Texas Prediction Markets Face Legislative Scrutiny Amidst Continued Federal Oversight
Despite the state’s constitutional ban on gambling, platforms such as Kalshi and Polymarket remain operational, with findings from a new committee probe expected to shape policy in 2027.
Prediction market platforms including Kalshi, Polymarket, DraftKings Predictions, and OG Predictive continue to operate in Texas under federal Commodity Futures Trading Commission oversight, effectively bypassing the state’s constitutional ban on gambling. Lieutenant Governor Dan Patrick has directed a state Senate committee to investigate these platforms as a potential gambling loophole, with findings expected to influence legislative action in 2027.
The legal status of these markets is described as still developing, yet they remain fully operational across the state. Texas has never legalised retail or online sports betting despite repeated legislative attempts, making it one of the largest untapped sports betting markets in the country. This regulatory gap has allowed prediction markets to grow quickly among Texas sports fans, as sports event contracts fall under federal commodities law rather than state gaming law.
Kalshi is currently ranked as the top recommendation for Texas traders, citing the deepest liquidity of any US exchange. Its market menu covers sports lines and the 2026 Texas governor's race, operating as a Designated Contract Market under the CFTC. The platform is also one of the only services with sufficient order flow to support Texas-specific political markets, including statewide primary and general election contracts.
Polymarket is identified as the highest-volume prediction market for Texas residents, processing billions of dollars in monthly trading across sports, politics, and breaking news. While these platforms thrive, federal courts have previously blocked other states from enforcing similar restrictions against them. This precedent limits Texas's ability to ban the platforms even after the committee reports back on its findings.
The outcome of the state Senate committee's investigation remains unknown, as findings are not expected until 2027. It is uncertain whether the committee's findings will lead to legislative action or how such action might be implemented. For now, the platforms continue to accept new accounts, with terms and offers subject to change as the legal landscape evolves.
