THE SENATE	S.B. NO.	852
TWENTY-SEVENTH LEGISLATURE, 2013
STATE OF HAWAII

A BILL FOR AN ACT

relating to gambling.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  The legislature finds that gambling, as defined in section 712-1220(4), Hawaii Revised Statutes, is composed of three necessary elements.  First, a person must wager something of value.  Second, the wager must be placed on the outcome of a contest of chance or a future contingent event that is not under the wagerer's control or influence.  Finally, the wager must be made under conditions in which a payout is made if a specified outcome occurs.

     Recently, across the nation, including in this State, a proliferation of electronic sweepstakes game machines have been designed to circumvent the spirit, if not the letter, of gambling laws by making opportunities to play contests of chance for prizes incidental to the purchase of goods or services.  For example, a business may sell a phone card or internet time that, for no additional charge, affords the buyer an opportunity to play contests of chance on a machine that offers payouts.  The cost of the card or internet time sometimes far exceeds what it would cost to buy the card or time if no opportunity for play is included.  Many of the contests of chance that may be played on these machines resemble games that are widely associated with gambling.  However, businesses operating these machines contend that their use does not constitute gambling because the consumer's payment is for the purchase of other goods or services, not for the opportunity to use the machine, and therefore the consumer is not wagering anything of value for purposes of the gambling law.  In fact, these businesses claim that they are merely offering a sweepstakes to promote their goods or services, even though it is often apparent that the purchases are primarily or solely made for the opportunity to play on a sweepstakes machine that replicates the gambling experience.

     The legislature also finds that, now more than ever, the prohibition of gambling activities has become exceedingly difficult in light of a highly sophisticated and adaptable gaming industry that uses technology to exploit perceived loopholes in the law.  Electronic gaming machines can be quickly reprogrammed to modify gameplay and other features, which presents tremendous challenges to efforts to define prohibited activities under the gambling law.  Hence, the effective crafting and enforcement of gambling prohibitions remains a constant and ever-evolving process.

     The purpose of this Act is to strengthen gambling laws by addressing contests of chance played to win something of value where the wager consists of an incidental purchase of goods or services.

     SECTION 2.  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-  Sweepstakes; defenses. (1)  In a prosecution under any section of this part relating to a sweepstakes, it is an affirmative defense that the sweepstakes operator offered free entry or play; provided that:

(a) The free entry or play is offered for immediate use in the same manner as entry or play obtained by purchase of goods or services, not offered by mail or some other means for use at a later time or date; and

(b) The defendant shall have the burden of going forward with evidence to prove, by a preponderance of the evidence, the facts constituting the defense, unless the facts are supplied by the testimony of the prosecuting witness or circumstances in the testimony.

(2)  In a prosecution under any section of this part relating to a sweepstakes, it is no defense that a person who enters or plays the sweepstakes may determine whether the person has won without having to actually enter or play the contest of chance."

     SECTION 3.  Section 712-1220, Hawaii Revised Statutes, is amended to read as follows:

     "§712-1220  Definitions of terms in this part.  In this part, unless a different meaning plainly is required, the following definitions apply[.]:

     [(1)] "Advance gambling activity".  A person "advances gambling activity" if [he] the person engages in conduct that materially aids any form of gambling activity.  Conduct of this nature includes but is not limited to conduct directed toward the creation or establishment of the particular game, contest, scheme, device, or activity involved, toward the acquisition or maintenance of premises, paraphernalia, equipment, or apparatus therefor, toward the solicitation or inducement of persons to participate therein, toward the actual conduct of the playing phases thereof, toward the arrangement of any of its financial or recording phases, or toward any other phase of its operation.  A person advances gambling activity if, having substantial proprietary control or other authoritative control over premises being used with [his] the person's knowledge for purposes of gambling activity, [he] the person permits that activity to occur or continue or makes no effort to prevent its occurrence or continuation.  A person advances gambling activity if [he] the person plays or participates in any form of gambling activity.

     [(2)] "Bookmaking" means advancing gambling activity by accepting bets from members of the public upon the outcomes of future contingent events.

     [(3)] "Contest of chance" means any contest, game, gaming scheme, or gaming device in which the outcome depends in a material degree upon an element of chance, notwithstanding that skill of the contestants may also be a factor therein.

