Creates state gaming commission; limits casino gaming to 1 facility on a site in West Oahu; allows legislature to pre-select 1 gaming operator who is presumed to be qualified. Imposes 12% tax on gross revenues; uses balance to fund Hawaii HOPE scholarship program. Establishes HOPE scholarship program.

A BILL FOR AN ACT

SECTION 1. The legislature finds that Hawaii's economy remains founded on tourism. However, Hawaii is unfortunately no longer the preeminent tourist destination. Many east-bound tourists bypass Hawaii, choosing instead one of the many daily direct and indirect airline flights from Japan to Las Vegas. While our convention center sits empty, mainland convention organizers routinely consider the availability of casino gaming as a major factor in selecting a convention site. Meanwhile, Hawaii exports its wealth to the mainland. Hawaii residents generate 480,000 visits a year to Las Vegas and other gaming venues in Nevada.

This Act creates the Hawaii gaming code which permits limited casino gaming by an experienced operator at a single site on commercial or resort-zoned property outside of the Waikiki/Ala Wai area in West Oahu. The code imposes a wagering tax of twelve per cent on gross gaming revenues. A statutory minimum tax will assure collection of $32,250,000 in wagering tax revenues in the first twelve months of casino operations, $37,250,000 in the second twelve months, and $42,250,000 in the third twelve months and thereafter. The minimum tax would be paid in advance of each twelve-month period. The code is based in large part on the legislative and regulatory experience embodied in the Nevada Gaming Code and establishes a five-member Hawaii gaming commission. The commission will have an annual budget of at least $2,250,000 to ensure vigorous supervision of casino gaming and to fund a $250,000 problem gamblers awareness program. All remaining tax revenues are earmarked for education through the Hawaii HOPE scholarship program.

This Act will allow upscale gaming at only one site on Oahu. There will be no slot machines at the airport or in gas stations. The National Gambling Impact Study Commission found that proximity to legal gambling is not an indicator of addiction. That is, problem gamblers find a way to gamble regardless of whether they live near a place that offers legalized gambling or not. According to the Commission, "the availability of casino gambling had no effect on rates of serious violent or property crimes, like larceny, burglary, murder, motor vehicle theft, assault, or robberies." The Commission also found that the harm to local economies and existing businesses by the introduction of gaming is over-stated: "The preponderance of empirical studies indicate claims of the complete cannibalization of pre-existing local restaurants and entertainment facilities by a shift in resident spending is grossly exaggerated."

The Hawaii HOPE scholarship program is modeled after the highly successful Georgia HOPE Scholarship Program. "HOPE" stands for "Helping Outstanding Pupils Educationally". Funded with wagering tax revenues, the Hawaii HOPE scholarship program will provide HOPE scholarships covering tuition, fees, and a textbook allowance to qualified students attending the University of Hawaii, a community college, or an eligible private post-secondary educational institution. To qualify, a student must be a Hawaii resident and graduate from high school with a B- cumulative grade point average. The program accommodates students who have been "home-schooled" or who hold a general educational development equivalency diploma. Qualified students in a four-year undergraduate degree program will receive HOPE scholarships each year if they maintain a B- cumulative grade point average. Once it has covered qualified students in all four years at in-state undergraduate institutions, the HOPE scholarship program will expand to include scholarships of up to $3,000 per year for qualified students going out-of-state. The HOPE scholarship program will eventually include loans for students seeking undergraduate degrees in education and loans for teachers seeking training in areas of specialized expertise for which a shortage of qualified teachers or educators exists in Hawaii. These loans will be forgiven if the recipient serves as a teacher in Hawaii's public school system for a minimum number of years.

The purpose of this Act is to both enhance the value of Hawaii as a tourism destination by making available limited upscale casino gaming at one site on Oahu while at the same time generating moneys to fund education for our residents. By permitting casino gaming on a limited, single-site basis, this Act will help us regain our status as the preeminent tourism destination, and at the same time reward high school graduates by lessening the great burden of college tuition and related costs.

PART I

SECTION 2. Chapter 46, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

§46-    Gaming in counties; conditions. Any other law to the contrary notwithstanding, casino gaming shall be permitted under chapter A in the city and county of Honolulu at a site pursuant to section A-58, and holders of valid manufacturer's, supplier's, or distributor's licenses may conduct business under those licenses in the city and county of Honolulu."

SECTION 3. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

§A-l Hawaii gaming code. This chapter shall be known and may be cited as the Hawaii gaming code.

§A-2 Purpose. This chapter shall be construed and applied to further its underlying purposes, which are as follows:

§A-3 Definitions. As used in this chapter, unless the context requires otherwise:

"Affiliate" means a person who, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under the common control of a specified person.

"Affiliated company" means a subsidiary company, holding company, intermediate company, or any other form of business organization that controls, is controlled by, or is under common control of a licensee which is a corporation or limited liability company, and is involved in gaming activities in this State or involved in the ownership of property in this State upon which gaming is conducted.

"Applicant" means any person who has applied for or is about to apply for a state gaming license under this chapter, registration or finding of suitability under this chapter, or approval of any act or transaction for which commission approval is required or permitted under this chapter.

"Application" means a request for issuance of a state gaming license under this chapter, registration or finding of suitability under this chapter, or approval of any act or transaction for which commission approval is required or permitted under this chapter.

"Baccarat commission" means a fee assessed by a licensee on cash paid out as a loss to a patron of baccarat to modify the odds of the game; or a rate or fee charged by a licensee for the right to participate in a baccarat game.

"Capital lease" means a bailment, lease, or similar transaction in which:

"Cashless wagering system" means a method of wagering and accounting in which the validity and value of a wagering instrument or wagering credits are determined, monitored, and retained by a computer operated and maintained by the holder of an operator's license which maintains a record of each transaction involving the wagering instrument or wagering credits, exclusive of the game or gaming device on which wagers are being made. The term includes computerized systems which facilitate electronic transfers of money directly to or from a game or gaming device.

"Commission" means the Hawaii state gaming commission.

"Corporate director" means any director of a corporation or any person performing similar functions with respect to any organization.

"Department" means the department of budget and finance.

"Director" means the director of finance.

"Equity security" means any voting stock of a corporation, or similar security; any security convertible, with or without consideration, into such a security, or carrying any warrant or right to subscribe to or purchase such a security; any such warrant or right; or any security having a direct or indirect participation in the profits of the issuer.

"Executive director" means the executive director of the commission.

"Game" or "gambling game" means any game played with cards, dice, equipment, or any mechanical, electromechanical, or electronic device or machine for money, property, checks, credit or anything of value, including, without limiting the generality of the foregoing, faro, monte, roulette, keno, bingo, fan-tan, twenty—one, blackjack, seven—and—a-half, big injun, klondike, craps, poker, chuck—a-luck, Chinese chuck—a-luck (dai shu), wheel of fortune, chemin de fer, baccarat, pai gow, pachinko, beat the banker, panguingui, slot machine, any banking or percentage game, or any other game or device approved by the commission, but does not include any game played under circumstances that constitute "social gambling" as defined in section 712—1231(a).

"Gaming" or "gambling" means to deal, operate, carry on, conduct, maintain, or expose for play any game or gambling game.

"Gaming device" means any equipment, or mechanical, electromechanical or electronic contrivance, component, or machine used remotely or directly in connection with gaming or any game which affects the result of a wager by determining win or loss. The term includes a slot machine, any mechanical, electrical, or other device which may be connected to or used with a slot machine to alter the normal criteria of random selection or affect the outcome of a game, a system for the accounting or management of any game in which the result of the wager is determined electronically by using any combination of hardware or software for computers, and those combinations of components of gaming devices which the commission determines to be a machine used directly or remotely in connection with gaming or any game which affects the results of a wager by determining a win or loss.

"Gaming facility" means any combination of land, buildings, and improvements thereon, in which gaming takes place and any other structure or facility required or used in connection with the operation of casino gaming, including, but not limited to, hotel rooms and facilities, parking, garage, and other supporting service structures; and all necessary, useful, and related equipment, furnishings, and appurtenances.

"General partner" means any general partner of a partnership or limited partnership or any person performing similar functions.

