The Hawaii House Committee on Consumer Protection and Commerce (CPC) has unanimously advanced a bill on prediction markets, just days after its introduction.
House Bill 2198 (HB 2198) would declare a broad variety of prediction markets to be illegal gambling under Hawaii law, making the state’s laws against event-based financial trading even stronger.
HB 2198 was introduced in the House on 28 January and had its first reading the same day.
The bill would also modify Hawaii law to broaden the definition of gambling. It would add that some forms of financial betting based on future events are considered gambling, effectively blocking them in the state.
Currently, real futures contracts and insurance are not considered gambling. But HB 2198 restricts this exemption by specifying some results that are no longer protected.
Legislative findings in the bill cite the growth of consumer-facing financial platforms that allow individuals to profit from real-world events.
Lawmakers state that these developments have enabled speculation tied to athletics, politics, catastrophe, and death, creating financial incentives around outcomes viewed as ethically problematic.
The bill characterises this activity as exploiting gaps in Hawaii’s current gambling framework, rather than operating as legitimate financial markets.
If enacted, buying, selling, and/or betting on securities, commodities, and/or similar items would be considered betting when the outcome of the action involves certain specified topics.
Some of the specified topics include sports events, prize contests, events involving people, political acts and elections, major disasters and public health emergencies, and death-related outcomes.
Eliminating loopholes
The language is structured to apply broadly, regardless of whether the underlying event is athletic or non-athletic, or whether the transaction resembles trading rather than wagering.
The proposal does not establish a regulatory pathway or licensing regime for prediction markets. Instead, it relies on criminal prohibition by folding these products directly into the statutory definition of gambling.
This approach places the onus on operators to avoid offering contracts linked to the specified outcomes within Hawaii’s jurisdiction.
HB 2198 demonstrates lawmakers’ efforts to eliminate loopholes by targeting financial trading with stocks, commodities, or other devices. The bill tries to prevent operators from changing prediction contract types to avoid the rules.
The lawmakers argue that the structure, name, or development of the product does not affect its type if the end product falls within the provided categories.
The bill is scheduled to take effect on 1 July, providing a short implementation window should it complete the legislative process. The bill now moves on to its second reading.