When Raffles, Sweepstakes, Games of Chance and Skill Constitute Illegal Gambling in Hawaii

• Jurisdiction: Hawaii,United States
• Citation: Vol. 19 No. 02
• Publication year: 2015

When Raffles, Sweepstakes, Games of Chance and Skill Constitute Illegal Gambling in Hawaii

By Christine Daleiden

In Hawaii, it is well known that gambling is illegal. To most, illegal gambling equates to slot machines operated in discreet back rooms and online casinos. With the rise of internet gambling and the recent explosion of adult video game parlors, Hawaii's gambling statutes have been the source of recent and controversial law enforcement actions. In May 2014, the Office of the Prosecuting Attorney and the Honolulu Police Department issued 70 cease and desist orders to businesses for possessing machines that were considered gambling devices at adult video game parlors.¹The machines deemed to be gambling devices included one where a video game is played for a fee, and the player, if successful, receives a discount coupon to buy products on the internet and an entry into a sweepstakes.² Another is a game where one pays to play a video game, earns points, and is rewarded for the points with cash.³ Even seemingly innocuous games were targeted in the enforcement actions, including "coin pusher" games. These games, which can be found even in kiddie arcades, are played by dropping a coin onto moving metal shelves covered with other coins. If one is lucky, the coin will bump other coins off the shelf to the bottom level, where they can be collected. In the adult version of this game, there might be $20 bills mixed in with the coins to tantalize the players to drop more coins in.⁴

Also considered illegal gambling in Hawaii are church raffles, retail contests, and product promotions where chance is involved. While law enforcement is not actively enforcing against fundraising activities at churches or non-profit dinner events where raffles are being promoted, these activities still potentially carry a criminal penalty.

Hawaii's Gambling Statutes

It should first be noted that Hawaii's gambling statutes are generally difficult to understand,⁵ contain ambiguous language,⁶ and contain inconsistencies seemingly arising from several amendments that occurred over decades.⁷Rather than being helpful, the legislative history can be a source of confusion.⁸There is also little case law interpreting the statutes.

With that as a caveat, gambling offenses are covered in Section III, Chapter 712 ("Offenses Against Public Health and Morals") of the Hawaii Penal Code. Gambling offenses can be misdemeanors or felonies, depending on the profits realized.⁹ Illegal gambling comes in the form of promoting or advancing gambling, or possessing gambling records or devices. While the term "advancing gambling" generally targets the establishment of a gambling business, a person who plays or participates in a gambling activity may also be liable.¹⁰ A person engages in gambling if: (1) he stakes or risks something of value; (2) upon the outcome of a contest of chance or a future contingent event not under his control or influence; (3) upon an agreement or understanding that he or someone else will receive something of value in the event of a certain out-come.¹¹

The Chapter also covers lotteries. Although the idea of establishing a State-sponsored lottery is on the legislative agenda from time to time, lotteries have been declared illegal in Hawaii, even if the lottery is drawn or conducted outside of Hawaii in a jurisdiction where it is legal.¹² This section presumably was enacted to prevent nationwide lotteries such as "Powerball" from being played in Hawaii.¹³

Games of Chance in Hawaii

"Games of chance," such as sweepstakes, contests, and raffles are generally categorized as illegal lotteries. In Hawaii, a lottery is defined as a gambling scheme where:

(1) 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

(2) The winning chances are to be determined by a drawing or by some other method based on an element of chance; and
(3) The holders of the winning chances are to receive something of value.¹⁴

Illegal games of chance were specifically enumerated in the former version of Chapter 712 and this list is helpful today to understand the breadth of illegal activities.¹⁵ The original statute made it a misdemeanor to set up or assist in any type of lottery scheme, to sell or buy a ticket of chance in a lottery scheme, to conduct or play any game of chance or any game where money is lost or won or to be present where such games occur . . ."¹⁶ In a 1973 amendment, the Legislature stated that "by broadly defining the terms 'advancing gambling activity' and 'promoting gambling activity', it makes unnecessary the explicit listing of various games of chance that was present in previous statutory law."¹⁷ The commentary to the provisions added in 1973 explains that "a new offense of gambling [was] created to cover all other acts related to gambling for which evidence of profit need not be available nor applicable. The point of this is to obtain a clearer statement that gambling in all aspects is prohibited except in the limited case of social gambling."¹⁸ This history clearly indicates that the Legislature wishes to widely prohibit gambling by enacting comprehensive laws.

Social Gambling in Hawaii

Although gambling activities are broadly defined, social gambling is allowed in Hawaii for pure "contests of skill." Pursuant to Hawaii Revised Statutes § 712-1231, social gambling is legal if: (1) all players play on equal terms; (2) no player directly or indirectly receives anything of value, other than a player's personal gambling winnings; (3) it is played in a private residential building; and (4) all players are at least 18 years old. To be legal, social gambling does not allow a business to profit from allowing the use of its premises for gambling, supplying refreshments, food, drinks, services, lodging or entertain-ment.¹⁹ Bookmaking is specifically prohibited.²⁰

The Standing Committee Report to this section provides that "[c]asual gambling activities in a social context, involving contests of skill, and conducted in places other than those enumerated in the law, such as casual bets between golfers or bowlers would be 'social gam-bling.'"²¹ This statement is seemingly broad, but it misleads the reader by failing to note how extensive the list of prohibited enumerated places is under the statute. The enumerated list of sites where social gambling cannot legally occur is: hotels, motels, bars, nightclubs, cocktail lounges, restaurants, massage parlors, billiard parlors, or any business establishment of any kind, public parks, public buildings, public beaches, school grounds, churches or any other public area.²² If these casual bets between golfers or bowlers take place at a bowling alley, golf course, or business establishment of any kind, the bets are illegal, and therefore no longer considered "social gambling."²³ The exception for social gambling is extremely narrow, and generally only applicable to those casual bets, based on skill and not chance, that take place in the home.

Promotions Using Games of Chance: Lotteries, Sweepstakes, and Raffles

Advertisers have long understood the value of using games of chance to fundraise and to promote products or services. There is no doubt that consumers love to play games of chance where they can win prizes. These games and promotions, however, must be structured so that they do not violate Hawaii's gambling laws.

What makes lotteries, sweepstakes, raffles, and contests illegal is the combination of consideration, chance, and a prize. The chart below summarizes the characteristics of these three elements, all three of which must be met for the activity to be considered illegal under Hawaii law.

Avoiding state gambling penalties requires the removal of any one of these three elements. By doing so, the activity ceases to be illegal. Because awarding a prize is the enticement to get a consumer to participate in the activity, removal of this element is not really an option. It therefore makes sense to eliminate consideration or chance if it can be done without completely removing the enticement to participate.

Elements	Haw. Rev. Stat. § 712-1220 "Lottery"
Consideration	(1) 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
Chance	(2) The winning chances are to be determined by a drawing or by some other method...