"Gross revenue" means the total of all cash received as winnings; cash received in payment for credit extended by a licensee to a patron for purposes of gaming; and compensation received for conducting any game in which the licensee is not party to a wager, less the total of all cash paid out as losses to patrons, and those amounts paid to fund periodic payments and any other items made deductible as losses by section A—48. For purposes of this chapter, cash or the value of noncash prizes awarded to patrons in a contest or tournament are not losses. Gross revenue does not include:

"Holding company" means any corporation, firm, partnership, limited partnership, limited liability company, trust, or other form of business organization that is not a natural person which, directly or indirectly owns, has the power or right to control, or holds the power to vote any part of the limited partnership interests or interests in a limited liability company or outstanding voting securities of a corporation which is a licensee or applicant. In addition to any other reasonable meaning of the words used, a holding company "indirectly" has, holds, or owns any such power, right, or security, if it does so through any interest in a subsidiary or successive subsidiaries, however many such subsidiaries may intervene between the holding company and the corporation, limited partnership, or limited liability company which is a licensee or applicant.

"Individual" means a natural person.

"Interest in a limited liability company" means a member's share of the profits and losses of a limited liability company and the right to receive distributions of the company's assets.

"Intermediary company" means any corporation, firm, partnership, limited partnership, limited liability company, trust, or other form of business organization other than a natural person which is a holding company with respect to a corporation, limited partnership, or limited liability company which is a licensee or applicant; and is a subsidiary with respect to any holding company.

"License" or "state gaming license" means a license issued under this chapter.

"Licensee" means any person to whom a valid state gaming license has been issued.

"Licensed gaming facility" means a gaming facility operated by a person holding a valid operator's license.

"Limited liability company" means a limited liability company organized and existing pursuant to chapter 428 or similar statutory provisions of another state.

"Limited partner" means any limited partner of a limited partnership or any other person having similar rights.

"Limited partnership" means a partnership formed by two or more persons pursuant to chapter 425D, or similar statutory provisions of another state, having as members one or more general partners and one or more limited partners.

"Limited partnership interest" means the right of a general or limited partner to receive from a limited partnership a share of the profits; any other compensation by way of income; or a return of any or all of the contribution to capital of the limited partnership, or the right to exercise any of the rights or powers provided in chapter 425D, whether directly or indirectly.

"Manager" means a person elected by the members of a limited liability company to manage the company.

"Manufacturer" means a person who:

"Manufacturer's, seller's, or distributor's license" means a license issued pursuant to section A—33.

"Occupational license" means a license issued by the commission to a person or entity to perform an occupation which the commission has identified as requiring a license to engage in casino gaming in Hawaii.

"Operator's license" means a license to operate and maintain a gaming facility for casino gaming permitted under this chapter.

"Partnership" means a partnership formed by two or more persons pursuant to chapter 425, or similar statutory provisions of another state, having as members one or more general partners and one or more limited partners.

"Person" includes an individual, corporation, partnership, limited partnership, limited liability company, trust, estate, or other legal entity.

"Pre-selected operator" means any entity or entities selected by the legislature as the initial holder of an operator's license, a subsidiary or subsidiaries formed by such entity or entities for the purpose of ownership and operation of casino facilities in the State of Hawaii, or a partnership, limited partnership, limited liability company formed by such entity or entities, or subsidiaries thereof.

"Publicly traded corporation" means:

The term does not include any corporation or other legal entity which has securities registered or is an issuer pursuant to paragraph (1) solely because it guaranteed a security issued by an affiliated company pursuant to a public offering; or is considered by the Securities and Exchange Commission to be a co-issuer of a public offering of securities pursuant to 17 Code of Federal Regulations section 230.140.

"Slot machine" means any mechanical, electrical, or other device, contrivance, or machine which, upon insertion of a coin, token, or similar object, or upon payment of any consideration, is available to play or operate, the play or operation of which, whether by reason of the skill of the operator in playing a gambling game which is presented for play by the machine, or application of the element of chance, or both, may deliver or entitle the person playing or operating the machine to receive cash, premiums, merchandise, tokens, or any thing of value, whether the payoff is made automatically from the machine or in any other manner.

"Subsidiary" means a corporation, any part of whose outstanding equity securities are owned, subject to a power or right of control; or held with power to vote by a holding company or intermediary company; or a firm, partnership, limited partnership, limited liability company, trust, or other form of business organization that is not a natural person, any interest in which is owned, subject to a power or right of control; or held with power to vote by a holding company or intermediary company.

"Wagering credit" means a representative of value, other than a chip, token, or wagering instrument, that is used for wagering at a game or gaming device and is obtained by the payment of cash or a cash equivalent, the use of a wagering instrument, or the electronic transfer of money.

"Wagering instrument" means a representative thing of value, other than a chip or token, that is issued by a licensee and approved by the commission for use in a cashless wagering system.

§A-11 Hawaii state gaming commission. (a) There is established the Hawaii state gaming commission which shall be a body corporate and a public instrumentality of the State, for the purpose of implementing this chapter. The commission shall be placed within the department of budget and finance for administrative purposes. The commission shall consist of five members who shall be appointed in accordance with this section and section 26-34.

(b) No person shall be appointed a member of the commission or continue to be a member of the commission if the person is:

(c) Each member shall serve a term of five years except that of the initial members, one member shall serve for five years, one member shall serve for four years, one member shall serve for three years, one member shall serve for two years, and one member shall serve for one year. A vacancy shall be filled in accordance with article V, section 6, of the Constitution of the State of Hawaii.

(d) Each term of a member of the commission shall commence on July 1, and expire on June 30. No person shall be appointed consecutively to more than two terms as a member of the commission. No person shall serve as a member of the commission for more than ten consecutive years.

(e) Any member of the commission whose term has expired and who is not disqualified from membership under subsection (d) may continue in office as a holdover member until a successor is appointed; provided that a holdover member shall not hold office beyond the end of the second regular legislative session following the expiration of the member's term of office.

(f) The governor may remove or suspend for cause any member of the commission after due notice and public hearing.

(g) Members shall:

(h) Officers of the commission, including the chairperson, shall be selected by the members. The commission, subject to chapter 92, shall hold at least one meeting in each quarter of the State's fiscal year. Special meetings may be called by the chairperson or any four members upon seventy—two hours written notice to each member. Four members shall constitute a quorum, and a majority vote of the members present shall be required for any final determination by the commission. The commission shall keep a complete and accurate record of all its meetings.

(i) Before assuming the duties of office, each member of the commission shall take an oath that the member shall faithfully execute the duties of office according to the laws of the State and shall file and maintain with the director a bond in the sum of $25,000 with good and sufficient sureties. The cost of any bond for any member of the commission under this section shall be considered a part of the necessary expenses of the commission.

(j) The commission shall appoint a person to serve as the executive director of the commission subject to the commission s supervision. The executive director shall hold office at the will of the commission and shall be exempt from chapters 76 and 89 and shall devote full time to the duties of the office and shall not hold any other office or employment. The executive director shall receive an annual salary at an amount set by the commission. The executive director shall be reimbursed for expenses actually and necessarily incurred in the performance of the executive director's duties.

(k) Except as otherwise provided by law, the executive director may hire assistants, other officers, and employees, who shall be exempt from chapters 76 and 89 and who shall serve at the will of the executive director; and appoint committees and consultants necessary for the efficient operation of casino gaming; provided that no person shall be hired or appointed under this subsection who is:

(1) The salaries of employees shall be set by the executive director.

(m) Notwithstanding subsection (j), the commission may perform the functions of the executive director and may exercise the powers granted to the executive director until and shall not be required to appoint an executive director before that date.

(n) The commission shall adopt rules in accordance with chapter 91 establishing a code of ethics for itself and its employees which shall include, but not be limited to, restrictions on which employees shall be prohibited from participating in or wagering on any game or gaming operation subject to the jurisdiction of the commission. The code of ethics shall be separate from and in addition to any standards of conduct set forth pursuant to chapter 84.

§A-12 Staff. (a) The executive director shall keep records of all proceedings of the commission and shall preserve all records, books, documents, and other papers belonging to the commission or entrusted to its care relating to casino gaming.

