TLDR
- Texas Lt. Gov. Dan Patrick has added prediction markets to the state’s interim study agenda ahead of the 2027 legislative session
- Patrick’s directive accuses prediction markets of exploiting federal law to bypass Texas gambling prohibitions
- The Senate State Affairs Committee will study the overlap between federally regulated derivatives and state gambling laws
- Texas remains one of the most gambling-restrictive states in the U.S. and has not legalized sports betting
- More than a dozen states and federal lawmakers have introduced legislation targeting prediction markets this year
Texas Lt. Gov. Dan Patrick has put prediction markets in his crosshairs. In a list of interim charges released on March 27, Patrick directed state lawmakers to study what he called the “sudden inundation of prediction market gambling.”
The directive was included in instructions to the Senate State Affairs Committee. It asks lawmakers to examine how prediction markets may be exploiting federal law to get around Texas gambling rules.
Patrick used pointed language in the charge. He referenced “the exploitation of federal law to circumvent Texas gambling prohibitions by allowing users to place bets on the outcome of elections and other events.”
The committee was also told to look at the relationship between federally regulated derivative markets and state-prohibited gambling. The charge ended with a call to protect the integrity of Texas elections and sports.
Texas does not hold a regular legislative session in 2026. But interim charges like these typically set the direction for the next session in 2027.
Texas Has a Long History of Blocking Gambling Expansion
Patrick’s stance is not new. He has consistently opposed gambling expansion during his time as lieutenant governor. In past sessions, he vowed the Senate would not even consider gambling expansion bills.
Texas is one of a small number of states that has not legalized sports betting. Efforts to bring casino gaming to the state have also repeatedly failed.
Even Las Vegas Sands has spent millions lobbying and supporting political candidates in Texas without success. The state has remained firm in its opposition.
Recently, Texas authorities have cracked down on unregulated gambling operations. That includes raids on social poker rooms and illegal gaming parlors disguised as arcades.
Given that track record, prediction markets are likely to face a tough policy environment in the state. Patrick’s language suggests lawmakers may try to redefine prediction markets under state law or restrict access to certain types of contracts.
Prediction Markets Face Scrutiny Across the Country
Texas is not alone in looking at prediction markets more closely. This year, more than a dozen states and federal lawmakers have introduced bills targeting event-based contracts.
Much of the attention has focused on contracts tied to elections and sports. These products increasingly resemble traditional betting in the eyes of regulators and politicians.
However, courts may end up deciding the issue before legislatures act. Ongoing lawsuits involving platforms like Kalshi and Polymarket are testing whether federal derivatives regulation overrides state gambling laws.
Key hearings are scheduled over the next month in multiple states, including Arizona and Nevada. These cases could set legal precedent on regulatory scope before Texas even reconvenes.
Many industry observers expect the question of who regulates prediction markets to eventually reach the U.S. Supreme Court.
Patrick is currently seeking a fourth term as leader of the Texas Senate. His inclusion of prediction markets alongside election security and gambling loopholes shows how the products are being framed politically at the state level.
