, we know that credit cards will often be used to purchase gift cards, for example, as a loophole, and we know that certain e-wallets are even taking funds, from credit, excuse me, credit cards to fund gambling accounts.

When we are also confronted with the fact that states that have chosen to legalize sports betting and online casino have found that credit card delinquency rates have increased. Same with auto loan delinquencies, credit card scores are go, credit scores are going down, and bankruptcies, I'm gonna use this word. I don't use it lightly, but as I say, they are surging and they are over 28%. Jess, did I hit the highlights there? You think for that?

We're happy to stop here given that you don't have these data points in front of you that were prepared on the deck. Again, we are happy to provide them. There are some initiatives at the federal level that are trying to address both, illegal gambling, at least a letter was penned to the DOJ, but we haven't seen any action. There are some congressional hearings that have happened around prediction markets and the sports event contracts. And then there are two pieces of federal legislation.

They're trying to address sports betting and the concerns there within, one called the Point Act and one called Safe Bet. The truth of the matter is, is that the Federal Government is unfortunately silent on the issue of gambling harms. It's really imperative that states take this on. Unfortunately, when we compare it to other addictions right now, gambling disorder is 338 times less funded than other addictions even though we are 7 times less prevalent. There are 8 jurisdictions that currently invest absolutely nothing.

And so, if you need to call someone for help, there are no resources available within those states. I'm well aware about your ninth island, you say right out to Vegas. It would be nice to think that, you know, maybe there isn't gambling related harm happening and people who are suffering in Hawaii as we call it, the hidden addiction, but unfortunately, we know that gambling problems don't stay wherever your gambling took place.

And so, we're really challenging states to consider what infrastructure they have in place and how to best support their residents.

Yeah. I mean, to add to what Brianne was saying, I think anything that you're considering in terms of opening up gambling should come with dedicated funding with very specific goals for what you're trying to reach. Some states have benchmark numbers, others have percentages related to revenue, which is a much better metric by which to allocate money related to harm.

So we would advocate anything that you're doing is related both, you know, if you did lottery, casinos, sports betting, any and all should have some sort of allocation in there because not only is the Federal Government silent, the Federal Government does not really contribute money to this. It was the first federal funding in, what, 40 years, this year specifically to look at military's, participants in gambling and the effect on that.

I think given the military population in Hawaii, Brianne, it might be useful to speak a bit about why veterans and active military tend to have an outsized impact when it comes to problem gambling.

I'm happy to. As someone who was privileged to actually visit the Coast Guard base in Hawaii, as my husband is active duty, we got 3 days for a honeymoon there. That's all they'd give him for a leave. There are 56,000 members in the US military who are thought to be silently struggling with a gambling disorder. Unfortunately, if you present with such, even though, we have access to 3,141 slot machines on basis of fraud. Unfortunately, you will be dismissed from your position.

And, additionally, TRICARE, our health coverage both for my spouse as well as, myself and my children, doesn't cover gambling related harm. We know that military members, as well as athletes, are 2 to 3 times more vulnerable to struggling with a gambling disorder, than the general population. What makes these individuals incredibly elite and esteemed at their jobs makes them incredibly vulnerable to gambling and I could go into that, but I won't bore you with the biology behind all of those facts.

The truth of the matter is it's a personal passion of mine to ensure that those that, go to defend us every day, know that someone has their back and we're trying to serve and protect them.

The last fact I would like to leave, that I don't know if it was highlighted previously or in another time, but two things that we hear a lot from operators of all kinds, casinos, lotteries, sports betting, online casinos is that they care deeply about responsible gambling and that they have these tools and products that they offer.

Unfortunately, in a lot of instances, the engagement rate and percentage with those responsible gambling tools is incredibly low. For example, a mass gaming commission report, they require their operators to disclose engagement with those RG tools. Found that less than 4% of users, and that was, like, the highest of any of the tools, actually engaged with them. So while we applaud that they exist, you know, policymakers are starting to ask, is this something that should be required, not optional?

Because, again, these products are now so much more accessible 24/7, 365 when they're in your pocket. So, how many safeguards and systems are in place? And if we're putting everything into the RG tools, it's probably not working.

And one of the best data points for that is a absolutely terrifying report came out of the state of Connecticut, not that long ago, that from 51% of sports betting revenue was coming from individuals who were harmed, and 71% of total gambling revenue was coming from 7% of the total population, 1.8% who had an addiction, and the remaining part considered at risk. So right now as we see it, maybe the business model is a little flawed.

We're happy to open it up to questions.

Okay. Thank you. Thank you, Brianne. Thank you for that. Yeah. It's a little harder to follow, like, the Andrew and Helene, they had all of the slides and it gave us bullet points, and it's a little harder to follow the conversation back and forth. But I'm gonna open it up to the members for any questions. Brandon?

Aloha, Brianne. Sorry we didn't get to talk or anything. I always try to connect. You know, Hawaii has an opportunity to think through many of the issues you've raised before. We have a legal market. What should we be doing now that becomes much harder to address once the industry is established? And also, what have you seen in other jurisdictions with significant native or indigenous populations that Hawaii should be thinking about?

Those are great questions. Thank you. So when I first came into the field, I was actually out of Massachusetts. That's home for me. And I had the privilege of seeing what it was like for a state to stand up, a form of gambling for the first time.

Massachusetts back in 2013 didn't have casinos. And two of the things that I really appreciated about the state is that they went above and beyond with their gambling commission to convene open forums, convening experts from all different facets of the industry, including researchers, problem gambling experts.

