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Lt. Gov. Dan Patrick issued new interim charges to the Texas Senate on Friday, March 27, signaling an aggressive move to regulate—or potentially shutter—the state’s burgeoning prediction market industry.
The directive comes as “gray market” platforms like Kalshi and Polymarket gain a foothold in the Lone Star State, even as traditional sports betting and Texas online casino expansion remain stalled.
Prediction markets draw integrity concerns
Patrick instructed the State Affairs Committee to study the “sudden inundation” of prediction markets. These platforms currently operate through a federal loophole, treating event contracts as derivatives rather than traditional wagers. This allows Texans to legally bet on election outcomes and sports results despite the state’s strict bans on sports wagering and casino gaming.
Patrick’s charge seeks recommendations to “ensure the integrity of Texas elections and Texas sports.” The move reflects growing concern among anti-gambling advocates that these platforms could influence voter behavior or create “insider trading” risks. Any legislative action in 2027 could formally redefine these contracts as illegal gambling under Texas law.
Texas casino interests face 2026 primary setbacks
The push against prediction markets follows a difficult primary season for pro-gambling interests. A news post by The Texas Tribune stated that earlier this month, a slate of anti-gambling incumbents successfully fended off primary challenges funded by the Texas Sands PAC.
Billionaire Miriam Adelson’s Las Vegas Sands empire reportedly spent millions to unseat GOP hardliners like Reps. David Lowe and Mark Dorazio. However, the failure to flip these seats means the legislative math for a 2027 casino constitutional amendment remains daunting. According to news by KSAT.com, Mark Jones, a political science fellow at Rice University, noted that Sands is “further away” from destination resorts in 2026 than it was in 2023.
Chaos at the Texas Lottery Commission
Further complicating the landscape is the recent abolition of the Texas Lottery Commission. The agency was shuttered earlier this year following a corruption scandal involving a winning ticket sold by an online courier service. While the state is working to transition lottery operations to a new oversight body, the vacancy has left a power vacuum in the state’s only legal form of mass wagering, providing Patrick more leverage to oppose new gambling expansions.
How the OBBBA impacts Texas high-rollers
Industry observers are also monitoring the impact of the federal One Big Beautiful Bill Act (OBBBA), which went into effect Jan. 1, 2026. The law introduces a significant hurdle for high-volume Texas bettors:
- Deduction Cap: Taxpayers can now only deduct 90% of their gambling losses against their winnings.
- The “Taxable Gain” Trap: Even a “break-even” gambler (e.g., $100k won, $100k lost) will now be forced to report $10,000 in taxable income.
Will the 90th session break the gambling deadlock?
Texas remains one of the few “big prizes” left for the US gambling industry, but Dan Patrick’s latest charges confirm his role as the primary roadblock. By targeting prediction markets, Patrick is moving to close the only remaining “loophole” available to Texas bettors before the 90th Legislature convenes in January 2027.
