Hawaii lawmakers propose ban on prediction markets

• House Bill 2198 would prohibit platforms where users wager on political elections, sporting events and other real-world outcomes.
• The legislation targets platforms like Kalshi and Polymarket which facilitated millions in wagers during the 2024 presidential election.
• Violators would face class C felony charges, with the law taking effect on 1 July 2026 if passed.

Hawaii lawmakers have introduced House Bill 2198 to outlaw prediction markets, platforms that allow users to place wagers on political elections, sporting events and other future events.

The bill was introduced on 26 January 2026 and sponsored primarily by Representative Scot Z. Matayoshi, alongside over a dozen Democratic co-sponsors including Representative Jeanné Kapela. The legislation seeks to ban these platforms by amending Hawaii’s existing gambling laws.

Defining prohibited activity

HB2198 defines prediction markets as illegal platforms covering “purchase, sale, financial speculation securities or commodities based on the outcomes or future occurrences related to sports, competitions, individuals, politics, disasters, and death”.

The bill raises concerns about potential market manipulation and electoral integrity.

The proposed law specifically cites Kalshi and Polymarket as examples of prohibited platforms. Both services rose to prominence during the 2024 US presidential election cycle, where users bet millions of dollars on electoral outcomes.

Legal penalties and timeline

Violators would face class C felony charges under Hawaii’s criminal code. The bill awaits committee referral in the 2026 legislative session, which convened on 15 January. If enacted, the law would take effect on 1 July 2026.

Nationwide regulatory crackdown

Hawaii’s proposal follows a wave of state actions against prediction markets across the United States. Louisiana issued a warning that prediction markets constitute illegal sports betting under state law, joining Maryland in cautioning licensed operators about such platforms.

Massachusetts Gaming Commission prohibited sportsbooks from offering prediction markets, whilst Arizona moved to revoke Underdog’s licence over its partnership with prediction market platforms.

Major operators have also retreated from certain markets. The regulatory pressure prompted Underdog to exit North Carolina sports betting to focus on prediction markets.

FanDuel and DraftKings exited Nevada over conflicts with prediction markets, whilst Wisconsin pushed tribal sports betting specifically to curb the rise of these platforms.

In response to mounting state opposition, prediction market operators formed a trade coalition to defend federal oversight and argue against state-level prohibitions.

Federal and state regulatory tension

Kalshi operates as a federally regulated exchange overseen by the Commodity Futures Trading Commission (CFTC), though it has encountered legal challenges over election-related markets. Polymarket uses blockchain technology and cryptocurrency, drawing federal probes following the 2024 election cycle.

Hawaii’s gambling laws already rank among the nation’s strictest, prohibiting most commercial gambling except social games and charitable gaming activities.

Competing perspectives

Prediction market operators maintain their platforms aggregate public opinion more effectively than traditional polling. They argue these markets operate within existing regulatory frameworks and serve legitimate purposes beyond gambling.

Critics argue that financial stakes in political outcomes create artificial incentives undermining democratic processes. The Hawaii legislation reflects concerns that prediction markets blur the line between financial speculation and gambling on events affecting public welfare.

Enforcement challenges ahead

If enacted, Hawaii would join a growing number of jurisdictions explicitly banning or restricting prediction markets. The legislation could set a precedent for other states considering similar restrictions as authorities navigate conflicting approaches to regulation.

Practical enforcement poses challenges, especially for offshore or decentralised platforms operating outside traditional frameworks. The bill does not specify detailed mechanisms for blocking access to international or blockchain-based services.

As HB2198 advances through Hawaii’s legislative process, debate will likely focus on constitutional questions, jurisdictional reach and the broader role of prediction markets in American society.

The outcome could influence how other states regulate these emerging platforms and shape the evolving landscape for political and event-based wagering across the United States.