Texas Targets Prediction Markets Over Gambling Concerns

Texas Lt. Gov. Dan Patrick is taking aim at online prediction markets, warning the fast-growing platforms may be exploiting "gambling loopholes" while putting elections and sports at risk.

Patrick has directed state senators to study whether the markets are being used to "circumvent Texas gambling prohibitions" and recommend action before the 2027 legislative session.

The platforms let users put money on outcomes ranging from elections to sports scores. Operators insist they are federally regulated financial exchanges, not gambling sites, while critics say it's a distinction without a difference.

"This is public health. It rewires the brain, it requires increasing amounts of dopamine, people will bet more and more and more," Russ Coleman, board chair for Texans Against Gambling, told The Texas Tribune. "The number of suicides that will result, the number of families that will be broken up, the number of embezzlement cases — it will hit."

Jonathan Covey, director of policy for Texas Values, said election betting is especially alarming.

"Elections, they're not just economic activity, they're core functions of our state sovereignty," Covey told the outlet. "We have Penal Code chapter 47 that says election betting is illegal, and prediction markets have been trying to sort of relabel that activity."

The fight is complicated by the Commodity Futures Trading Commission, which is asserting federal control over the industry and has sued to block several states from taking enforcement action.

Kalshi, the nation's largest prediction market, says current federal oversight is already sufficient.

"We are regulated at the federal level, but of course, given now the popularity of prediction markets, we are doing a lot of educating on the state level," Sara Slane, Kalshi's head of corporate development, told the Tribune. "That's the dialogue that we'll envision having, certainly, in the state of Texas."

The issue has grown more urgent after Kalshi disclosed it fined three congressional candidates, including one in Texas, for trying to wager on their own races. Kalshi fined Zeke Enriquez $784 and banned him for five years after he bought less than $100 in contracts tied to his GOP primary.

Sportsbooks are also moving into the space. DraftKings and FanDuel now offer prediction-market products available to Texans despite Texas' longstanding opposition to online sports betting.

In a statement, DraftKings said there is "clear consumer interest" in Texas and pointed to its platform that was "designed to enhance the fan experience while making available responsible engagement tools and resources."

Carol Ann Maner, chair of the Texas Coalition on Problem Gambling, said the risks are obvious.

"It would be almost like malpractice on our part to pretend not to know that this would be harmful," she told the Tribune.

Patrick has long opposed expanding gambling in Texas, and opponents hope his directive signals a broader pushback.

"Maybe it was stretching a little bit to read too much into that, but it says that he's paying attention," Coleman said.

Still, the legal battle may ultimately be decided in federal court. Several cases are already moving through appeals courts, and both sides expect the U.S. Supreme Court to eventually weigh in.

• Washington Steps Up Scrutiny of Prediction Markets
• Prediction Markets in Spotlight After $400K Maduro Wager