Hawaii lawmakers introduced legislation Monday that would explicitly ban prediction markets by defining them as illegal gambling under state law.
House Bill 2198 would amend Hawaii’s gambling statute to make clear that financial speculation on real-world events is gambling, even when those contracts are structured as securities or commodities. The bill, if passed, would take effect July 1 of this year.
The measure targets event contracts tied to sports, contests, people, politics, catastrophes, and death. Lawmakers say these products exploit a gap in Hawaii law that allows certain futures contracts while prohibiting gambling.
According to the bill, the legislature says recent financial products have “allowed for individuals to create financial incentives and motivations for the occurrence of events involving athletics, politics, catastrophe, and death.” It adds that “some or all of these types of contracts violate moral and ethical standards” and prey on gaps in existing law.
Under current Hawaii law, gambling excludes legitimate business transactions, including contracts for the future purchase or sale of securities or commodities. HB 2198 keeps that exclusion, but removes it when the contract’s outcome is tied to a real-world event not under the participant’s control.
The bill spells out those events in detail. It would ban markets tied to sporting events, contests or promotions, outcomes involving individual people, elections and government actions, wars and disasters, and death or mass-casualty events.
If it walks like a duck
If passed, the change would leave zero room for interpretation. Prediction markets would be treated the same as any other form of gambling under Hawaii law, regardless of how the products are labeled or regulated elsewhere.
The proposal fits with Hawaii’s broader approach to gambling. The state does not allow commercial casinos or regulated sports betting — though it is actively considering bills to introduce some forms of regulated gaming.
Hawaii defines gambling in the bill in this manner: “A person engages in gambling if he stakes or risks something of value upon the outcome of a contest of chance or a future contingent event not under his control or influence, upon an agreement or understanding that he or someone else will receive something of value in the event of a certain outcome.”
The bill arrives as prediction markets continue to face scrutiny nationwide. Whether HB 2198 advances remains to be seen. But the intent is clear: In Hawaii, betting on real-world outcomes, even when packaged as finance, would be treated as gambling.
Operator Kalshi, however, has consistently argued that state laws don’t apply to prediction markets — which are regulated federally by the Commodity Futures Trading Commission (CFTC) — so if HB 2198 becomes law, a legal battle over whether it can be enforced will likely follow.