(b) The commission may employ any personnel, including personnel with law enforcement authority, that may be necessary to carry out its duties related to casino gaming. In conducting investigations, the commission may employ the services of police departments with reasonable reimbursement for costs and services received.

§A-13 Powers of the commission. The commission shall have all powers necessary and proper to fully and effectively supervise all casino gaming operations, including the power to:

§A-14 Rules. (a) The commission shall adopt rules for the development of the casino gaming facility regarding health, safety, building, planning, zoning, land use, land development, and flood plain management, including mitigation and permitting, which, upon final approval by the commission of the casino gaming facility development plan presented by the pre-selected operator, shall supersede all other inconsistent ordinances and rules relating to health, safety, building, planning, zoning, land use, land development, and flood plain management, including mitigation and permitting, and provision of access and utilities thereto. The casino gaming facility development plan approved by the commission shall be made a part of, and shall have the same force and effect as, the rules aforesaid. Rules adopted under this section shall follow existing law, rules, ordinances, and regulations as closely as is consistent with standards meeting minimum requirements of good design, pleasant amenities, health, safety, and coordinated development, and accomplishment of the purposes of this chapter. For purposes of chapters 501, 502, and 514A, the commission may certify maps and plans of lands and real property interests constituting or forming a part of the site of the casino gaming facility as having complied with applicable laws and ordinances relating to consolidation, subdivision of lands, and condominium property regimes, and such maps and plans shall be accepted for registration or recordation by the land court and registrar.

(b) In adopting rules under this chapter, the commission shall be exempt from the requirements of public notice, public hearing, and gubernatorial approval under chapter 91; provided, however, that the rules and any amendment thereto are adopted in an open meeting of the commission satisfying the requirements of chapter 92 and have been made available for gubernatorial comment at least thirty days before that meeting.

(c) The commission shall expedite approval of the gaming facility development plan presented by the pre-selected operator and reasonably facilitate an expedited effort to build, equip, staff, and open the gaming facility initially permitted by section A—31(d), including, without limitation, adopting partial or temporary rules and accepting applications for licenses or registration on forms used for equivalent licenses or circumstances in the states of Nevada or New Jersey pending adoption of final rules or forms. Legal services may be procured to draft or revise rules and forms and to provide legal services in connection with adoption of rules, under section 103D—304.

(d) Without limiting the general powers conferred upon the commission, the rules shall include provisions:

§A-15 Applications for licenses. (a) Applications for state gaming licenses shall be made on forms provided by the commission and shall contain any information that the commission prescribes.

(b) An application fee shall be paid at the time of filing to defray the costs associated with the background investigation conducted by the commission, and the search and classification of fingerprints obtained by the commission with request to the application. Application fees shall be set by the commission for each category of license. If the costs of the investigation exceed the scheduled fee, the applicant shall pay the additional amount to the commission. If the costs of the investigation are less than the scheduled fee, the applicant, in the discretion of the commission, may receive a refund of the remaining amount. All information, records, interviews, reports, statements, memoranda, or other data supplied to or used by the commission in the course of its review or investigation of an application for a license shall be privileged, strictly confidential, and shall be used only for the purpose as provided in this chapter, including evaluation of an applicant or of sharing information with law enforcement and with gaming regulatory agencies in other jurisdictions. The information, records, interviews, reports, statements, memoranda, or other data shall not be admissible as evidence, nor discoverable in any action of any kind in any court or before any tribunal, commission, agency, or person, except for any action deemed necessary by the commission.

§A-16 Disclosure of records. (a) Notwithstanding any other law to the contrary, the commission on written request from any person, shall provide information furnished by an applicant or licensee concerning the applicant or licensee, or the applicant's or licensee's products, services, or gaming enterprises, and business holdings related to casino gaming under this chapter, as follows:

(b) Notwithstanding any other law to the contrary, the commission, on written request from any person, shall also provide the following information related to casino gaming under this chapter:

(c) Subject to subsection (b), the commission shall not provide any information the disclosure of which would be barred by:

(d) The commission may assess fees for the copying of information in accordance with chapter 92F.

§A-17 Criminal history record checks. (a) The commission shall develop procedures for obtaining verifiable information regarding the criminal history of persons who the commission is authorized to employ, review, license, or investigate. These procedures shall include a criminal history record check to determine suitability for employment, licensing, or other activity requiring commission approval.

For purposes of this section, "criminal history record check" means an investigation based on fingerprints obtained by a law enforcement officer and other identifying information by means of:

(b) The commission shall not request a criminal history record check of any person unless that person:

(c) The commission may hire or approve an applicant provisionally prior to the completion of the criminal history record check if, at all times prior to receipt of the criminal history record check, the individual is under the direct supervision of someone whose criminal history record check has been completed.

(d) The commission may refuse to employ or approve, or may terminate employment or approval of any person if:

§A-18 Hearings by the commission. (a) Upon order of the commission, one of the commission members or a hearings officer designated by the commission may conduct any hearing provided for under this chapter related to casino gaming or by commission rule and may recommend findings and decisions to the commission. The commission member or hearings officer conducting the hearing shall have all powers and rights granted to the commission in this chapter. The record made at the time of the hearing shall be reviewed by the commission, or a majority thereof, and the findings and decision of the majority of the commission shall constitute the order of the commission in that case.

(b) Any party aggrieved by an action of the commission denying, suspending, revoking, restricting, or refusing to renew a license under this chapter may request a hearing before the commission. A request for a hearing must be made to the commission in writing within five days after service of notice of the action of the commission. Notice of the action of the commission shall be served either by personal delivery or by certified mail, postage prepaid, to the aggrieved party. Notice served by certified mail shall be deemed complete on the business day following the date of the mailing. The commission shall conduct all requested hearings promptly and in reasonable order.

§A-19 Judicial review. Jurisdiction and venue for the judicial review of a final order of the commission relating to operator's, supplier's, manufacturer's, seller's, distributor's, or occupational licenses shall be vested in the circuit court of the appropriate jurisdiction. A petition for judicial review of a final order of the commission shall be filed within thirty days after entry of the final order.

§A-20 Annual report. The commission shall file a written annual report with the governor and the legislature on or before sixty days following the close of each fiscal year and any additional reports that the governor or the legislature may request. The annual report shall include a statement of receipts and disbursements related to casino gaming pursuant to this chapter, actions taken by the commission, and any additional information and recommendations which the commission may deem valuable or which the governor or the legislature may request.

§A-31 Operator's license. (a) It is unlawful for any person to deal, operate, carry on, conduct, or expose for play in the State any game, gaming device, or slot machine except in a licensed gaming facility or to receive, directly or indirectly, any compensation or reward or any percentage or share of the money or property played, for keeping, running, or carrying on any game, slot machine, or gaming device, without first having procured, and maintaining in effect, all federal and state licenses as required by statute or rule. Nothing in this chapter shall be interpreted to prohibit a holder of an operator's license from operating a school for the training of any occupational licensee.

(b) Every person who must be licensed pursuant to this section is subject to sections A-42 and A-43, except as exempted from those provisions by the commission or otherwise provided in this chapter.

(c) The burden of proving one's eligibility and qualification to receive or hold a license under this section is at all times on the applicant or licensee.

(d) Only one licensed gaming facility shall be permitted under this chapter. The foregoing limitation on the number of gaming facilities shall apply until:

(e) Notwithstanding anything to the contrary in this chapter, the pre—selected operator shall be presumed qualified and suitable to receive an operator's license; provided, however, that the commission may require the pre—selected operator to provide the information described in this chapter as required of an applicant for an operator's license. Within thirty days of the appointment of the initial five commissioners, the commission shall issue to the pre—selected operator an operator's license for the gaming facility, which shall be located at the site selected by the pre-selected operator. Each of the pre—selected operator's officers, directors, and shareholders and any employees previously involved in casino gaming in gaming facilities licensed under the laws of another jurisdiction shall be deemed suitable to be involved in casino operations in Hawaii pending the outcome of licensing or determinations, if any, as the commission or this chapter may require, so long as the officer, director, shareholder, or employee is not the subject of a current finding of unsuitability by a gaming regulatory body of another jurisdiction.

