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- During a Texas Senate State Affairs Committee hearing, the American Gaming Association urged state lawmakers to pursue litigation and geofencing to block prediction markets, arguing their sports event contracts are functionally identical to traditional sports wagers.
- Kalshi countered that an outright state ban would simply drive Texas consumers toward unregulated offshore betting sites, advocating instead for collaborative consumer safeguards and advertising rules.
A Texas Senate Committee on State Affairs hearing on Sept. 18 put prediction markets under fresh scrutiny, with industry opponents urging the state to pursue litigation and geofencing while Kalshi argued a ban would push customers to offshore sites.
The 62-minute hearing matters because sports wagering is illegal in Texas, and lawmakers focused on whether sports-event contracts offered through federally regulated prediction markets are meaningfully different from sportsbook bets. The session, convened by Sen. Bryan Hughes, highlighted a widening state-versus-federal fight over how these products should be classified and policed.
AGA urges Texas to challenge prediction markets
American Gaming Association Vice President Tres York told senators that a sports-event contract does not differ fundamentally from a sportsbook wager. He urged Texas to seek an order requiring prediction market operators to geofence the state and said Texas should pursue litigation in state court rather than federal circuit court.
“Prediction markets think they can mess with Texas,” York said. “I hope you prove them wrong.”
State Sen. Bob Hall took a similarly hard line, saying event contracts are just gambling under another label. “They’re different costumes on gambling,” Hall said, adding, “Some have high heels and a tiara and others have on miniskirts or a bikini.”
The hearing also touched on scale. According to the source report, Eilers & Krejcik Gaming found that 43% of sports-event contract activity came from Texas and California combined.
Kalshi says bans would send users offshore
Representing Kalshi, Robert DeNault said federally regulated prediction markets offer a safer option than offshore operators. “You can go the combative route and ban something that’s federally regulated. But what you’ll end up with is a bunch of customers in Texas just going offshore,” he told lawmakers.
Problem gambling expert Brianne Doura-Schawohl also testified, criticizing a competitor feature that she said allowed minors over 17 to link an investment account and trade event contracts. She called that setup “very dangerous.”
The hearing did not produce an immediate policy change, but it laid out the arguments Texas officials could use if the state moves toward enforcement or court action.
Tribal and court developments add to the pressure
The broader prediction-market debate is also expanding beyond Texas. The Tunica-Biloxi Tribe of Louisiana recently announced a tribal prediction market app powered by Kalshi through SaltTrade Derivatives. Tribal Chairman Marshall Pierite said the deal showed how tribes could be “owners, innovators and leaders.”
At the same time, the Ninth Circuit reversed a lower court in Blue Lake Rancheria v. Kalshi, holding that Kalshi’s sports event contracts amount to unauthorized gaming under IGRA when accessed on tribal land. David Bean of the Indian Gaming Association said the ruling reinforced that “when sports wagering occurs on Indian lands, federal Indian gaming law matters.”
What comes next in Texas is still unclear. The open question is whether lawmakers, regulators, or the Texas attorney general follow the hearing with litigation, geofencing demands, or other enforcement steps against prediction market operators.
Source: As reported by news.google.com.
