Hawaiʻi Tourism & Gaming Working Group Takes Closer Look at Lotteries, Online Gaming

During its latest meeting, the Hawai’i Tourism and Gaming Working Group focused its attention on examining not only how other states generate revenue through gaming, but how those systems are structured, regulated and used to fund public needs.

The meeting featured Andrew White, executive director of the North American Association of State and Provincial Lotteries (NASPL), and Helene Keeley, director of the Delaware Lottery Office. Brianne Doura-Schawohl, president and CEO of Doura-Schawohl Consulting LLC, later addressed sports betting, online gambling and concerns surrounding gambling-related harm.

For Hawaiʻi, one theme emerged throughout the lottery discussion: before asking how much money a lottery could generate, the state may first need to determine what it wants that money to accomplish.

Start With the Need

When asked whether a lottery discussion should begin with potential revenue or with what the state hopes to accomplish, White said that in his experience, the creation of a lottery is often driven by a specific public need.

One example is education.

Several states direct lottery proceeds toward college scholarships, allowing students to attend local institutions and, in some cases, helping states keep students at home for their education.

“The need has really driven starting the lottery or voting it in,” White said.

Lottery beneficiaries differ from state to state and can include education, local governments, senior programs, economic development, environmental initiatives, property-tax relief and veterans programs.

That flexibility could become an important part of Hawaiʻi’s discussion: If the state were to establish a lottery, what would Hawaiʻi want its beneficiary to be?

What Counts as a “Lottery”?

Another takeaway from the hearing was that the answer depends heavily on the state.

White described the differences as “jurisdictional variance.” Some states operate traditional lotteries centered around draw games and instant tickets, while others place much broader gaming operations under their lottery agencies.

Delaware is an example of the latter.

The Delaware Lottery began with traditional products in 1975 and gradually expanded to include video lottery terminals, table games, iGaming, iLottery and online sports betting. In Delaware, those various forms of gaming all fall under the lottery, which serves as both an operator and regulator.

When working group member Stanford Carr asked which products generate the most revenue, Keeley identified two: video lottery at casinos and iGaming — essentially, online casino gaming.

Delaware’s lottery operation is also self-funded. Keeley explained that it receives no General Fund contributions to cover its expenses. Gaming revenue first pays for the lottery’s operations and other obligations required under state law — including staff, gaming enforcement and problem-gambling programs — before the net proceeds are transferred to the General Fund.

“We pay our expenses. We fund ourselves first. We get no general fund contributions at all,” Keeley said.

As one example, Keeley said Delaware’s traditional lottery products — including Powerball, Mega Millions, Keno and scratch-off tickets — generated $60 million in net contributions to the General Fund after expenses.

In other words, when Delaware discusses its “lottery,” it encompasses significantly more than Powerball tickets and scratch-offs — both in the types of gaming it oversees and the role the lottery plays within state government.

Delaware’s One-Provider Approach

One of the more notable exchanges came when working group member Brandon Maka’awa’awa asked Keeley whether, looking back at Delaware’s evolution into sports betting and iGaming, she would have structured anything differently.

Keeley pointed to Delaware’s decision to operate with a single online gaming provider.

That differs significantly from neighboring Pennsylvania, where she said numerous providers compete for customers.

Because Delaware is both regulator and operator, Keeley said the state maintains control over its provider’s advertising budget and media. If the state objects to advertising language, it can require the provider to change it.

Keeley said she believes that structure has helped Delaware avoid the constant sports betting advertising seen in other markets.

While acknowledging that problem gambling exists in Delaware, she said the state has not seen a dramatic increase under its model. Delaware also added funding for problem-gambling education when online gaming was introduced, including outreach to middle schools and universities.

Keeley emphasized that responsible gaming was not something Delaware addressed after expansion.

“Every single piece of legislation made sure that responsible gaming was part of the equation,” she said. “Because when you do this, you have to take that seriously.”

Could Tourism Factor Into a Hawaiʻi Lottery?

The group’s tourism focus also produced an interesting question: Would a Hawaiʻi lottery primarily rely on residents, or could visitors become part of the market?

White said some lottery players travel specifically to purchase games or tickets unique to a particular jurisdiction. He suggested Hawaiʻi could potentially create its own distinctive products in addition to offering national games such as Powerball and Mega Millions.

He was also careful to note that he did not have research quantifying how much revenue Hawaiʻi could expect from visitors and described the tourism potential as his opinion.

Keeley offered Delaware’s beach communities as a real-world example, saying the state sees increased lottery and online gaming activity during the summer months when visitor populations surge.

Online Gaming Raises a Different Set of Concerns

The final presentation shifted away from how a lottery could operate and toward the potential consequences of expanding sports betting and online gambling.

Doura-Schawohl, joined by Jessica Wellman of the Campaign for Fairer Gambling, raised concerns about the growth of illegal online gambling and argued that legalization alone has not eliminated the unregulated market in states that have expanded gaming.

Another concern centered on younger gamblers.

Doura-Schawohl said a significant portion of Gen Z views sports betting as an investment vehicle — and, for some, as a way to financially “catch up” as they enter adulthood.

Her response was straightforward:

“It’s entertainment. It’s not investing.”

She also pointed to data from states with online casinos showing higher rates of gambling-related harm among certain populations, including younger adults.

What Hawaiʻi Would Have to Decide

Thursday’s hearing demonstrated that creating a “lottery” is not a single policy decision.

Hawaiʻi would first have to determine why it wants one and who should benefit from the revenue. From there would come questions about what games are permitted, whether online casino gaming or sports betting falls under the same system, how many operators are allowed, who regulates them and what responsible-gaming protections are established.

The examples presented to the working group also showed there is no universal model to follow.

That leaves Hawaiʻi with the opportunity — and challenge — of deciding whether any of those models make sense for the state, and if so, what a system designed specifically for Hawaiʻi should look like.

If you or someone you know is struggling with a gambling problem, help is available. Call or text the National Problem Gambling Helpline at 1-800-MY-RESET (1-800-697-3738) for free, confidential support 24/7.