(f) The commission may revoke the operator's license if a licensee fails to begin regular casino gaming operations within twelve months of issuance of the operator's license or twelve months after a certificate of occupancy for the gaming facility is first issued, whichever is later, upon a finding by the commission that license revocation is in the best interest of the State and the county in which casino gaming is authorized.

(g) In the event of the revocation of an operator's license, the commission may entertain applications for an operator's license for a gaming facility.

(h) Before an operator's license may be issued, the applicant shall pay a licensing fee of $2,000,000 per gaming facility. The license shall be renewable annually, upon payment of an annual fee of $50,000.

§A-32 Bond of licensee. Before an operator's license is issued, the licensee shall file a bond in the sum of $200,000 with the department. The bond shall be used to guarantee that the licensee faithfully makes the payments, keeps books and records, makes reports, and conducts games of chance in conformity with this chapter and the rules adopted by the commission. The bond shall not be canceled by a surety on less than thirty days notice in writing to the commission. If a bond is canceled and the licensee fails to file a new bond with the commission in the required amount on or before the effective date of cancellation, the licensee's license shall be revoked. The total and aggregate liability of the surety on the bond shall be limited to the amount specified in the bond.

§A-33 Manufacturer's, seller's, and distributor's licenses. (a) It is unlawful for any person, either as owner, lessee, or employee, whether for hire or not, to operate, carry on, conduct, or maintain any form of manufacturing, selling, or distribution of any gaming device or cashless wagering system for use or play in the State or for distribution outside of the State without first procuring and maintaining all required federal and state licenses, except as follows:

(b) Any person whom the commission determines is a suitable person to receive a license under the provisions of this section may be issued a manufacturer's, seller's, or distributor's license. The burden of proving one's eligibility and qualification to receive or hold such a license is at all times on the applicant or licensee. A person, firm, or corporation shall be ineligible to receive a supplier's license if:

(c) Every person who must be licensed pursuant to this section is subject to sections A-42 and A-43, unless exempted from those provisions by the commission.

(d) For a period of thirty-six months from the effective date of this Act and provided that the commission has not made a finding of unsuitability, anyone holding a valid license in the states of Nevada or New Jersey to engage in the manufacture, sale, or distribution of gaming devices shall be exempt from this section for purposes of supplying and servicing a licensed gaming facility; provided, however, that the commission may require such persons to register with the commission.

(e) No gaming device shall be manufactured, sold, or distributed in this State unless it conforms to standards adopted by rules of the commission or, in the absence of standards adopted by rules of the commission, to standards adopted in Nevada or New Jersey.

(f) All persons who manufacture, sell, or distribute gaming devices in the State shall:

§A-34 Effect of determination that manufacturer or distributor is unsuitable to hold license. If the commission determines that a manufacturer or distributor is unsuitable to receive or hold a license:

is an unsuitable method of operation.

§A-35 Finding of suitability for manufacturer or distributor of associated equipment. (a) A manufacturer or distributor of associated equipment who sells, transfers, or offers the associated equipment for use or play in the State may be required by the commission, upon recommendation of the commission, to file an application for a finding of suitability to be a manufacturer or distributor of associated equipment.

(b) Any person who is directly or indirectly involved in the sale, transfer, or offering for use or play in the State of such associated equipment who is not otherwise required to be licensed as a manufacturer or distributor may be required by the commission, upon recommendation of the commission, to file an application for a finding of suitability to be a manufacturer or distributor of associated equipment.

(c) If an application for a finding of suitability is not submitted to the commission within thirty days after demand by the commission, it may pursue any remedy or combination of remedies provided in this chapter.

§A-36 Inspection of gaming device, associated equipment, and cashless wagering systems; fee. (a) The commission may inspect every gaming device which is manufactured, sold, or distributed for use in this State, before the gaming device is put into play, and in this State for use outside this State, before the gaming device is shipped out of this State.

(b) The commission may inspect every gaming device which is offered for play within this State by a licensee.

(c) The commission may inspect all associated equipment and every cashless wagering system which is manufactured, sold, or distributed for use in this State before the equipment or system is installed or used by a licensee and at any time while the licensee is using the equipment or system.

(d) In addition to all other fees and charges imposed by this chapter, the commission may determine, charge, and collect an inspection fee from each manufacturer, seller, or distributor which shall not exceed the actual cost of inspection and investigation.

§A-37 State gaming license required where equipment, services, or property delivered or furnished for gaming interest or revenue; exemptions. (a) Except as otherwise provided in subsections (b) and (c), it is unlawful for any person to:

(b) Subsection (a) shall not apply to any person:

Receipts or rentals or charges for real property, personal property, or services shall not lose their character as payments of a fixed sum or as bona fide because of provisions in a contract, lease, or license for adjustments in charges, rentals, or fees on account of changes in taxes or assessments, escalations in the cost-of-living index, expansions or improvement of facilities, or changes in services supplied. Receipts of rentals or charges based on percentage between a corporate licensee or a licensee who is a limited partnership or limited liability company and the entities enumerated in paragraph (3) are permitted under this subsection.

(c) The commission, upon the issuance of its approval or a finding of suitability, may exempt a holding company from the licensing requirements of subsection (a).

(d) The commission may require any person exempted by subsection (a)(1) or subsection (b) to provide such information as it may require to perform its investigative duties.

(e) The commission may require a finding of suitability or the licensing of any person who:

(f) If the commission finds a person described in subsection (e) unsuitable, a licensee shall not enter into any contract or agreement with that person without the prior approval of the commission. Any other agreement between the licensee and that person shall be terminated upon receipt of notice of the action by the commission. Any agreement between a licensee and a person described in subsection (e) shall be deemed to include a provision for its termination without liability on the part of the licensee upon a finding by the commission that the person is unsuitable. Failure expressly to include that condition in the agreement is not a defense in any action brought pursuant to this section to terminate the agreement. If the application is not presented to the commission within thirty days after demand, the commission may pursue any remedy or combination of remedies provided in this chapter.

§A-38 Licensing of certain persons having significant influence over gaming operation of licensee; remuneration, contracts and employment prohibited for certain unsuitable or unlicensed persons. (a) Except for persons associated with licensed corporations, partnerships, limited partnerships, or limited liability companies and required to be licensed pursuant to this section, each employee, agent, guardian, personal representative, lender, or holder of indebtedness of a gaming licensee who, in the opinion of the commission, has the power to exercise a significant influence over the licensee's operation of a gaming facility may be required to apply for a license.

(b) A person required to be licensed pursuant to subsection (a) shall apply for a license within thirty days after the commission requests the person to do so.

(c) If an employee required to be licensed under subsection (a) does not apply for a license within thirty days after being requested to do so by the commission, and the commission makes a finding of unsuitability for that reason; is denied a license; or has the employee's license revoked by the commission, the licensee by whom the employee is employed shall terminate the employment in any capacity in which the employee was required to be licensed and shall not permit that employee to exercise a significant influence over the operation of the gaming facility upon being notified by registered or certified mail of that action.

(d) A gaming licensee or an affiliate of the licensee shall not pay to a person whose employment has been terminated pursuant to subsection (c) any remuneration for any service performed in any capacity in which the person is required to be licensed, except for amounts due for services rendered before the date of receipt of notice of the action by the commission. Any contract or agreement for personal services or for the conduct of any activity at the licensed gaming facility between a gaming licensee or an affiliate of the licensee and a person terminated pursuant to subsection (c) is subject to termination. Every such agreement shall be deemed to include a provision for its termination without liability on the part of the licensee or registered holding company upon a finding by the commission that the person is unsuitable to be associated with a gaming enterprise. Failure expressly to include that condition in the agreement is not a defense in any action brought pursuant to this section to terminate the agreement.

(e) A gaming licensee or an affiliate of the licensee, without the prior approval of the commission, shall not enter into any contract or agreement with a person who is found unsuitable, who is denied a license, or whose license is revoked by the commission or with any business enterprise under the control of that person after the date of receipt of notice of the action by the commission. Every contract or agreement for personal services to a gaming licensee or an affiliate or for the conduct of any activity at a licensed gaming facility shall be deemed to include a provision for its termination without liability on the part of the licensee or registered holding company upon a finding by the commission that the person is unsuitable to be associated with a gaming enterprise. Failure expressly to include such a condition in the agreement is not a defense in any action brought pursuant to this section to terminate the agreement.

