Texas Lawmakers Turn Attention to Prediction Markets as Scrutiny Intensifies

Texas Lt. Gov. Dan Patrick has ordered a Senate review into prediction markets, placing the sector among priority issues before the next legislative session. The directive reflects growing concern around platforms operating in a state that still bans most forms of gambling. 

Patrick tasked the State Affairs Committee with examining how these platforms fit within the state’s existing legal framework. Kalshi and Polymarket, along with other prediction market operators, have expanded access to event-based contracts tied to real-world outcomes, attracting users despite restrictions on sports betting and casinos. 

The review is expected to focus on how quickly these prediction market apps have spread across the state and how easily residents can access them. Lawmakers will also examine whether prediction markets could influence elections, a point that has gained attention as political contracts become more common.  

Concerns around sports integrity are also included, even though there is no Texas sports betting market.

Texas law continues to limit most wagering activity, but enforcement lines have blurred as federally regulated platforms expand. The Senate review is expected to clarify how state law applies and whether new legislation is required. 

The focus broadly mirrors priorities outlined by House Speaker Dustin Burrows earlier in the week. Still, Patrick’s emphasis on election risks stands out. That angle points to possible tighter controls or a more direct attempt to restrict access when lawmakers return to session. 

Washington lawsuit adds pressure on Kalshi 

Pressure on the sector is not limited to Texas. Washington State filed a lawsuit against Kalshi on March 27, alleging the company operated illegal online gambling through its contracts platform. 

The complaint states that residents in the Washington sports betting market could access markets tied to sports, elections, entertainment, and other future events. Users were able to deposit funds, place bets statewide, and pay transaction fees on both web and mobile platforms. 

State officials argue Kalshi’s product range widened after its 2021 launch. What began with limited offerings expanded into political markets and sports-related contracts. The filing describes additional formats, including spread-style wagers, totals, prop bets, and multi-selection combinations structured through pricing requests. 

Washington alleges these activities meet the state’s definition of gambling and amount to professional gambling and bookmaking. The complaint also points to contracts tied to local political races and college basketball, as well as to non-sports events such as public hearings and global developments. 

After the filing, Kalshi moved the case from King County Superior Court to the US District Court for the Western District of Washington. The company argued the dispute falls under federal law, citing the Commodity Exchange Act. 

Washington is seeking a ruling that the conduct is unlawful. The state is also pursuing a permanent injunction, financial penalties, restitution, and recovery of funds it claims were lost by residents.