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Texas lawmakers are taking a closer look at prediction markets, with Senate and House State Affairs committees hearing from experts on whether the products should be treated as illegal gambling in the state.
The debate matters because Texas still bars traditional sports betting under its constitution, and the KXAN report said prediction markets have become a de facto alternative for some residents. Critics described platforms such as Kalshi as a possible loophole, while operators argue they are federally regulated exchanges rather than sportsbooks.
Texas hearing centers on whether event contracts are gambling
According to the report, one lawmaker noted that gambling remains unconstitutional in Texas and that a push to legalize it failed in 2023. The segment also featured a 23-year-old UT Dallas senior who said he made about $200,000 predicting sports outcomes after starting on daily fantasy apps in late 2023 and later moving to prediction markets.
Kalshi’s position, as cited in the segment, is that it does not bet against users and instead makes money from transaction fees. A company representative said, "We’re not on the other side of the user’s trade as an exchange. We’re just facilitating the trade, so we don’t come out on top."
Critics pushed back on the idea that federal oversight alone should shield the products from state gambling law. One Texas lawmaker, quoted by KXAN, sharply challenged that reasoning during the discussion.
Legal pressure is building beyond Texas
The report said Texas has not joined several state legal challenges against prediction markets and was one of 16 states that did not join a multi-state lawsuit last year seeking greater authority over the products. KXAN also said that decision came days after a maximum campaign donation from a Kalshi CEO to Attorney General Ken Paxton.
Elsewhere, Nevada won a federal appeals court decision in August blocking Kalshi trading on sports and elections there. According to the report, the court said federal law would likely allow Nevada to apply its gambling regulations to Kalshi’s sports event contracts.
New York officials sued Kalshi last month, calling it an illegal unlicensed gambling operation and seeking to stop the company from operating there and force it to forfeit profits. The segment also cited a new New York mobile sports betting study that found sporting events made up almost 80% of Kalshi’s global trading and about half of Polymarket’s.
What players should watch
For players, the main takeaway is that prediction markets remain in a fast-moving regulatory fight. Texas lawmakers have not announced a final action in the report, but the hearings show that more states are testing whether these products belong under exchange law, gambling law, or both. Future moves in Texas, Nevada, and New York could shape how other states approach sports-related event contracts.
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Source: As reported by KXAN.
