Why Texas Lawmakers Are Watching Prediction Markets

If you watch sports in Texas there is no doubt that you have seen dozens of ads promoting sports gambling, even though it's technically illegal in the Lone Star State. While many of those apps are still blocked in Texas there seems to be a legal gray area in regard to prediction markets which can produce very similar-looking sports wagers.

Texas Lawmakers Are Looking at Prediction Markets

Last week, the Texas Senate State Affairs Committee and the Texas House State Affairs Committee both met with experts on prediction markets. Unlike sportsbooks, which are regulated under state gambling laws, prediction markets are licensed by the Commodity Futures Trading Commission (CFTC). While prediction markets offer ‘sports markets’ that are similar to sports gambling, there are some differences on the back end.

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So What Exactly Is a Prediction Market?

Instead of making money when a customer loses their bet like a traditional sportsbook would prediction markets charge a small fee to execute each trade. But the types of ‘trades’ they offer look exactly like a traditional sports bet.

As you would expect, sportsbooks are not happy as they feel this is a backdoor way to enter the Texas market that they have been blocked from entering. Recent reporting says Kalshi gave $5,000 to Paxton's PAC and CEO Tarek Mansour gave Paxton's Senate campaign $7,000.

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What Happens Next in Texas?

The prediction market setup nationwide legally has a lot of gray area. And it looks like this battle is headed to the Supreme Court. Texas has not taken any legal action toward any prediction market as of yet.

It will be interesting to see how this continues and if it eventually leads to legalized sports betting in Texas which could lead to legalized gambling. With many Texans taking their money to bet in surrounding states, how do you feel about this. Should we legalize gambling in Texas? Let me know your thoughts by sending me an email at billy.jenkins@townsquaremedia.com.