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State of Play
- Hawaii’s House committee advanced HB 2198, pushing to classify prediction markets as illegal gambling.
- This move could make Hawaii the first state to pursue a straight-up statutory ban, a development that matters to bettors, operators, and platforms that market event contracts as ‘‘trading.”
The Hawaii House Committee on Consumer Protection and Commerce advanced an amended HB 2198 by voice vote, expanding Hawaii’s definition of gambling to explicitly capture prediction markets.
Rather than create a licensing or regulatory path, the bill treats buying, selling, or financially speculating on contracts whose value depends on real-world event outcomes as illegal gambling. Targeted categories include sports and contests, politics and elections, catastrophes and public-health events, people-based outcomes, and death-related markets.
Hawaii’s approach contrasts with other states that have proposed regulatory frameworks for betting-style products; this bill focuses on substance over labels, aiming to close what lawmakers call a product-wrapper loophole. The committee action follows broader national scrutiny of prediction market platforms and growing debate over whether federal oversight via the CFTC pre-empts state gambling law.
Legal challenges expected if bill passes
HB 2198 would tighten access in Hawaii – users could face blocked accounts or geofencing enforcement if the law passes.
Operators marketing markets as ‘‘derivatives’’ or ‘‘risk-pricing’’ (notably Kalshi, which is regulated by the CFTC) face increased legal friction: the bill sidesteps licensing and leans on criminalizing covered activity, making compliance a binary choice to cease offerings or fight enforcement.
The practical fallout includes stricter geofencing, potential delisting of Hawaii-based accounts, and costly state-by-state legal battles.
Financially, Hawaii isn’t positioning this as a revenue-generating regulated market; lawmakers want any future expansion of gambling to occur through licensed, controlled channels – not via unregulated prediction platforms. The Massachusetts injunction against Kalshi’s sports contracts underscores the risk operators face in states that interpret event-based contracts as wagering despite federal registrations.
HB 2198 still needs additional floor votes and must move through Hawaii’s legislative calendar to become law; momentum exists but passage is not guaranteed. Expect legal challenges if the bill becomes statute, especially from firms arguing CFTC oversight preempts state action.
Based on reporting by David Evans for Gaming America.
