The bill cleared the committee via voice vote during a Thursday hearing in which no witnesses testified in favor of allowing prediction market platforms. Four opponents spoke against the platforms, while no representatives from companies operating prediction markets appeared either in person or virtually.

Strong Legislative Signal Amid Tight Timelines

With Hawaii’s legislative crossover deadline set for March 12 and adjournment scheduled for May 8, HB 2198 is currently the primary vehicle for banning prediction markets in the state. No companion bill exists in the Senate, and the deadline to introduce new legislation has already passed.

The committee’s action sends a strong signal amid growing national scrutiny of prediction markets, which have become one of the most debated topics in the gambling and regulatory landscape over recent months.

Industry Scrutiny and Legal Headwinds

Prediction markets—led by platforms such as Kalshi—are facing mounting legal and regulatory pressure across the United States. Kalshi alone is reportedly involved in a dozen lawsuits related to its legality. Meanwhile, regulators in several states have warned licensed sports betting operators against participating in prediction markets, while Connecticut’s governor has proposed raising the minimum participation age to 21.

At the federal level, a draft bill would ban government employee insider trading on prediction markets, and at least three federal judges have ruled that prediction markets should be halted until ongoing court cases are resolved.

“They are a real problem,” said Hawaii prosecutor Steve Alm during the hearing. “Gambling by another name … this has the potential to destroy sports and destroy young men and women.”

Gambling Concerns in a No-Gambling State

Hawaii remains one of the few U.S. states where all forms of gambling are illegal. While lawmakers came close to legalizing sports betting during the 2025 session, those efforts ultimately failed. Bills to authorize online sports betting were carried over from 2025, along with a separate proposal to develop an entertainment district with casinos near Aloha Stadium.

During the 2025 sports betting push, major operators such as BetMGM and DraftKings lobbied lawmakers in person. Since then, DraftKings, FanDuel, and Fanatics Sportsbook have each launched prediction market-style products, further blurring the lines between gambling and financial trading.

Critics argue that prediction markets exploit a regulatory gap, as they are federally regulated by the Commodity Futures Trading Commission (CFTC) rather than by state gambling authorities. As a result, they do not pay state gambling taxes and are not subject to the same integrity, consumer protection, or responsible gambling requirements imposed on licensed sportsbooks.

Amendments Accepted, Core Intent Preserved

Former state Rep. Marcus Oshiro testified in support of the bill and proposed two amendments—one related to legislative authority and another focused on national security. The committee adopted both, along with a third amendment from the committee chair designed to “preserve the bill from repeal in 2029.” None of the changes altered the fundamental intent of the legislation.

Oshiro also highlighted that so-called pure prediction markets derive approximately 90% of their revenue from sports-related contracts, reinforcing the argument that the products closely resemble traditional wagering.

“Call it what you will, it’s betting,” Oshiro said.

A Precedent-Setting Move

If HB 2198 continues to advance, Hawaii could set a national precedent at a time when states and federal authorities are increasingly questioning the role of prediction markets within the broader gambling ecosystem. Supporters of the bill frame it as a proactive measure to protect consumers, uphold state law, and prevent unregulated gambling activity from taking root.