Prediction Markets Under Threat From Hawaii Bill

Hawaii lawmakers introduced new legislation aimed at classifying prediction markets as illegal gambling under state law. The proposal focuses on trading platforms that offer contracts tied to real world outcomes such as sports events and political races.

Good to Know

• Hawaii and Utah remain the only US states without any legalized gaming or lottery
• The bill targets event based contracts, not standard commodities or securities trading
• Federal regulation by the Commodity Futures Trading Commission would not prevent enforcement in Hawaii

House Bill 2198 was filed in the Hawaii House of Representatives on Monday with support from more than a dozen Democratic lawmakers. The legislation seeks to prohibit the purchase, sale, or financial speculation of securities or commodities linked to future contingent events involving sports, contests, people, politics, catastrophe, and death.

If enacted, the measure would take effect on July 1. The proposal reinforces Hawaii long standing position against gambling activity of any form, including newer market models that resemble financial trading rather than traditional wagering.

Rather than focusing on casinos or sportsbooks, HB 2198 zeroes in on prediction market platforms. The bill language specifically addresses exchanges that allow users to trade contracts on outcomes such as the Super Bowl winner or the result of a political election. Lawmakers intentionally excluded conventional business activity involving commodities and securities that do not depend on event outcomes.

Hawaii enforces some of the strictest gambling laws in the United States. No commercial casinos operate in the state, and sports betting remains prohibited. Repeated efforts to introduce regulated gaming options have failed, even as other states expanded betting markets over the past decade.

Prediction market platforms such as Kalshi and Polymarket operate under oversight from the Commodity Futures Trading Commission. Those companies argue that federal regulation places them outside the reach of state gambling statutes. HB 2198 challenges that position by asserting state authority over event based trading tied to prohibited categories.

Lawmakers behind the bill appear focused on preventing prediction markets from gaining a foothold before participation grows. Interest in event contracts has increased nationwide, particularly around major sports events and national elections, prompting state level responses in jurisdictions with strict gambling frameworks.

The bill enters a legislature with a consistent record of rejecting gambling proposals. During the previous session, a sports betting bill advanced deep into the process before collapsing due to disagreements over tax rates, licensing costs, regulatory structure, and opposition from anti gambling groups.

HB 2198 faces an uncertain path forward. Past votes suggest limited appetite for any policy that could be viewed as expanding wagering activity, even when framed as financial trading rather than gambling.

Frequently Asked Questions

What activities would House Bill 2198 prohibit?

The bill would prohibit trading contracts tied to outcomes involving sports, political races, and other specified real world events.

Does the proposal affect stock or commodities markets?

No. Traditional securities and commodities trading unrelated to event outcomes would remain legal.

Are prediction markets federally regulated?

Yes. Platforms such as Kalshi and Polymarket operate under Commodity Futures Trading Commission oversight.

Would federal regulation override Hawaii law?

Under HB 2198, prediction markets would still be illegal in Hawaii despite federal regulation.

When would the bill take effect?

The proposed effective date is July 1.