For pro-gambling lawmakers, getting legislative approval this session for a referendum on the issue may be an uphill battle.
The idea of a referendum to decide whether to legalize gambling gained currency after Senate President Robert Bunda , D-Wahiawa-Waialua-Sunset Beach, backed Gov. Cayetano’s proposal in his opening-day address to the Legislature. A couple of bills in the Senate and the House seek an advisory referendum on gambling.
Initial signs seem to indicate the fate of gambling bills. Senate Bill 2029, calling for a constitutional amendment prohibiting the legalization of gambling, already has a majority of 14 supporting signatures from the 25-member Senate. Further, an informal e-mail poll of the Republican representatives conducted by Pacific Business News showed that all nine respondents were opposed to a referendum.
Outside of the state Capitol, a growing faction of local businesses have begun to voice their opposition to gambling.
Leading the campaign are Victoria Ward President and CEO Mitch D’Olier and Group 70 International Inc. Chairman and CEO Francis Oda. The two have held informational meetings touting their cause and trying to get more businesses to oppose having casinos in the state.
A referendum, opponents contend, will become an issue of which side has deeper pockets to pay for the air time and publicity.
“The idea of a referendum becomes a money issue, as people who have most money for a publicity campaign will succeed,” said Oda, who is also chairman of the grass-roots group Hawaii Family Forum.
“If it comes to a referendum, the gambling industry will spend a tremendous amount of money to take their message to the public,” said Dorothy Bobilin, president of Hawaii Coalition Against Legalized Gambling. “There’s no way we, a grass-roots organization, can level the playing field and the spend same amount of money.”
The money issue takes on added significance, given the current economic climate, as the Trusted Online Casino Singapore industry promises to add thousands of jobs and millions of dollars to the state economy.
Sun International Hotels Ltd., one of the biggest resort-casino operators in the world, says it would build a $1 billion, 1,000-room resort at Ko Olina in two years and pay the state $100 million upfront for a casino license, which would last for 10 years.
“There are number of legislators who see the economics of it,” said Jim Boersema, spokesman for Sun International. “And if the issue comes to a referendum, it will definitely pass. There’s no question about it, as long as the issues are properly worded.”
Some observers argue the economic impact is open to discussion and, in the long term, they say gambling can only harm the state.
David McClain, dean of University of Hawaii’s College of Business Administration, said research shows the costs of bringing in gambling to the state will outweigh any short-term benefits.
Referring to a “fairly authoritative study that properly measures benefits and costs of gambling,” McClain states that costs outweigh benefits two to one, even when comparing minimum costs to maximum benefits. And when maximum cost is weighed against minimum benefit, the ratio tilts to six to one, costs outweighing benefits.
The study, “Business Profitability vs. Social Profitability: Evaluating Industries with Externalities, The Case of Casinos,” conducted by Earl Grinols of the University of Illinois and David Mustard, University of Georgia, quantifies all benefits and costs of gambling, including emotional and psychological impacts. It was published in Managerial and Decision Economics in August.
Local retailers and restaurateurs also take issue with the pitch that casinos will boost state tourism.
“Gambling is a parasitic type of industry where it focuses discretionary dollars to itself,” Oda said. “It cuts off necessary dollars to other emerging kinds of tourism, and restaurants and businesses, if we are talking of using gambling as a gambit to get more tourists.”
The casinos, instead of attracting new markets, more likely will eat into current tourist demographics, Oda said.
“Some of the tourists may be from a new market, but the casinos are primarily looking at how to capture and isolate current tourists,” he said. “No one will build a billion-dollar investment not based on current tourist numbers.”
Despite the strong opposition, the Legislature has a handful of bills on the issue. It includes companion bills House Bill 1366 and Senate Bill 650 that push for Sun International setting up a resort-casino in Ko Olina and HB 1697 and SB 866 that favor Ilitch Holdings, the Detroit-based parent of Little Caesar Enterprises, opening a casino each in Waikiki and Kapolei.
“The big concern among lawmakers is that if we let one in, everybody will come in,” Sun’s Boersema said. The company proposes that the state give exclusive licenses to one or two casino operators in exchange for a share of the earnings or an upfront monetary payment.
The model, he said, could imitate Sun’s contract to operate the Mohegan Sun Casino Resort built on an Indian reservation in Connecticut, where the state gets 25 percent of revenue from slot machines as long as there’s no new gambling license approved. Paying the state the equivalent of lost revenue would safeguard against a third party entering the market, he said.
For some, this kind of power play revives the ghosts of Hawaii’s past when the state was run by the “Big Five” companies.
“Gambling is the tip of the iceberg,” Oda said. “When you have so much money floating around it moves us back to the old Big Five oligarchy model. Eventually, they will be the ones controlling most of what goes on in Hawaii.”