Texas Scrutiny Grows as Prediction Markets Operate Despite State Gambling Ban

State of Play’s TL;DR

• Prediction markets remain available in Texas even though the state bans most traditional gambling.
• That has prompted concern from lawmakers and the Texas Medical Association over oversight and youth access.

Prediction markets are available in Texas even though the state bans most gambling and sports betting under Texas Penal Code 47.

That disconnect is now drawing scrutiny from state lawmakers and health advocates, with a Senate hearing scheduled for Sept. 15.

Texas TV station KSAT reported that several platforms – including DraftKings Predictions, Polymarket, and Kalshi – are operating in the state. The story highlights a growing clash between Texas’ gambling restrictions and the federal framework some prediction market operators say governs their products.

Texas officials and health advocates are questioning the gap in oversight

The Texas Medical Association is urging platform operators to raise the minimum age for their products to 21. The association said the lack of state oversight is a concern for young Texans, especially given broad access and marketing that it believes could contribute to addiction and debt.

One study from last year found that more than 35% of boys ages 11 to 17 said they had gambled. Another study showed 58% of surveyed 18- to 22-year-olds took part in at least one sports betting activity.

Polymarket told KSAT that its US business views prediction markets as regulated by the Commodity Futures Trading Commission under a federal framework, “not a patchwork of state rules.” That position goes to the heart of the debate: whether these products fall outside the state-by-state model that governs most US betting and gaming.

Next up is an interim hearing before the Texas Senate Committee on State Affairs at 9 a.m. Tuesday, Sept. 15. The committee plans to examine how predictive markets may be exploiting loopholes in Texas law.

No vote is expected at that hearing. But for operators, regulators, and responsible gambling advocates, the session could offer an early signal of how aggressively Texas wants to challenge prediction markets going forward.

Based on reporting by Pachatta Pope for KSAT.com.