Texas lawmakers weigh ban on prediction markets and sports event contracts
Texas lawmakers are weighing whether to regulate or ban prediction markets and sports event contracts in the state. No specific legislation has been introduced yet. The move follows a national expansion of prediction market platforms and comes amid a broader state backlash against CFTC-registered contracts that some officials view as violating state gambling prohibitions. Texas joins other states scrutinizing whether federal registration shields platforms from local gaming enforcement.
Texas is the largest state yet to signal a prediction-market crackdown, and a ban there would wall off a major population center that platforms have treated as safe territory. Kalshi and Polymarket have built national sports contract offerings on the assumption that CFTC registration protects them; every state that rejects that premise shrinks their addressable market and splinters liquidity. Underdog's retreat from seven fantasy states shows platforms already face unsustainable geofence costs.
A Texas enforcement action would follow the template Connecticut and Nevada are using, multiplying the circuits where preemption fails and pressuring the Supreme Court to act on New Jersey's pending cert petition. Platforms that lose Texas must either restructure for regional compliance or absorb the revenue hit, while traders face positions that may become void overnight depending on geography. The uncertainty itself drives volume to venues that ignore state lines entirely, undercutting the regulated market's growth thesis.
Joins Nevada, Connecticut, and Baltimore in a widening state-level campaign against CFTC-registered sports contracts, after the Ninth Circuit stripped Kalshi's federal shield and New Jersey asked the Supreme Court to settle the split.