(f) A gaming licensee or an affiliate of the licensee shall not employ any person in a capacity for which the person is required to be licensed, if the person has been found unsuitable or denied a license, or whose license has been revoked by the commission, after the date of receipt of notice of the action by the commission, without prior approval of the commission.

§A-39 Suitability or licensing of certain persons furnishing services or property or doing business with gaming licensee; termination of association. (a) The commission may determine the suitability, or may require the licensing of any person who furnishes services or property to a state gaming licensee under any arrangement, pursuant to which the person receives payments based on earnings, profits or receipts from gaming. The commission may require any the person to comply with the requirements of this chapter and with the rules of the commission. If the commission determines that any person is unsuitable, it may require the arrangement to be terminated.

(b) If the premises of a licensed gaming facility are directly or indirectly owned or under the control of the licensee therein, or of any person controlling, controlled by, or under common control with the licensee, the commission, upon recommendation of the commission, may require the application of any person for a determination of suitability to be associated with a gaming enterprise, if the person:

(c) If the commission determines that the person is unsuitable to be associated with a gaming enterprise, the association shall be terminated. Any agreement which entitles a business other than gaming to be conducted on the premises, or entitles a person other than gaming to conduct business with the licensed gaming facility as set forth in subsection (b)(2) or (3) is subject to termination upon a finding of unsuitability of the person associated therewith. Every such agreement shall be deemed to include a provision for its termination without liability on the part of the licensee upon a finding by the commission that the person associated therewith is unsuitable to be associated with a gaming enterprise. Failure expressly to include that condition in the agreement is not a defense in any action brought pursuant to this section to terminate the agreement. If the application is not presented to the commission within thirty days following demand or the unsuitable association is not terminated, the commission may pursue any remedy or combination of remedies provided in this chapter.

§A-40 Qualifications for license or finding of suitability. (a) Any person who the commission determines is qualified to receive a license or be found suitable under the provisions of this chapter may be issued a state gaming license or found suitable, as appropriate. The applicant shall have the burden of proving the applicant is qualified to receive any license or the applicant should be found suitable.

(b) An application to receive a license or be found suitable shall not be granted unless the commission is satisfied that the applicant is:

(c) An application to receive a license or be found suitable constitutes a request for a determination of the applicant's general character, integrity, and ability to participate or engage in, or be associated with gaming or the operation of a charitable lottery, as appropriate. Any written or oral statement made in the course of an official proceeding of the commission by any member thereof or any witness testifying under oath which is relevant to the purpose of the proceeding shall be absolutely privileged and shall not impose liability for defamation or constitute a ground for recovery in any civil action.

(d) The commission, in its discretion, may grant a license to a publicly traded corporation, any other corporation, a partnership, a limited partnership, or a limited liability company that has complied with sections A-42 and A-43.

(e) No limited partnership, except one whose sole limited partner is the pre—selected operator or a publicly traded corporation which has registered with the commission, or a limited liability company, or business trust, or organization, or other association of a quasi—corporate character is eligible to receive or hold any license under this chapter unless all persons having any direct or indirect interest therein of any nature whatever, whether financial, administrative, policymaking, or supervisory, are individually qualified to be licensed under the provisions of this chapter.

(f) The commission, by rule, may limit the number of persons who may be financially interested in any corporation, other than a publicly traded corporation, partnership, limited partnership, limited liability company, or other organization or association licensed under this chapter; and establish such other qualifications for licenses as it, in its discretion, may deem to be in the public interest and consistent with the purposes of this chapter.

§A-41 Restrictions on person denied license or found unsuitable. (a) A person who has had the person's application for a license denied or who has been found unsuitable by the commission:

(b) The commission may proceed pursuant to section A-54(b) to enforce subsection (a).

§A-42 Individual licensing of officers and directors of corporations, partners, members, managers, and other persons. (a) The following persons shall be licensed individually, according to this chapter:

(b) The following persons shall be found suitable and may be required to be licensed by the commission:

(c) A publicly traded corporation which is a general partner, limited partner, or member of a limited liability company is not required to be licensed, but shall comply with section A-43(g).

(d) If a person who must be licensed or found suitable fails to apply for a license or a finding of suitability in a timely fashion, is denied a license or not found suitable by the commission, or if the license or the finding of suitability is revoked after appropriate findings by the commission, the person shall be terminated from employment or immediately removed from any position in the administration or supervision of, or have any other significant involvement with, the activities of a licensee. If such person's license or finding of suitability has been suspended by the commission, the person shall be immediately terminated or suspended from performing any duties in administration or supervision of the activities of the licensee and from any other significant involvement therewith.

§A-43 Eligibility of partnerships, limited partnerships, limited liability companies, corporations, holding companies and intermediaries, and publicly traded corporations; required information. (a) In order to be eligible to receive a state gaming license, an entity, such as a partnership, limited partnership, limited liability company, or corporation, other than a publicly traded corporation, shall:

(b) An entity, such as a partnership, limited partnership, limited liability company, or corporation, other than a publicly traded corporation, which applies for a state gaming license, shall register with the commission and provide the following information to the commission:

(c) If a corporation, partnership, limited partnership, limited liability company or other business organization applying for or holding a license is or becomes a subsidiary, each holding company and each intermediary company with respect thereto, other than a publicly traded corporation that has been exempt by the commission, shall:

(d) If the holding company or intermediary referred to in subsection (c) is a firm, partnership, trust, or other form of business organization, it shall register with the commission and furnish such analogous information as the commission may prescribe.

(e) If a corporation, partnership, limited partnership, limited liability company, or other business organization applying for or holding a license is or becomes a subsidiary, each holding company and intermediary company, other than a publicly traded corporation that has been exempt by the commission, shall furnish the commission the following information:

(f) The commission may in its discretion exempt a publicly traded corporation from the requirements of subsections (a) to (e).

(g) If a corporation, partnership, limited partnership, limited liability company or other business organization applying for or holding a state gaming license is or becomes owned in whole or in part or controlled by a publicly traded corporation, or if a publicly traded corporation applies for or holds a state gaming license and has been exempt by the commission from the requirements of subsection (e), the publicly traded corporation shall:

(g) The commission may adopt rules that generally or selectively impose on any publicly traded corporation any requirement not inconsistent with law which it may deem necessary in the public interest. Without limiting the generality of the preceding sentence, any such requirement may deal with the same subject matter as, but be more stringent than, the requirements imposed by subsections (a) to (f) and section A-42.

(h) After licensing pursuant to section A-42 in connection with a partnership or limited partnership which holds or applies for a state gaming license, the licensee shall report to the commission in writing any change in personnel who have been designated by the commission as key executives and furnish the commission with an annual profit and loss statement and an annual balance sheet. The commission may require that the licensee furnish the commission with a copy of its federal income tax return within thirty days after the return is filed with the federal government.

§A-44 Prior commission approval of disposition of securities by corporations other than publicly traded corporations and interests in limited partnerships and limited liability companies; restrictions on unsuitable persons. (a) No person may become a holder or transferee of any security issued by a corporation, other than a publicly traded corporation, or interest as a general partner or limited partner in a limited partnership, or as a member or manager of a limited liability company which holds or has applied for a license without first securing the required approval of the commission.

(b) If at any time the commission finds that an owner of any security issued by a corporation, other than a publicly traded corporation, or interest as a general partner or limited partner in a limited partnership, or as a member or manager of a limited liability company which holds or has applied for a license or any person owning, controlling, or voting any class of security of, or interest in, a holding company or intermediary company, is unsuitable to continue to be connected with a licensee, the commission shall immediately notify the holder of the security or the limited partnership or limited liability company:

(c) Every security issued by a corporation, other than a publicly traded corporation, the certificate of limited partnership of any limited partnership, and the articles of organization of any limited liability company which holds a gaming license, shall bear a statement of the restrictions imposed by this section.