     [(4)] "Gambling".  A person engages in gambling if [he] the person stakes or risks something of value upon the outcome of a contest of chance or a [future] contingent event not under [his] the person's control or influence, including an outcome that has already been determined or an event that has already occurred but the outcome or occurrence is unknown to the person, upon an agreement or understanding that [he] the person or someone else will receive something of value in the event of a certain outcome.  Gambling [does]:

(1) Includes the use of any gambling device that is offered incident to the purchase of other goods or services, at no additional charge; and

(2) Does not include bona fide business transactions valid under the law of contracts, including but not limited to contracts for the purchase or sale at a future date of securities or commodities, and agreements to compensate for loss caused by the happening of chance, including but not limited to contracts of indemnity or guaranty and life, health, or accident insurance.

     [(5)] "Gambling device" [means]:

(1) Means any device, machine, paraphernalia, or equipment that is [used]:

(a) Used or usable in the playing phases of any gambling activity, whether that activity consists of gambling between persons or gambling by a person involving the playing of a machine[.  However,]; or

(b) Available to play or operate a contest of chance upon payment of something of value, including the purchase of goods or services incidental to play or operation of the device, and that may deliver or entitle the person playing or operating the device to a payout of anything of value, whether the payout is made automatically by the device or in any other manner; and

(2) Includes any machine used to play sweepstakes that:

(a) Discharges:

(i) Any prize, including money, cash equivalent, debit card, merchandise credit card, or opportunities to enter a sweepstakes or play any other contest of chance, whether the payout is made automatically by the machine or in any other manner and whether the discharge of the prize can be determined either at the beginning or at the end of play; or

(ii) Anything that may be exchanged for a prize; or

(b) Displays any symbol entitling any person to receive a prize.

          However, the term does not include lottery tickets and other items used in the playing phases of lottery schemes [are not gambling devices within this definition].

   [(6)] "Lottery" means a gambling scheme in which:

    (a)   The players pay or agree to pay something of value for chances, represented and differentiated by numbers or by combinations of numbers or by some other medium, one or more of which chances are to be designated the winning ones; and

    (b)   The winning chances are to be determined by a drawing or by some other method based on an element of chance; and

    (c)   The holders of the winning chances are to receive something of value.

     [(7)] "Mutuel" means a form of lottery in which the winning chances or plays are not determined upon the basis of a drawing or other act on the part of persons conducting or connected with the scheme, but upon the basis of the outcome or outcomes of a future contingent event or events otherwise unrelated to the particular scheme.

     [(8)] "Player" means a person who engages in gambling solely as a contestant or bettor.

     [(9)] "Profit from gambling activity".  A person "profits from gambling activity" if [he] the person accepts or receives money or other property pursuant to an agreement or understanding with any other person whereby [he] the person participates or is to participate in the proceeds of gambling activity.

     [(10)] "Social gambling" is defined in section 712-1231.

     [(11)] "Something of value" [means]:

(1) Means any money or property, any token, object, or article exchangeable for money or property, any purchase of goods or services that entitles a person to participate in a gambling scheme or to play or operate a gambling device, or any form of credit or promise directly or indirectly contemplating transfer of money or property or of any interest therein, or involving extension of a service or entertainment[.]; and

(2) Includes a sweepstakes ticket or other item that entitles the holder to a share or chance in a sweepstakes, whether the ticket or other item is obtained in conjunction with the purchase of goods or services or provided at no cost in limited quantities pursuant to the terms of the sweepstakes.

"Sweepstakes":

(1) Means any game, advertising scheme or plan, or other promotion that constitutes a contest of chance by which a person may enter to win or become eligible to receive any prize, the determination of which is based upon chance; and

(2) Includes only those sweepstakes that an entrant can enter, play, or otherwise interact with using a gambling device furnished by the sweepstakes operator or an affiliate or person under contract with the operator, in an establishment controlled by, affiliated with, or contracting with the operator."

     SECTION 4.  This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

     SECTION 5.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 6.  This Act shall take effect upon its approval.

INTRODUCED BY:

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Report Title:

Gambling; Gambling Devices; Sweepstakes

Description:

Amends various definitions in the gambling law to clarify that gambling includes playing or entering sweepstakes or other contests of chance played to win something of value, where the wager consists of an incidental purchase of goods or services.

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.