Prediction market roundup: Sides clash at heated legislative hearing in Texas

The American Gaming Association has advised Texas lawmakers to pursue litigation against prediction markets and implement statewide geofencing, while Kalshi warned legislators that a combative approach would push customers to unregulated offshore operators. The clash came during a 62-minute Texas Senate Committee on State Affairs hearing convened by State Senator Bryan Hughes on 15 September.

AGA Vice President Tres York testified alongside Robert DeNault, Kalshi’s head of enforcement and legal counsel, in a hearing that examined the relationship between federally regulated derivatives markets and state-prohibited gambling. Research from Eilers & Krejcik Gaming in April found that 43% of activity from sports event contracts came from Texas and California combined.

The hearing comes as prediction market volume reaches record levels in Texas. Trading activity for the Dallas Cowboys versus New York Giants NFL matchup on 15 September topped $208 million across US markets, according to Aldrin Research. At Kalshi, volume for the game eclipsed any NFL regular-season game last year. When Ohio State faced Texas on 12 September, volume surpassed 50.7 million contracts traded, according to Odds Shopper.

AGA Pushes State Court Strategy

York argued that event contracts on sports outcomes do not differ fundamentally from sports wagers placed at sportsbooks. He advised Texas to seek an order requiring prediction markets to geofence their platforms from operating statewide, preferring litigation in state court rather than federal circuit where state attorneys general have been less successful.

“Prediction markets think they can mess with Texas,” York said. “I hope you prove them wrong.”

State Senator Bob Hall, 84, who represents Senate District 2 in Texas, agreed with the AGA’s position. “They’re different costumes on gambling,” he said. “Some have high heels and a tiara and others have on miniskirts or a bikini.”

Kalshi Warns of Offshore Migration

DeNault countered that prediction markets regulated by the CFTC offer a “safer alternative” than offshore operators lacking consumer protections. “You can go the combative route and ban something that’s federally regulated,” he said. “But what you’ll end up with is a bunch of customers in Texas just going offshore.”

The committee also heard from Brianne Doura-Schawohl, a problem gambling expert and former legislative director for the National Council on Problem Gambling. She cited a study finding that 52% of Gen Z respondents include sports betting and prediction markets as part of their long-term financial plan, and criticised a Kalshi competitor for allowing minors over 17 to link investment accounts with the ability to buy and sell event contracts, describing it as “very dangerous.”

Political Landscape and Tribal Partnership

The November midterm elections will likely impact the future of prediction markets in Texas. Governor Greg Abbott, Lieutenant Governor Dan Patrick, and the race for attorney general are all on the ballot. Patrick, who vehemently opposes sports betting, has foiled several attempts to legalise sports wagering since the 2018 PASPA decision.

Beyond Texas, Kalshi announced on 12 September it had become the first prediction market to partner with a federally recognised sovereign nation. The Tunica-Biloxi Tribe of Louisiana launched a tribal prediction market app powered by Kalshi through SaltTrade Derivatives, a newly established subdivision of a tribal-owned enterprise.

“This partnership represents exactly the type of opportunity Indian Country should be pursuing, where Tribes are owners, innovators and leaders, not just participants,” said Tunica-Biloxi Chairman Marshall Pierite.