Texas Senate grills Kalshi and gaming lobby on prediction markets
The Texas Senate held a hearing on September 15 to examine prediction markets, pressing Kalshi and the American Gaming Association on sports contracts, election markets, and consumer protections. Robert DeNault, Kalshi's legal counsel, testified that the platform offers trading in event contracts, also known as swaps. Senators debated whether platforms like Kalshi function as derivatives markets or constitute sports gambling. The hearing marks state-level legislative scrutiny as event-contract platforms expand into sports and political markets.
The Texas hearing joins Connecticut's live lawsuit, Nevada's enforced geofence, and New Jersey's Supreme Court bid in a state-by-state stripping of Kalshi's federal preemption shield. Each new forum compounds legal spend and fragments the national sports market before any federal resolution.
Kalshi must now argue its derivative-market status to state legislators who hear gaming-industry pressure in parallel with judicial and enforcement threats. Traders face geography-dependent contract validity even within CFTC-registered venues. The hearing gives other state lawmakers a template for their own examinations. A legislative ban in Texas would wall off another major market and embolden copycat bills elsewhere.