§A-45 Occupational licenses. (a) The commission may issue an occupational license to an applicant upon the payment of a nonrefundable application fee as set by the commission, upon a determination by the commission that the applicant is eligible for an occupational license, and upon payment of an annual license fee in an amount set by the commission. To be eligible for an occupational license, an applicant shall:

(b) Each application for an occupational license shall be on forms prescribed by the commission and shall contain all information required by the commission. The applicant shall set forth in the application whether the applicant:

(c) Each applicant shall submit with the application two sets of the applicant's fingerprints. The commission shall charge each applicant a fee to defray the costs associated with the search and classification of fingerprints obtained by the commission with respect to the application.

(d) The commission may refuse an occupational license to any person:

(e) The commission may suspend, revoke, or restrict any occupational licensee:

(f) A person who knowingly makes a false statement on an application is guilty of a petty misdemeanor.

(g) Any license issued pursuant to this section shall be valid for a period of one year from the date of issuance and shall be renewable annually upon payment of the annual license fee and a determination by the commission that the licensee continues to meet all of the requirements of this chapter.

(h) Any training provided for occupational licensees may be conducted either in a licensed gaming facility or at a school with which a licensed owner has entered into an agreement.

§A-46 Conduct of casino gaming. Casino gaming may be conducted by a licensed operator, subject to the following standards:

§A-47 Collection of amounts owing under credit agreements. Notwithstanding any other law to the contrary, a licensed operator who extends credit to a casino gaming patron shall be expressly authorized to institute a cause of action to collect any amounts due and owing under the extension of credit, as well as the operator's costs, expenses, and reasonable attorney's fees incurred in collection.

§A-48 Computation of gross revenue and items which may be deducted. (a) In calculating gross revenue, any prizes, premiums, drawings, benefits, or tickets that are redeemable for money or merchandise or other promotional allowance, except money or tokens paid at face value directly to a patron as the result of a specific wager, shall not be deducted as losses from winnings at any game except a slot machine.

(b) In calculating gross revenue, the amount of cash paid to fund periodic payments may be deducted as losses from winnings for any game.

(c) In calculating gross revenue from slot machines, keno, and bingo, the actual cost to the licensee of any personal property distributed to a patron as the result of a specific legitimate wager may be deducted as a loss, but not travel expenses, food, refreshments, lodging, or services.

(d) In calculating gross revenue from bingo, a licensee who provides a patron with additional play at bingo as the result of an initial wager may deduct as losses from winnings all money or tokens paid directly to that patron as a result of such additional play.

§A-49 Wagering tax; rate; distribution. (a) A tax shall be imposed on the gross revenues received from casino gaming authorized under this chapter at the rate of twelve per cent. During the first ten years of operation, the wagering tax shall be not be less than $32,250,000 for the first twelve months of operation, not less than $37,250,000 for the second twelve months of operation, and not less than $42,250,000 for each twelve-month period thereafter; provided that these minimums shall be abated during any cessation of casino operations for more than thirty consecutive days as the result of fire, casualty, or other reasons beyond the casino operator's control. The commission shall annually retain one-twentieth of those wagering tax revenues, but not less than $2,250,000, to cover the expenses of the commission's operations including any programs that the commission may initiate, including programs for employment training and a $250,000 program for gaming awareness and compulsive gaming treatment. The balance of the wagering tax revenues accruing to the State shall be used only to fund the Hawaii HOPE Scholarship Program under chapter B. The wagering tax imposed by this section shall be in lieu of all other state or municipal taxes on gross or adjusted gross receipts or revenues, except income taxes, including taxes levied under chapters 237 and 239, and shall not be increased, if at all, until the one initial gaming facility has been in continuous operation for at least one hundred twenty months.

(b) The tax imposed by this section shall be paid by the licensed operator to the commission no less frequently than monthly by the fifteenth day of the following month. If the amount of the wagering tax required to be reported and paid pursuant to this section is later determined to be greater or less than the amount actually reported and paid by the licensee, the chairperson of the commission shall:

(c) Notwithstanding the foregoing, during the first ten years of operation, the full amount of the minimum tax imposed by this section for a twelve-month period shall be paid by the licensed operator in advance of each period and shall be due no later than the fifteenth day of the first month of the period. During each twelve-month period, monthly tax payments shall commence in the event the aggregate gross revenues for the preceding months of that period multiplied by the wagering tax rate exceed the applicable minimum tax.

§A-50 Licensees; records; reports; supervision. (a) A licensed operator shall keep books and records related to casino gaming permitted under this chapter so as to clearly show the total amount of gross revenue.

(b) The licensed operator shall furnish to the commission reports and information that the commission may require with respect to the operator's activities on forms designed and supplied for the purpose by the commission.

(c) The books and records kept by a licensed operator shall be public records and the examination, publication, and dissemination of the books and records shall be subject to chapter 92F.

§A-51 Audit of licensee operations. Within ninety days after the end of each quarter of each fiscal year, the licensed operator shall transmit to the commission an audit of the financial transactions and condition of the licensee's total operations. All audits shall be conducted by certified public accountants selected by the commission. Each certified public accountant shall be registered and licensed to practice in this State. Compensation for each certified public accountant shall be paid directly by the licensed operator to the certified public accountant.

§A-52 Offenses; penalty. (a) A person is guilty of a misdemeanor for any of the following:

(b) A person wagering or accepting a wager at any location outside the gaming facility shall be subject to the penalties in sections 712—1220 to 712—1230.

(c) A person commits a class C felony and, in addition, shall be barred for life from casino facilities under the jurisdiction of the commission, if the person does any of the following:

(d) The possession of more than one of the devices described in subsection (c)(3), (5), or (10), raises a rebuttable presumption that the possessor intended to use the devices for cheating.

§A-53 Violations involving improper influence. (a) The following individuals shall be prohibited from knowingly accepting a gift or political contribution from the persons listed in subsection (b):

provided that, in the case of individuals who are no longer serving in the capacities described above, this subsection and subsection (b) shall apply before the second anniversary of the date of termination of service.

(b) The following persons shall be prohibited from knowingly making a gift or political contribution to the individuals listed in subsection (a):

(c) No individuals enumerated in subsection (a) may:

provided that, in the case of individuals who are no longer serving in the capacities described above, this subsection shall apply before the second anniversary of the date of termination of service.

(d) A person who violates subsection (a) or (b) commits a misdemeanor. A person who violates subsection (c) commits a class C felony. Upon conviction of any violation of this section, the person shall immediately forfeit the person's office or employment without regard to chapter 76 or 89, or any collective bargaining agreement. Any provision of any collective bargaining agreement in conflict with this subsection is void as against public policy.

(e) As used in this section:

"Direct ownership interest" means any financial interest, equitable interest, beneficial interest, or ownership control held by the persons enumerated in subsection (a) or the person's family member related within the second degree of consanguinity or affinity, in any gaming facility or operation licensed or applied for under this chapter; provided that a direct ownership interest shall not include any equity interest purchased at fair market value or equity interest received as consideration for goods and services provided at fair market value of less than one per cent of the total outstanding shares of stock of any publicly traded corporation or certificates of partnership of any limited partnership which is listed on a regulated stock exchange or automated quotation system.

"Gift" includes a gratuity, tip, meal, or other thing of value for which the recipient does not compensate the person making the gift.

"Participated" means to have taken action as an officer or employee through decision, approval, disapproval, recommendation, giving advice, or similar action.

"Particular matter" includes an investigation, an application, a request for a ruling or determination, a license proceeding, rulemaking, a contract, a controversy, a claim, a charge, an accusation, an arrest, or a judicial or other proceeding.

"Person that has a significant financial interest in any gaming facility or operation licensed under this chapter" means:

§A-54 Prohibited activities; civil penalties; enforcement. (a) Any person who conducts a casino gaming operation without first obtaining a license to do so, or who continues to conduct such games after revocation of the person's license, or any licensee who conducts or allows to be conducted any unauthorized casino games in a gaming facility where it is authorized to conduct its casino gaming operation, in addition to other penalties provided, shall be subject to a civil penalty equal to the amount of gross revenue derived from wagering on the games, whether unauthorized or authorized, conducted on that day as well as confiscation and forfeiture of all gaming equipment used in the conduct of unauthorized games.

