Hawaii becomes first state to advance prediction market ban through committee

• Hawaii’s House Consumer Protection and Commerce Committee has unanimously approved a bill to prohibit prediction market platforms in the state.
• The proposed legislation would classify betting on elections, political events, sports and other real-world outcomes as illegal gambling in Hawaii.
• Committee Chair Representative Scot Matayoshi introduced the bill after concerns emerged about platforms exploiting legal loopholes.

Hawaii lawmakers are moving closer to banning prediction markets after a House committee unanimously approved legislation that would prohibit platforms allowing wagers on political outcomes and other public events.

The House Consumer Protection and Commerce Committee voted 11-0 on 5th February to advance House Bill 2198 (HB 2198), which would classify prediction market platforms as illegal gambling under Hawaii law.

If passed, the measure would make it illegal to buy, sell or bet on contracts tied to real-world events within state boundaries. The legislation would take effect on 1st July 2026.

First state to advance prediction market ban

Representative Scot Matayoshi, who chairs the committee and introduced HB 2198, has raised concerns about prediction markets exploiting gaps in Hawaii’s gambling laws.

The bill represents the first time any state legislature has advanced a prediction market ban through committee, positioning Hawaii as a potential national leader on this issue.

The bill targets platforms that allow users to stake money on the likelihood of future events. This includes election results, political appointments, policy decisions, sports outcomes, disasters, public health emergencies and death-related outcomes.

Hawaii would join a small number of states like New York, Iowa, and Illinois attempting to restrict or regulate such markets through legislation.

Strong opposition from prosecutors and advocacy groups

Steve Alm, Honolulu Prosecuting Attorney, expressed strong concerns about prediction markets during the hearing, describing them as gambling that poses risks to sports integrity and young people.

The timing of the bill proved significant. Ahead of Governor Josh Green’s State of the State address in late January, online bettors placed approximately $449,000 in prediction market wagers on whether he would say specific phrases including “affordable”, “housing”, “volcano” or “aloha” during his speech.

Les Bernal, testifying on behalf of Stop Predatory Gambling Now, described prediction markets as predatory and said they have “metastasised across the U.S.” He called the platforms “a blatant attempt to avoid Hawaii’s laws on legalised gambling.”

Former Hawaii state representative Marcus Oshiro testified that approximately 89-90% of revenue for pure prediction market platforms like Kalshi comes from sports event contracts.

“So, call it what you will. It’s betting,” Oshiro said.

Federal vs state regulation remains unclear

Hawaii’s proposed ban reflects broader uncertainty about how US states should approach prediction markets. Federal regulators, including the Commodity Futures Trading Commission (CFTC), which oversees futures and derivatives markets, have offered limited guidance on which types of prediction contracts fall under existing rules.

Prediction market platforms have faced increased regulatory attention following their expansion during recent election cycles.

Platforms such as Polymarket and Kalshi gained substantial visibility during the 2024 US presidential race, with some platforms processing hundreds of millions of dollars in trading volume.

The popularity of prediction markets has soared recently, with trading volumes reaching approximately $3 billion per week across major platforms in recent months.

Kalshi, which operates as a federally regulated derivatives exchange overseen by the CFTC, is currently involved in multiple lawsuits about its legality to operate. A Massachusetts judge gave Kalshi 30 days to cease sports wagering operations in a ruling last week.

Other states considering similar action

Hawaii is not alone in scrutinising prediction markets. New York has at least three separate bills aimed at addressing the platforms during its current session.

Iowa legislators have proposed regulating and taxing prediction markets. Illinois introduced its own ORACLE Act this week that would impose numerous restrictions on the platforms.

What happens next

HB 2198 now advances to the House Judiciary Committee for further review. Hawaii’s legislative crossover deadline, which is when bills must pass out of their originating chamber, is set for 12th March. The session concludes on 8th May.

If enacted, Hawaii’s ban would represent one of the most comprehensive state-level restrictions on prediction markets in the United States.

The state maintains one of the strictest gambling environments in the United States. Hawaii and Utah are the only two states where no form of gambling is legal, including lottery, casinos and sports betting.

The measure’s progress will likely be watched closely by operators, regulators and lawmakers in other states grappling with similar questions about how to regulate these emerging platforms.