Hawaii Advances Bill to Ban Sports Event Contracts

• Hawaii is the first state to advance a prediction market ban bill
• The Hawaii House Committee on Consumer Protection and Commerce unanimously advanced HB 2198
• The prohibition will extend to all event contracts relating to sports, contests, people, politics, catastrophe, and death

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Hawaii became the first state in the nation to successfully advance a bill that seeks to prohibit sports event contracts.

The Hawaii House Committee on Consumer Protection and Commerce yesterday unanimously advanced HB 2198, which seeks to define prediction markets as illegal gambling, by a 11-0 vote during a public hearing.

The legislation will effectively prohibit all event contracts related to sports, contests, people, politics, catastrophe, and death.

Gambling By Any Other Name

The House Committee on Consumer Protection and Commerce heard about 20 minutes of testimony from members of the public on the bill. No prediction market company representative provided commentary during the hearing.

Steven S. Alm, the elected Honolulu prosecuting attorney, spoke out against prediction markets, specifically sports event contracts, describing them as a “real problem” for Hawaii residents.

“They are gambling by any other name. Sports betting has the potential to destroy sports and the potential to destroy young men and women,” he said.

Hawaii is one of two states in the country that does not have any form of legalized gambling or lottery. The bill seeks to update Hawaii’s gambling laws to prohibit prediction event contracts relating to sports, contests, people, politics, catastrophe, and death.

If approved, the bill will prohibit the sale of event contracts related to sports, which are defined as the following:

“Sports, including an outcome that relates to a specific athletic event or non-athletic sporting event or events within an athletic event or non-athletic sporting event or events.”

Additionally, the legislation will prohibit the sale of event contracts related to politics, which includes the outcomes of elections, anything related to war or emergencies, and any outcome related to death.

Les Bernal, national director of Stop Predatory Gambling, addressed the committee and described sports event contracts as a “huge financial scheme” that has “metastasized across the nation.”

“This is a blatant attempt to evade Hawaii’s laws on commercialized gambling.”

Banning Sports Events Contracts, Legalizing Sports Betting?

The hearing came several days after two companion bills were introduced in the House and Senate to legalize Hawaii online sports betting in the state.

Sen. Dru Kanuha (D-3) introduced SB 3303, while Rep. Daniel Holt (D-28) introduced companion bill HB 2570, both of which seek to legalize Hawaii online sports betting. The bills were referred to their respective committees and are awaiting initial hearings.

The legislation will allow for a minimum of six online sports betting licenses for applicants and will tax sports betting at a rate of 15% of adjusted gross sports betting revenues. The suggested tax rate is higher than 2025 legislation that only floated a 10% tax rate, which several lawmakers believed to be too low to be worthwhile for the state.

Tax revenues will be allocated as follows:

• 2% to the University of Hawaii system to be distributed to the University of Hawaii at Manoa athletic department
• 2% to a Native Hawaiian organization
• 1% to the Hawaii Employees Lifeline Program
• 10% to the general fund (7% into the problem gambling prevention and treatment special fund and 7% used for programs that support education)