Cruz plans bill giving states veto over sports prediction markets

U.S. Senator Ted Cruz (R-TX) is preparing legislation that would hand state and tribal governments control over whether prediction markets can list sports contracts, according to a Bloomberg Law report cited by SBC Americas.

Cruz intends to file the bill after the November 3 midterm elections. It would bar exchanges from offering event contracts tied to gambling activities, sports betting included, unless a state or tribal government has authorised them.

That would reverse the industry's current default. Kalshi and other exchanges registered with the Commodity Futures Trading Commission now operate sports contracts nationwide under federal oversight, without needing individual state approval. Cruz's bill would require operators to secure permission state by state or tribe by tribe before listing those products.

The bill had not appeared on the Congress website at the time of reporting. Filing it during the lame-duck session leaves little runway: the 119th Congress ends in early January, meaning the measure would likely need reintroduction in the next Congress unless it moves unusually fast.

Cruz laid out his thinking at a Senate Commerce subcommittee hearing on May 20, telling the panel that sports contracts are "for all intents and purposes, sports bets." He argued the legal question of whether the CFTC can unilaterally permit such products is unresolved, saying "the courts are split" and that "unless Congress acts, the Supreme Court may have to decide the issue." He also said the hearing was not about rolling back gambling in states that have already legalised it.

The approach differs from other prediction-markets bills circulating in Congress. A Congressional Research Service report lists measures such as the Prediction Markets Are Gambling Act and the Fair Markets and Sports Integrity Act, which would ban sports and casino-style contracts on CFTC exchanges outright, alongside the Event Contract Enforcement Act and the Prediction Markets Security and Integrity Act, which would permit gaming-related contracts only where a state allows them.

Texas gives the issue particular weight for Cruz. The state bans both sports betting and casinos, and Lieutenant Governor Dan Patrick has repeatedly blocked legalisation efforts, including a bill that cleared the Texas House in 2023 and another that failed in 2025. Patrick has described prediction markets as exploiting a gambling "loophole" and directed the Senate State Affairs Committee to examine what he called the sudden inundation of prediction market gambling.

That committee heard testimony in September from Kalshi's Head of Enforcement, Robert DeNault, who warned that prohibiting the products would push Texans toward unregulated offshore platforms, and from American Gaming Association Vice President Tres York, who said 85% of Kalshi's volume ties to sports and parlays.

Texas carries unusual weight for operators precisely because it lacks legal sportsbooks. Eilers & Krejcik Gaming estimated that Texas and California together accounted for 43% of Kalshi's volume, with the 19 states lacking legal online sports betting delivering 69% overall. Texas Attorney General Ken Paxton has not joined the 39 states and the District of Columbia that backed New Jersey's petition asking the Supreme Court to weigh in.

Federal courts remain divided on the underlying jurisdiction question. The Third Circuit sided with Kalshi in April, finding the CFTC likely holds exclusive authority over its sports contracts in New Jersey, a ruling New Jersey has asked the Supreme Court to review. The Ninth Circuit reached a different conclusion in August, ruling that Kalshi likely could not show that the Commodity Exchange Act preempts Nevada's regulatory reach.