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- Texas lawmakers used a joint legislative committee hearing to question whether federally regulated prediction markets like Kalshi should be permitted to operate in the state, drawing comparisons to illegal sports betting while industry representatives defended the platforms as financial exchanges.
- The hearing highlights the ongoing national friction between federal oversight by the Commodity Futures Trading Commission and state gambling bans, with Texas yet to take formal legal action amid conflicting appellate rulings across the country.
Texas lawmakers used a joint committee hearing this week to challenge whether federally regulated prediction markets should be allowed to operate in a state where traditional sports betting remains illegal.
The hearing matters because prediction markets, including Kalshi, are increasingly being treated by critics in Texas and the broader gambling industry as a workaround for state sports betting bans. The debate also underscores a wider legal conflict over whether states can police products overseen by the Commodity Futures Trading Commission.
Texas lawmakers question why prediction markets remain available
The Texas Senate State Affairs Committee and Texas House State Affairs Committee heard testimony on prediction markets, which allow users to trade on the outcome of real-world events. According to the hearing coverage, Kalshi offers sports-related markets, including one tied to the University of Texas vs. UTSA football game.
State Sen. Bob Hall said he views the products as gambling and questioned why they are still operating in Texas.
“I don’t understand why or how it continues to operate,” Hall said. He also said, “I’m not sure why the law is not even being enforced today because I think the law is adequate to enforce it because it is gambling.”
Others drew the same comparison. Tres York of the American Gaming Association said prediction markets and sportsbooks have “the exact same functionality” and are “indistinguishable.” Brianne Doura-Schawohl, speaking about gambling harms, said, “The brain doesn’t care (what you call it).”
A representative for the industry pushed back. Robert DeNault described prediction markets as financial exchanges regulated like stock markets and said they are “peer-to-peer systems for people to set prices by trading with one another in an open and fair marketplace.”
Federal oversight and court rulings have created a patchwork
A central issue in Texas is that prediction markets are licensed by the CFTC, while Texas law bars traditional sports betting under the state constitution.
That tension has produced conflicting court outcomes. According to the report, the Third Circuit Court of Appeals ruled that Kalshi, as a market regulated under the federal Commodity Exchange Act, cannot be regulated by state gambling laws. The Ninth Circuit, however, allowed Nevada to regulate Kalshi.
Texas has not yet taken Kalshi or another prediction market operator to court, leaving the state’s next move uncertain.
The report also noted that Texas Attorney General Ken Paxton did not join two major legal efforts against Kalshi. Politico previously reported that Kalshi CEO Tarek Mansour donated $7,000 to Paxton’s campaign four days before one of the letters was published. A Kalshi representative said the company, like many regulated businesses, supports candidates “on both sides of the aisle.”
What Texas bettors and operators should watch next
For now, the immediate takeaway is that Texas lawmakers are publicly pressing the question of whether prediction markets are legal gambling products in the state, but no formal enforcement action has been announced.
What comes next could include a lawsuit, regulatory action, or further legislative scrutiny. More broadly, the split between federal oversight and state gambling authority appears unresolved, and the issue could draw even more attention if additional states challenge prediction market operators.
Source: As reported by ketk.com.
