Texas Senate committee hears testimony on prediction markets ahead of 2027 session
American Gaming Association vice president Tres York said Texas should sue prediction market operators in state court.
US.- The Texas Senate Committee on State Affairs has heard testimony on whether Texas can restrict prediction market platforms such as Kalshi and Polymarket that offer sports event contracts in the state despite its prohibition on sports betting. The hearing, chaired by Senator Bryan Hughes was directed to study “the sudden inundation of prediction market gambling and the exploitation of federal law to circumvent Texas gambling prohibitions by allowing users to place bets on the outcome of elections and other events.”
American Gaming Association vice president Tres York said Texas should sue prediction market operators in state court and treat sports event contracts as illegal gambling under existing state law. He said states had won 36 of 42 state and federal rulings issued so far.
York said: “This legislature has made the decision to not authorise sports betting in the state for now, but whether you want it or not, prediction markets like Kalshi have defied your authority and given it to Texans anyway.”
Robert DeNault, Kalshi’s head of enforcement and legal counsel, touted the company’s protection by Commodity Futures Trading Commission and suggested a ban would be fruitless. He said: “You could go the combative route and try to ban something that’s here in the United States and already federally regulated, but what you’ll end up with is a bunch of customers here in Texas just going offshore to an even more dangerous platform.”
DeNault said advertising limits, risk disclosures and protections for younger customers could address state concerns without a prohibition.
Jonathan Covey, Texas Values director of policy, said Kalshi’s detection of insider trading was “favourable evidence for Kalshi” but also showed that “highly sensitive, non-public political information can be monetised on the platform.”
Texas prohibits sports betting and commercial casino gambling. The legislature considered gambling expansion proposals in the 2023 and 2025 sessions. The next regular session begins on January 12.