They created frameworks, and I felt as though both the statute, as well as, the intentions and the experts that were brought to convene together to create a very informative strategy to standing up the market was just, it was incredible. It was a privilege to watch it and to be a part of it. They also have working groups, almost like this, where they convene different departments.

So, the Department of Health works with the gaming commission, which works with the lottery. So. their tries. There is this camaraderie for, I would say coordination, especially for the things that Massachusetts prioritizes. They're looking to stand up a legal market, gaining insights just like you are, you heard from the Delaware lottery, and others that have done it before you, I believe is invaluable.

If I can also add, I think a huge recommendation that Massachusetts has done very well is implement research mandates from the beginning. Because as you point out, Hawaii is a very different state in terms of of native populations, and you're not gonna be able to necessarily take numbers from a state of a different racial breakdown and have it apply.

So, make sure that anything that you're considering includes a data mandate, similar to one that passed in Colorado this year, so you can find out as people are gambling in your state how it's impacting them. Pennsylvania does great annual reports on this topic as well. That way you have specific information to your state from the beginning, and you know baseline year over year how things are changing.

We know that the research agenda, it's required annually in Massachusetts. In the legislation, it was baked right in with a funding mechanism for it. As far as your question about indigenous populations, we do know that indigenous populations trend to have higher rates of addiction. So, I would believe that a very good coordinated effort with your Department of Health would be vital. We know that harm can happen.

Harm is happening, but looking at best practices in prevention and education and doing that collaboratively. Also, I believe your Department of Education. Right? Virginia and Maryland both have passed laws trying to educate their youth population because of some of the other data. I think all of those best practices could be deployed here.

Thank you.

Thank you, Brandon. Paul?

Yeah. Just real quick. Thanks for the presentation. You know, three key points I think you made that I wholeheartedly agree with is the data mandate having a prevalence study before anything happens. I think you'd have to have a baseline so you know what you're working from.

I think that will also inform the funding needs, you know, from the start. So, you gotta have a baseline for that as well, and I think that makes a lot of sense. And I also appreciate the definitions you included in the report. I think shared definitions so that people understand that the meaning of the words you're using is very important because I've see, certainly seen states come up with sometimes their own versions of those definitions and that just leads to confusion.

I did have just a quick question on, understanding the size of the regulated market is fairly easy because that's very, you know, well reported and mandated reporting on the dollars, being spent in the gambling marketplace. What is the model around measuring the illegal market? And then does that also, if you'd mentioned it does not include sweepstakes, I believe. I assume that would also be-

This particular report doesn't.

Also exclude prediction markets?

It excludes regulated prediction markets, meaning federally regulated. I believe it does include offshore, for example, offshore poly market. Apologies. This is not. We worked with GCI to create this report. In terms of methodology, you're correct.

It's a moving target, and it is very difficult to ballpark, illegal activity. What they were looking at was, user intent in, search and web use, and that was the basis for how they came around these numbers.

Okay. That's helpful to understand. I think you're right. I mean, if the legal market even in Hawaii is big. You know, if you just do a Google search here, you'll find all kinds of seemingly legal websites, including predictive markets that operate in a different space. But I think the interesting take here for me anyway, is that it's happening no matter what, whether it's legal or not.

And it may be happening to different degrees in regulated versus or illegal markets. But the ones that don't have it aren't getting any of the upside that you might consider upside. Right? There's no capital investment. There's no job creation.

There's no money, some funding for responsible gaming or problem gaming. There's no funding for those state priorities or enforcement of the illegal market. So, without regulating it and at least capturing a portion of that, a state certainly has to balance the potential downside and the risk. But mitigating that risk is only available in the regulated market. Would that be fair to say?

I would disagree, in the sense that when you're looking at data points that $350 million is being incurred by the state of New Jersey to deal with the social harms, I think it's hard to say that there's an upside here because if you look at how much money they're trying-

That's not the number that's hard to calculate, though. You're feeding in a lot into that number that a lot would just disagree with. So.

I hear and I hear you. I think that if you're talking about casinos and investing in land and jobs, that may look a whole lot different than if you're just gonna do digital forums where there isn't a lot of job creation that's there. I just think that a lot of states have not taken a hard look at what are the social costs that come from legalized gambling of all kinds. And if attributing 1% or $2 million is really getting the job done.

The truth of the matter is gambling harms and the social consequences are not personalized.

Data is very clear that for every 1 person that's harmed, it negatively impacts 6 others. So when you really start to look into the picture holistically, I think it takes a lot more than a million or $2 to get to a point of neutrality. I'm not saying that you shouldn't do that. If you think that there's only upsides to the game, that's your choice to make. I'm just saying I don't think it's as binary as you have laid it out.

I think that what an investment looks like in the upside is relative. I think the one data point I didn't get to say in all this is, that Jess and I like to think that we're in the business of human lives. Individuals with the gambling problem are 15 times more likely to die by suicide than the general population. And with all fairness and respect, sir, I'm not sure you can put a dollar amount on a human life.

Look. I would never minimize someone's tragic experience. That in no way was I attempting to do that or-

I didn't I didn't say you were. I just wanted to say that that's, that is something-

I wholeheartedly agree that every individual circumstance needs to be looked at in a compassionate and empathetic way. But this is and there's no but to that. That there is a public policy discussion taking place and all of that has to be considered for sure. So thank you.

So, anyone online have any questions? Okay. If not, we've got everybody in the room. I wanna thank the presenters for their presentation today. If I didn't say it earlier, Andrew, I think what was really great about your presentation was the comparison. So thank you for sharing that with us. And I think we're at the end of our agenda today.

Members, thank you very much, Co-Chair DeCoite and the people in the audience. Thank you for your participation and your patience as we go through this process. Aloha. This meeting is adjourned.