(b) The commission shall initiate proceedings or actions appropriate to enforce this chapter and may request the attorney general to prosecute any violation of this chapter.

§A-55 Exemption from federal laws prohibiting gaming devices. The transportation of gambling devices into a county in which casino gaming is permitted and through other counties of the State shall be exempt from 15 United States Code section 1172. This exemption shall only apply to gambling devices that have satisfied the registration, record keeping, and labeling requirements of 15 United States Code section 1173-74 before entry into the State.

§A-56 Legislative oversight. (a) The auditor shall conduct financial and social assessments of casino gaming operations. An assessment shall be made two years after the opening of the casino facilities authorized by this chapter and every five years thereafter. In conducting an assessment, the auditor shall identify the financial impacts of casino gaming on the state economy and the social impacts of gaming upon the community. The auditor shall submit a report of findings and recommendations to the legislature prior to the convening of the next regular session after an assessment is completed.

(b) Initially, the auditor shall conduct a program and financial audit of the Hawaii state gaming commission. Thereafter, the auditor shall conduct a program and financial audit every four years after the first audit is completed.

§A-57 Court proceedings; preferences; venue. Any action or proceeding to which the commission, the State, or the county may be a party, in which any question arises as to the validity of this chapter, shall be preferred over all other civil cases, except election cases, in any court of this State and shall be heard and determined in preference to all other civil cases pending therein except election cases, irrespective of position on the calendar. The same preference shall be granted upon application of counsel to the commission in any action or proceeding questioning the validity of this chapter in which the commission may be allowed to intervene. In addition to the preference provided in this section, any such action or proceeding to which the commission, the State, or the county may be party, in which any question arises as to the validity of this chapter or any portion of this chapter, or any action of the commission may be filed in the supreme court of the State, which court is hereby vested with original jurisdiction over such action, and notwithstanding any provision of law to the contrary, declaratory relief may be obtained for any such action.

§A-58 Pre-selected operator; site. The pre-selected operator, as defined in section A-3 shall be                and the gaming facility, also as defined in section A-3, shall be located at a site in West Oahu."

SECTION 4. Chapter 712, Hawaii Revised Statutes, is amended by adding a new section to part III to be appropriately designated and to read as follows:

"§712-    Casino gaming; exempted. This part shall not apply to casino gaming as authorized by chapter A."

SECTION 5. Section 237-24, Hawaii Revised Statutes, is amended to read as follows:

"§237-24 Amounts not taxable. This chapter shall not apply to the following amounts:

SECTION 6. Section 28-8.3, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) No department of the State other than the attorney general may employ or retain any attorney, by contract or otherwise, for the purpose of representing the State or the department in any litigation, rendering legal counsel to the department, or drafting legal documents for the department; provided that the foregoing provision shall not apply to the employment or retention of attorneys:

SECTION 7. Within sixty days of the effective date of this Act, the pre-selected operator shall prepay its licensing fee under section A-14(h), Hawaii Revised Statutes.

PART II

SECTION 8. Educating Hawaii's children is of great importance to the future of our people and of our economy. The legislature finds that a program of financial aid is needed to lessen the great burden of college tuition and related costs on Hawaii residents. Financial aid should be provided to qualified students attending college in Hawaii and elsewhere. Nevertheless, students attending local public or private colleges oftentimes have fewer sources of financial support than their mainland or foreign bound counterparts. A program of financial aid should begin with scholarships and grants for students attending eligible postsecondary institutions in Hawaii and expand to include other students subject to available funding.

SECTION 9. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"Chapter B

§B-1 Title. This chapter shall be known and may be cited as the Hawaii HOPE Program.

§B-2 Definitions. As used in this chapter, unless the context requires otherwise:

"Academic year" means a period of time, typically nine months, in which a full-time student is expected to complete the equivalent of at least two semesters' or three quarters' academic work.

"Advanced degree" means a master's degree, specialist's degree, or doctorate in education conferred by an approved postsecondary institution upon completion of a unified program of study at the graduate level.

"Approved teacher education program" means a program offered by a public or private postsecondary institution, which program has been approved by the commission.

"Certificate" or "diploma" means a credential, other than a degree, indicating satisfactory completion of training in a program of study offered by an eligible public postsecondary institution.

"Commission" means the Hawaii HOPE scholarship commission.

"Critical shortage field" means an area of study or an area of specialized expertise for which a shortage of qualified teachers or educators exists in Hawaii, designated as such by the commission.

"Eligible high school" means a secondary school which is:

"Eligible postsecondary institution" means a school which is:

"Eligible private postsecondary institution" means an eligible postsecondary institution which meets the criteria set out in paragraph (2), (3), or (5) in the definition of "eligible postsecondary institution".

"Eligible public postsecondary institution" means an eligible postsecondary institution which meets the criteria set out in paragraph (1) or (4) in the definition of "eligible postsecondary institution".

"Freshman student" means a student at a postsecondary institution who has attempted less than forty-six quarter hours or less than thirty-one semester hours.

"Full—time student" means a matriculated student attending a postsecondary educational institution and enrolled for the equivalent of at least twelve quarter or semester hours.

"Grade point average" means the numbered grade average calculated using a 4.0 scale.

"HOPE scholarship" means a Helping Outstanding Pupils Educationally scholarship for education awarded in accordance with section B-16.

"HOPE teacher's scholarship" means a Helping Outstanding Pupils Educationally scholarship for education awarded in accordance with section B-20.

"HOPE GED voucher" means a Helping Outstanding Pupils Educationally general educational development equivalency diploma voucher for postsecondary education awarded in accordance with section B—18.

"Junior student" means a student at a postsecondary institution who has attempted at least ninety-one quarter hours but less than one hundred thirty-six quarter hours or at least sixty-one semester hours but less than ninety-one semester hours.

"Mandatory fees" means fees meeting criteria established by the commission that are charged by a postsecondary institution to every student enrolled in that institution, regardless of the student's program of study.

"Matriculated status" means being recognized as a student in a defined program of study leading to a degree, diploma, or certificate at a postsecondary institution.

"PROMISE teacher's scholarship" means a scholarship awarded in accordance with section B-19.

"Quarter hours" includes each quarter hour attempted, whether remedial or for credit toward a degree, but shall not include any quarter hour attempted or completed before graduating from high school or earning a general educational development equivalency diploma.

"Semester hours" includes each semester hour attempted, whether remedial or for credit toward a degree, but shall not include any semester hour attempted before graduating from high school or earning a general educational development equivalency diploma.

"Senior student" means a student at a postsecondary institution who has attempted at least one hundred thirty-six quarter hours but less than one hundred ninety-one quarter hours or at least ninety-one semester hours but less than one hundred twenty-eight semester hours.

"Sophomore student" means a student at a postsecondary institution who has attempted at least forty-six quarter hours but less than ninety-one quarter hours or at least thirty-one semester hours but less than sixty-one semester hours.

"Title IV" means Title IV of the Higher Education Act of 1965, as amended, 20 U.S.C. Section 1070, et seq.

§B-11 Hawaii HOPE Scholarship commission. (a) There is established the Hawaii HOPE commission which shall be a body corporate and a public instrumentality of the State, for the purpose of implementing this chapter.

(b) The commission shall be placed within the department of education for administrative purposes.

(c) The commission shall consist of seven members, who may be public officers or employees, appointed by the governor in accordance with this section. Each member shall serve a term of seven years except that of the initial members, one member shall serve for seven years, one member shall serve for six years, one member shall serve for five years, one member shall serve for four years, one member shall serve for three years, one member shall serve for two years, and one member shall serve for one year. A vacancy on the commission of a seat subject to this subsection shall be filled in accordance with article V, section 6, of the Constitution of the State of Hawaii.

(d) Members of the commission shall be appointed as follows:

(e) Each term of a member of the commission shall commence on July 1, and expire on June 30. No person shall be appointed consecutively to more than two terms as a member of the commission. No person shall serve as a member of the commission for more than fourteen consecutive years.

(f) Any member of the commission whose term has expired and who is not disqualified from membership under subsection (e) may continue in office as a holdover member until a successor is appointed; provided that a holdover member shall not hold office beyond the end of the second regular legislative session following the expiration of the member's term of office.

