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As the Hawaii legislature opens its 2026 session, prediction markets moved to the center of a growing policy clash over gambling, federal oversight, and consumer harm.
Good to Know
Long before a vote reached the floor, Hawaii lawmakers sent a clear signal. Prediction markets face an uphill battle in a state that bans all forms of gambling, and House Bill 2198 now stands as the most direct challenge yet.
The House Commerce Consumer Protection Committee voted unanimously by voice on Thursday to advance an amended version of HB 2198. The proposal would classify prediction markets as illegal gambling, aligning them with existing state prohibitions.
If enacted, Hawaii would become the first US state to move a prediction market ban through the legislative process rather than relying solely on regulatory warnings or court action.
The hearing featured testimony exclusively from opponents of prediction markets. No platform representatives appeared in person or remotely, and no testimony supported allowing the markets to operate.
Speakers repeatedly drew direct comparisons between prediction markets and traditional gambling. One opponent said: “Call it what you want, it’s still gambling… And millions of dollars are being lost on this bet!”
Former Honolulu prosecutor Steve Alm warned of broader consequences:
“Gambling by another name … this has the potential to destroy sports and destroy young men and women.”
National momentum added context to the Hawaii debate. Kalshi, one of the largest prediction market platforms, remains entangled in multiple legal disputes over its right to offer sports related event contracts. Three federal judges have ruled that prediction markets should not operate until related court cases reach resolution.
Several states have issued regulatory warnings advising licensed sportsbooks to avoid any involvement with prediction markets. At the federal level, draft legislation would ban insider trading on prediction markets by government employees. In Connecticut, the governor has proposed raising the minimum participation age to 21.
Back in Honolulu, testimony emphasized financial harm. Les Bernal, speaking on behalf of Stop Predatory Gambling Now, described prediction markets as a threat to household stability. He said:
“How do we make Hawaii more affordable for everyday citizens? This is an issue with citizens losing $300,000 a minute on the mainland and over the next five years, a trillion dollars of lost personal wealth to this institution.”
Bernal also characterized prediction markets as “a blatant attempt to avoid Hawaii laws on legalized gambling,” adding that they have “metastasized across the U.S.”
The committee adopted three amendments alongside the bill. Two came from former state Representative Marcus Oshiro, addressing legislative matters and national security. A third amendment from the committee chair removed a repeal clause scheduled for 2029. Committee members stated the changes did not alter the bill core purpose.
Oshiro highlighted the business model behind sports focused prediction markets:
“About 90% of their revenue for pure prediction markets such as Kalshi comes from sports event contracts. Call it what you will, it’s betting.”
The debate arrives amid renewed gambling discussions in Hawaii. During the previous session, lawmakers came close to legalizing sports betting before the effort collapsed. Three bills from 2025 remain active, including two online sports betting proposals and one plan to create an entertainment district with casinos near Aloha Stadium.
The legislative calendar now shapes the path forward. Hawaii crossover deadline falls on March 12, with adjournment scheduled for May 8. HB 2198 stands alone as the only active measure aimed at banning prediction markets. No companion bill exists in the Senate, and the deadline to introduce new legislation has already passed.