STAND. COM. REP. NO.  1193


Honolulu, Hawaii

                , 2011


RE:   S.B. No. 755

      S.D. 2

      H.D. 1





Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Sixth State Legislature

Regular Session of 2011

State of Hawaii




     Your Committees on Economic Revitalization & Business and Judiciary, to which was referred S.B. No. 755, S.D. 2, entitled:




beg leave to report as follows:


     The purpose of this measure is to stimulate Hawaii's economy by establishing an annual exemption from the general excise tax on retail sales of certain back-to-school items during a five-day period in late July.


     For the purposes of a public hearing, your Committee circulated a proposed H.D. 1 of the measure that would delete its contents and insert language that authorizes major events such as the World Series of Poker or similar tournaments.  The proposed draft would also authorize the issuance of two licenses to conduct similar activities via internet sites hosted in Hawaii.  These activities would not constitute casino-type gambling because they would be limited to contests of skill and would be conducted on a peer-to-peer basis in which each participant would take all of the participant's winnings and no third party would have a stake in the outcome of the games.


Your Committees received testimony in support of the S.D. 2 from the Chamber of Commerce of Hawaii and the Retail Merchants of Hawaii.  The Tax Foundation of Hawaii submitted comments.  Your Committees received testimony in support of the proposed H.D. 1 from fourteen individuals.  The Director of Business, Economic Development, and Tourism submitted testimony in support of the intent of the measure.  The Office of Information Practices submitted comments.


Your Committees find that peer-to-peer entertainment events would attract participants, their families, and fans to Hawaii for the weeks-long duration of the events and augment tourism-revenues recently diminished by global political unrest and natural disasters.  The internet operations would yield a minimum license fee of $100,000,000 each, twenty per cent of wagers, and free online advertising for the State's tourism industry.  Your Committees further find that these peer-to-peer events and their internet analogues would not give rise to the social ills that can attend gambling activities or require expenditures to ameliorate those social ills.


     Your Committees have amended this measure by adopting the proposed H.D. 1 with the following further amendments:


     (1)  Replacing references to peer-to-peer gaming with references to peer-to-peer entertainment to emphasize that the measure authorizes only contests of skill with no "house";


     (2)  Clarifying that the authority of the peer-to-peer entertainment commission is limited to peer-to-peer contests of skill and that it may not authorize establishment of casinos, card rooms, or similar gambling operations;


     (3)  Clarifying the authority of the peer-to-peer entertainment commission with regard to regulation of events and those that conduct them, including the authority to establish permit fees and adopt rules relating to insurance and tax-compliance requirements for event operators, the type and size of venues in which the events are to be held, minimum number of participants required, and maximum duration of events;


     (4)  Clarifying that participation in contests of skill in the course of peer-to-peer entertainment is limited to live participants; and


     (5)  Making other technical amendments for consistency, clarity, and style.


     As affirmed by the records of votes of the members of your Committees on Economic Revitalization & Business and Judiciary that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 755, S.D. 2, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 755, S.D. 2, H.D. 1, and be referred to the Committee on Finance.


Respectfully submitted on behalf of the members of the Committees on Economic Revitalization & Business and Judiciary,