Texas Senate Eyes Prediction Markets Crackdown

Texas lieutenant governor Dan Patrick has eyed a prediction markets crackdown since April. After a recent hearing, it looks like the Texas Senate is right there with him.

Texas lawmakers spent Sept. 15 questioning Robert DeNault, the head of enforcement at Kalshi. Kalshi, alongside Polymarket, has become the face of whether prediction markets qualify as sports betting or not. The federal government has sided with prediction markets, while most states have wanted a legal prediction markets crackdown, either through a Supreme Court decision or legislation.

Patrick, who serves as head of the Texas Senate as lieutenant governor, is a major opponent of legal sports betting. Texas has never come close to legalizing the practice, largely because of Patrick. He has served as lieutenant governor since 2014, and has adamantly refused to hear any bills that don’t come from Texas Republicans.

As Patrick essentially heads the party in the Senate, that’s effectively killed any gambling legalization efforts in Texas. Texas Republicans could theoretically go against him, but that would require a bipartisan effort. Given how powerful Patrick is and his willingness to use his power, none have challenged him.

This, however, appears to be a situation where the sides are united. During questioning, the senators took a hostile approach toward Kalshi.

“I’m just a simple engineer from East Texas,” Sen. Bob Hall (R-Edgewood) said. “But I can read our Constitution and understand what it says…it is gambling; it doesn’t matter how it’s done, and the Constitution says it’s illegal to do it.”

Why Is Patrick Waiting On a Prediction Markets Crackdown?

While Patrick wants to put a stop to prediction markets in Texas, he has two main reasons to wait to do so. The first is that the Texas legislature only meets to discuss legislation in odd-numbered years. Although the governor can call a special session for emergencies, that’s not going to happen with regards to prediction markets.

That’s because of the second reason: opposing prediction markets risks angering President Donald Trump. Trump and his allies have come out strongly in favor of prediction markets, and the president has shown no hesitation in opposing Republicans who go against him on policies he cares about.

Recent polls have Patrick in a tight race for re-election against Rep. Vikki Goodwin (D-Bee Cave). If Trump tells Republicans not to support him in November, that could end Patrick’s hopes of securing a fourth term as lieutenant governor.

Would a Goodwin Victory Change Things for Prediction Markets?

Probably not. Goodwin has previously expressed support for letting Texas voters decide if they want casinos and sports betting in the Lone Star State. But those entities would be state-regulated and pay taxes to Texas.

Prediction markets avoid state regulations, which has led Republicans and Democrats alike to oppose them. Based on her support for traditional sportsbooks and casinos, Goodwin is far more likely to agree with Patrick in opposing prediction markets. That means a prediction markets crackdown attempt will likely come in 2027 no matter who wins.

The one potential change is if the Supreme Court takes the decision out of Texas’ hands. But that also wouldn’t come until 2027 at the earliest.

What Dates Are Important to Watch?

Early voting in Texas starts on Oct. 19, and Election Day is Nov. 3. If the Supreme Court decides to take another state’s case regarding a prediction markets crackdown, that would become the most important date to watch. Such a decision would likely come in October.

If the Supreme Court does not take the case, the next date to watch is Jan. 12, 2027. That’s when the Texas legislature begins its four-month session.