Texas Lieutenant Governor Dan Patrick has directed state senators to investigate whether online prediction markets are exploiting “gambling loopholes” and endangering elections and sports outcomes.
The platforms, which allow users to wager on election results and sports scores, face criticism for potentially circumventing Texas gambling prohibitions. Operators maintain they are federally regulated financial exchanges rather than gambling sites, but critics argue the distinction is negligible.
Russ Coleman, board chair of Texans Against Gambling, described the issue as a public health crisis: “It rewires the brain, it requires increasing amounts of dopamine, people will bet more and more and more,” he stated. “The number of suicides that will result, the number of families that will be broken up, the number of embezzlement cases — it will hit.”
Jonathan Covey, director of policy for Texas Values, warned: “Elections, they’re not just economic activity, they’re core functions of our state sovereignty. We have Penal Code chapter 47 that says election betting is illegal, and prediction markets have been trying to sort of relabel that activity.”
The legal battle has been complicated by the Commodity Futures Trading Commission, which has sued several states to block enforcement actions on prediction markets.
Kalshi, the nation’s largest prediction market, asserts federal oversight is sufficient: “We are regulated at the federal level, but given now the popularity of prediction markets, we are doing a lot of educating on the state level,” said Sara Slane, Kalshi’s head of corporate development. “That’s the dialogue we’ll envision having in Texas.”
The issue has grown more urgent after Kalshi fined three congressional candidates for wagering on their own races. In one case, it penalized Zeke Enriquez with a $784 fine and a five-year ban after he purchased less than $100 in contracts tied to his GOP primary.
Sportsbooks are also entering the space. DraftKings and FanDuel now offer prediction-market products available to Texans despite Texas’ longstanding opposition to online sports betting.
DraftKings cited “clear consumer interest” in Texas and noted its platform is designed “to enhance the fan experience while making available responsible engagement tools.”
Carol Ann Maner, chair of the Texas Coalition on Problem Gambling, emphasized the risks: “It would be almost like malpractice on our part to pretend not to know that this would be harmful.”
Patrick has long opposed expanding gambling in Texas, and opponents hope his directive signals a broader pushback. “Maybe it was stretching a little bit to read too much into that, but it says that he’s paying attention,” Coleman remarked.
Still, the legal battle may ultimately be decided in federal court. Several cases are already moving through appeals courts, and both sides expect the U.S. Supreme Court to eventually weigh in.