(g) The governor may remove or suspend for cause any member of the commission after due notice and public hearing.

(h) Members shall:

(h) Officers of the commission, including the chairperson, shall be selected by the members. The commission, subject to chapter 92, shall hold at least one meeting in each quarter of the State's fiscal year. Special meetings may be called by the chairperson or any four members upon seventy-two hours written notice to each member. Five members shall constitute a quorum, and a majority vote of the members present shall be required for any final determination by the commission. The commission shall keep a complete and accurate record of all its meetings.

(i) Before assuming the duties of office, each member of the commission shall take an oath that the member shall faithfully execute the duties of office according to the laws of the State and shall file and maintain with the director of finance a bond in the sum of $25,000 with good and sufficient sureties. The cost of any bond for any member of the commission under this section shall be considered a part of the necessary expenses of the commission.

(j) The commission shall appoint a person to serve as the executive director of the commission subject to the commissions supervision. The executive director shall hold office at the will of the commission and shall be exempt from chapters 76 and 89 and shall devote full time to the duties of the office and shall not hold any other office or employment. The executive director shall receive an annual salary at an amount set by the commission. The executive director shall be reimbursed for expenses actually and necessarily incurred in the performance of the executive director's duties.

(k) Except as otherwise provided by law, the executive director may hire assistants, other officers, and employees, who shall be exempt from chapters 76 and 77 and who shall serve at the will of the executive director; and appoint committees and consultants necessary to the implementation or administration this chapter.

(1) The salaries of employees shall be set by the executive director.

(m) Notwithstanding subsection (j), the commission may perform the functions of the executive director and may exercise the powers granted to the executive director until one is appointed, and shall not be required to appoint an executive director before that date.

§B-12 Powers of the commission. The commission shall have all powers necessary and proper to fully and effectively implement or administer this chapter, including the power to:

§B-13 Rules. In adopting rules under this chapter, the commission shall be exempt from the requirements of public notice, public hearing, and gubernatorial approval under chapter 91; provided that the rules shall be adopted in an open meeting of the commission satisfying the requirements of chapter 92 and shall be made available for gubernatorial comment at least thirty days before that meeting.

§B-14 Implementation of HOPE program. (a) Using revenues from the wagering tax under the Hawaii Gaming Code and any other funds appropriated by the legislature, the commission shall implement the elements of the Hawaii HOPE program in the following order:

(b) In the event of a decline in funding or reserves, the commission shall withdraw funding in the reverse order from that specified in subsection (a).

§B-15 Ineligibility. A student is ineligible for any scholarship or grant described in this part if the student:

§B-16 HOPE scholarships at eligible public postsecondary institutions. (a) To be eligible for a HOPE scholarship, an entering freshman student seeking an associate or baccalaureate degree at an eligible public postsecondary institution shall:

(b) To be eligible for a HOPE scholarship, a sophomore student seeking an associate or baccalaureate degree at an eligible public postsecondary institution shall:

(c) To be eligible for a HOPE scholarship, a junior student seeking a baccalaureate degree at a public postsecondary institution shall:

(d) To be eligible for a HOPE scholarship, a senior student seeking a baccalaureate degree at a public postsecondary institution shall:

(e) A student who fails to maintain a cumulative grade point average of at least 2.75 at the end of the quarter or semester in which the student has attempted forty-five quarter hours or thirty semester hours may attend the next forty-five quarter or thirty semester hours without a HOPE scholarship. An otherwise eligible student who regains a cumulative grade point average of at least 2.75 at the end of the quarter or semester in which the student has attempted ninety quarter hours or sixty semester hours may requalify for a HOPE scholarship.

(f) For students eligible for a HOPE scholarship under this section, no minimum number of hours of enrollment is required.

(g) Except as provided in this subsection, a student may receive the HOPE scholarship until the student has earned a baccalaureate degree, or the student has attempted at any postsecondary institution a total of one hundred ninety quarter hours or one hundred twenty-seven semester hours, whichever occurs first.

Notwithstanding this subsection to the contrary, a student enrolled in an undergraduate degree program designed to be more than one hundred ninety quarter hours or one hundred twenty-seven semester hours in length is eligible to receive the HOPE scholarship for the lesser of:

(h) Subject to funds available to the commission, a HOPE scholarship awarded under this section shall include tuition, approved mandatory fees, and a book allowance not to exceed $100.00 per quarter or $150.00 per semester.

§B-17 HOPE scholarships at eligible private postsecondary institutions. (a) To be eligible for a HOPE scholarship, an entering freshman student seeking an associate or baccalaureate degree at an eligible private postsecondary institution shall:

(b) To be eligible for a HOPE scholarship, a sophomore student seeking an associate or baccalaureate degree at an eligible private postsecondary institution shall:

(c) To be eligible for a HOPE scholarship, a junior student seeking a baccalaureate degree at an eligible private postsecondary institution shall:

(d) To be eligible for a HOPE scholarship, a senior student seeking a baccalaureate degree at an eligible private postsecondary institution shall:

(e) An otherwise eligible student who fails to maintain a cumulative grade point average of at least 2.75 at the end of the quarter or semester in which the student has attempted forty-five quarter hours or thirty semester hours may attend the next forty-five quarter hours or thirty semester hours without a HOPE scholarship. A student who regains a cumulative grade point average of at least 2.75 at end of the quarter or semester in which the student has attempted ninety quarter hours or sixty semester hours may requalify for a HOPE scholarship.

(f) Except as provided in this subsection, a student may receive a HOPE scholarship until the student has earned a baccalaureate degree, or the student has attempted at any postsecondary institution a total of one hundred ninety quarter hours or one hundred twenty-seven semester hours, whichever occurs first.

Notwithstanding this subsection to the contrary, a student enrolled in an undergraduate degree program designed to be more than one hundred ninety quarter hours or one hundred twenty-seven semester hours in length is eligible to receive a HOPE scholarship for the lesser of:

(g) Subject to funds available to the commission, a HOPE scholarship awarded under this section shall include tuition, approved mandatory fees, and a book allowance not to exceed $100 per quarter or $150 per semester, but shall not exceed $3,000 for any academic year.

§B-18 HOPE GED vouchers. (a) Subject to funds available to the commission, a HOPE GED voucher in the amount of $500 shall be awarded once to each student receiving a general educational development equivalency diploma. A HOPE GED voucher shall be valid at any eligible postsecondary institution in Hawaii for twenty-four months from the date of issuance.

(b) An otherwise eligible student receiving a HOPE GED voucher under this section is eligible for a HOPE scholarship as a sophomore, junior, or senior student.

§B-19 PROMISE teacher scholarships. (a) To be eligible for a PROMISE teacher's scholarship, a student seeking a bachelor's degree in teacher education shall:

(b) A student who terminates enrollment at an eligible institution or who is otherwise dropped from enrollment by an eligible institution will not be eligible to continue receiving a PROMISE teacher's scholarship.

(c) Subject to funds available to the commission, a PROMISE teacher's scholarship shall not exceed a total of $6,000 for the junior and senior years.

§B-20 HOPE teacher scholarships. (a) To be eligible for a HOPE teacher's scholarship, a student shall:

(b) Except as otherwise provided in this subsection, for students eligible for a HOPE teacher's scholarship, no minimum number of hours of enrollment is required for eligibility for a HOPE teacher's scholarship.

Notwithstanding this subsection to the contrary, the program of study a student is attempting shall be completed within five years, beginning with the first term for which scholarship funds are awarded.

Notwithstanding this subsection to the contrary, a student's eligibility for a HOPE teacher's scholarship expires if the student has a break in enrollment at an eligible institution of more than twelve months.

(c) Subject to funds available to the commission, a HOPE teacher's scholarship award amount for a student shall not exceed $10,000 for the student's program of study.

§B-21 Application of HOPE scholarships. A HOPE scholarship may be applied only to tuition and mandatory fees not covered by any Pell grant or other federal grant."

PART III

SECTION 10. In codifying the new chapters added by sections 3 and 9 of this Act, the revisor of statutes shall substitute appropriate chapter numbers for the letters used in designating the new chapters in this Act.

SECTION 11. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 12. This Act shall take effect upon its approval.