Texas Senate hearing pits Kalshi against gambling industry lobby
A 62-minute hearing in the Texas Senate exposed the fault lines over prediction markets, with regulators, the AGA and Kalshi disagreeing on whether event contracts amount to sports betting.
Prediction market trading in Texas has reached volumes that helped trigger a pointed legislative hearing on how such products should be treated under state law.
Figures from Aldrin Research show that trading tied to a single NFL fixture between the Dallas Cowboys and New York Giants topped $208 million across US markets last Sunday. Kalshi told iGaming Business that turnover on that Sunday Night Football contract exceeded any NFL regular-season game the platform handled in the whole of last year.
College football drew similarly large sums. Tracking site Odds Shopper recorded more than 50.7 million contracts traded around the 12 September meeting between Ohio State and Texas.
That scale of activity formed the backdrop to a hearing convened by state senator Bryan Hughes before the Texas Senate Committee on State Affairs, which examined how federally regulated derivatives markets sit alongside a state gambling ban. Research published by Eilers & Krejcik Gaming in April found that Texas and California together accounted for 43% of all sports event contract activity nationally, though no Texas-only figure has been made public.
Tres York, vice-president at the American Gaming Association, told the committee that a contract on the Cowboys beating the Giants is no different in substance from a wager placed with a licensed sportsbook, and argued Texas should pursue litigation against prediction markets through its own courts rather than the federal system, alongside a geofencing requirement to keep the platforms out of the state entirely.
Robert DeNault, Kalshi's head of enforcement and legal counsel, pushed back, arguing that markets overseen by the Commodity Futures Trading Commission carry protections that offshore operators do not. He warned that banning a federally regulated product would simply push Texans towards those offshore sites instead.
State senator Bob Hall, who represents part of Dallas and is 84, put it more bluntly, telling the hearing that event contracts and sports wagers were the same activity in different disguises, comparing them to gambling dressed variously in "high heels and a tiara" or "miniskirts or a bikini."
Problem gambling researcher Brianne Doura-Schawohl, a former legislative director at the National Council on Problem Gambling, also gave evidence. She cited a study showing that a majority of Gen Z respondents — 52% — now count both sports betting and prediction markets among the tools they expect to use for their financial future. She separately criticised a Kalshi rival for letting users as young as 17 link an investment account to buy and sell event contracts, calling the feature "very dangerous."
No changes to Texas law are expected before 2027, and the outcome will likely hinge on November's elections. Governor Greg Abbott and Lieutenant Governor Dan Patrick, a longstanding opponent of legal sports betting who has blocked previous legalisation efforts, are both seeking re-election. Attorney General Ken Paxton is contesting a US Senate seat against Democrat James Talarico, with Republican Mayes Middleton and Democrat Nathan Johnson competing to succeed him as AG.
Separately, Kalshi announced what it described as the first partnership between a prediction market and a federally recognised tribal nation, agreeing terms with the Tunica-Biloxi Tribe of Louisiana ahead of the Mississippi–LSU football fixture.