KEY TAKEAWAYS
- Aloha State lawmakers are studying Hawaii sports betting, casinos, and lottery products while prediction markets already operate in the state’s regulatory gray area.
- Failed sports betting bills and state research offer a potential framework for one of the most prohibitive states for gambling, but Hawaii lawmakers have not yet agreed to create a legal market.
- Lawmakers are already thinking about banning or regulating prediction markets ahead of the 2027 session as a new Kalshi class-action lawsuit moves the state’s gambling debate from the legislature to the courts.
After recent legislative failures to move forward with Hawaii sports betting, lawmakers in one of the most prohibitive gambling states continue to contemplate the constantly evolving gambling conversation.
A working group created earlier this year continues to examine whether the state should permit Hawaii sports betting, casino gaming, lottery products, or other forms of regulated gambling. At the same time, lawmakers attempted to prohibit prediction market contracts tied to sports and political events, while a Hawaii resident filed a putative class action against Kalshi under state consumer protection and gambling laws.
These overlapping developments leave the state with an increasingly awkward regulatory posture as conventional gambling remains illegal, Hawaii sports betting legislation keeps stalling, and residents still access betting-like event contracts through federally regulated platforms.
Prediction markets on legislators’ agenda in 2026 and 2027
Prediction markets complicate Hawaii lawmakers’ broader regulatory landscape as nationwide lawsuits look to settle a jurisdictional dispute that appears headed for the U.S. Supreme Court.
While Hawaii legislators debate a prospective sports betting market, platforms such as Kalshi offer contracts based on real-world outcomes, including sports, politics, and economic indicators. Kalshi and the Commodity Futures Trading Commission (CFTC) argue those products are federally regulated swaps, while state regulators across the country argue sports event contracts should be state-regulated gambling.
Hawaii lawmakers attempted to address that question with House Bill 2198 earlier this year. The bill would have updated the state’s gambling definition to expressly prohibit event contracts involving sports, politics, legislation, contests, deaths, catastrophes and other outcomes.
It did not pass, but it signaled that legislators did not view the prediction market issue as separate from the broader gambling debate.
At least several lawmakers appear ready to file legislation on prediction markets next session.
“My first reaction is they’re in existence, they need to be taxed,” Sen. Lynn DeCoite, who chairs the Economic Development and Tourism Committee, told KHON2.
Meanwhile, Rep. Scot Matayoshi, chair of the House Consumer Protection & Commerce Committee, described sports event contracts as “a form of a loophole.”
Both legislators told the news station that legislators will consider both banning and regulating prediction markets next session.
This month, a Hawaii resident filed a putative Hawaii-only class action in the Circuit Court of the First Circuit against Kalshi and affiliated companies. The lawsuit alleges that Hawaii law should void certain contracts and advances consumer protection claims based on how the products were presented to users.
A market without a market
Meanwhile, Hawaii lawmakers created the Tourism and Gaming Working Group in 2025 and directed it to examine gaming’s potential role in economic development and tourism, including gambling at the New Aloha Stadium Entertainment District. The group must submit findings, recommendations and potential legislation to lawmakers at least 20 days before the 2027 session, which begins Jan. 20, 2027.
The group’s assignment goes well beyond legal Hawaii sports betting. Its requested membership includes representatives from law enforcement, taxation, social services, and behavioral addiction fields, along with industry representation from Boyd Gaming, DraftKings and BetMGM.
Proponents of expansion see an opportunity to bring already-existing activity into a licensed, taxable environment. Opponents see a state without the regulatory infrastructure, treatment resources, or political appetite needed to manage the social consequences of legalization.
In an October meeting covered by KHON2, Las Vegas gaming executives encouraged Hawaii to consider where a casino could fit within its broader tourism economy. The discussion also returned to problem gambling safeguards, including treatment funding, public health counseling capacity, and education programs.
Hawaii keeps studying same sports betting questions
Lawmakers already have a recent blueprint for Hawaii sports betting. In 2025, Hawaii sports betting legislation passed both chambers but died in a conference committee after no final agreement could be reached.
A 2025 online Hawaii sports betting working group convened by the Department of Business, Economic Development and Tourism generally backed a competitive market rather than a single-operator model. Members favored at least five to seven operators, while more than half supported a tax rate between 10% and 15%. The final report estimated legal online Hawaii sports betting could generate roughly $13m in annual tax revenue.
Those details closely resemble the state’s failed 2026 legislation.
House Bill 2570 and Senate companion Senate Bill 3303 proposed at least six mobile sportsbook licenses and a 15% tax rate. The bills did not pass, extending Hawaii’s streak of unsuccessful sports betting efforts and leaving the new working group to revisit many of the same basic practical questions, including:
- Who would regulate the market?
- How revenue would be spent?
- Whether the state could adequately police illegal operators.
