Hawaii bill would ban Nevada casino ads in Aloha State

Sen. Stanley Chang, D-Honolulu, introduced Senate Bill 935 on Jan. 20. The legislation proposes a fine of an unspecified amount for violators. A public hearing on the bill is scheduled Thursday morning before the Senate Committee on Commerce and Consumer Protection.

The proposed legislation pointed out that gambling is illegal in Hawaii, and “residents generate hundreds of millions of dollars, perhaps billions, in economic activity in other jurisdictions related to gambling, and in return, Hawaii receives no benefit.”

The legislation also referenced Boyd Gaming Corp.’s success in attracting Hawaiians to its downtown Las Vegas properties. The abundance of Hawaiian visitors has led to references of Las Vegas being Hawaii’s “ninth island.”

“Hawaii residents take an estimated 300,000 trips to Las Vegas and other gambling destinations each year, with many residents making multiple trips per year,” the legislation said. “In 2011, it was reported that Boyd Gaming, a Nevada-based gaming corporation, earned about $600 million from Hawaii annually. Further, in a 2021 annual investor report, Boyd Gaming highlighted that customers from the Hawaiian market comprised more than half of the room nights sold at the California, the Fremont, and Main Street Station, and that decreases in Hawaiian market spending could adversely affect their business and financial condition.”

Hawaii estimate ‘inaccurate’

A Boyd spokesman said the $600 million revenue figure “is completely and totally inaccurate.” Spokesman David Strow said the company’s 2022 revenue figures, released last week, showed Boyd’s downtown Las Vegas segment generated $215 million from all sources, not just Hawaiians.

“Obviously, we oppose the bill and we think there are a couple of serious constitutional issues with it,” Strow said. “First and foremost is the First Amendment. Commercial speech is clearly protected by the First Amendment. We believe that couldn’t be clearer. Also, federal law prohibits states from passing laws that discriminate against interstate commerce.”

Chang, a champion for housing issues in Honolulu and a Harvard Law School graduate, declined to comment for this story, but said he would speak with the Review-Journal next week.

Pre-filed testimony for the bill indicates that, if passed, it could face a First Amendment challenge, according to comments by Hawaii Attorney General Anne Lopez.

Her two-page memorandum said the bill “may be subject to challenge under the First Amendment to the United States Constitution and article I, section 4, of the Hawaii State Constitution as an unconstitutional restriction of commercial speech.”

Flawed proposal

Local tourism experts say Chang’s proposal is flawed.

“With the change to allow casinos to advertise on television in the early 2000s, casinos have increased their advertising reach without any noticeable uptick in gaming addiction,” Amanda Belarmino, an assistant professor at UNLV’s William F. Harrah College of Hospitality.

“Restricting the use of advertising for casinos is an out-of-date concept from a bygone era when gambling was not considered socially acceptable,” she said. “Hawaii seems to be behind the times in its acceptance of legal gaming as it is one of only five states without a lottery and one of the few states not to embrace legalized sports betting.”

Belarmino also wondered why Nevada was singled out in the legislation.

“As Hawaii is one of our largest feeder markets, it seems that banning advertising would be a bit like locking the barn door after the horse escaped,” she said. “Additionally, I wonder if it is only Nevada casinos. As there is legalized gaming in 48 states, would this ban extend to riverboat casinos, casinos on tribal land, and sports betting apps? With the increased use of streaming services and social media advertising, would a ban really be effective and enforceable? It seems to me that their goal is to keep local dollars in the state, but I would imagine that creating new entertainment options for locals would be a better plan than trying this out-of-date tactic.”

Industry analyst Josh Swissman, founding partner of Las Vegas-based Strategy Organization, said the legislation “appears to be pretty heavy handed,” and he thinks it won’t be successful because it attempts to erase business strategies that have been in effect for decades.

“SB935 is not going to stop Hawaiians from coming to the ‘ninth island,’ and it’s going to be challenging to circumvent the advertising that is currently done by a host of entities about Las Vegas,” said gaming industry analyst Brendan Bussmann of Las Vegas-based B Global.

“If Hawaii wants to cover both, it should realize that illegal gambling is occurring on the island, evaluate the best economic opportunity to further investment and job growth, and direct those resources appropriately to evidence-based responsible gaming programs and other needs such as housing.”

The proposed ad ban is reminiscent of the NFL’s efforts in the early 2000s to keep Las Vegas from advertising during the Super Bowl, at a time when the Las Vegas Convention and Visitors Authority was launching its popular “What happens here, stays here” campaign.

The ensuing controversy and eventual mockery of the NFL led to an unexpected storm of publicity for Las Vegas with the banned ads being shown for free on newscasts.

The NFL’s attempt to ban the ads turned out to be one of best outreach opportunities for the LVCVA.

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on Twitter.