Texas Officials Silent on Federal Prediction Market Oversight

Texas Attorney General Ken Paxton has not publicly stated why he declined to sign a July letter asserting state authority over prediction markets. This comes as Lieutenant Governor Dan Patrick seeks to close perceived “gambling loopholes” related to these online platforms.

What Happened

Texas Attorney General Ken Paxton has not provided a reason for his absence from a July letter signed by 44 state attorneys general, which asserted states’ authority to regulate online prediction markets, according to The Dallas Morning News. The letter specifically addressed the Commodity Futures Trading Commission’s (CFTC) proposed rules concerning these markets. Meanwhile, Lieutenant Governor Dan Patrick has expressed a desire for lawmakers to address what he terms “gambling loopholes” that facilitate online prediction markets in Texas, as reported by The Dallas Morning News.

The state of Texas has historically maintained a restrictive stance on gambling, with casino operations and online sports betting facing significant obstacles to establishment within its borders, The Dallas Morning News noted. Despite this, federal agencies have permitted certain prediction market platforms, such as Kalshi, to operate within the state. Kalshi maintains that its operations are legal due to federal oversight from the CFTC, categorizing its offerings as financial contracts rather than gambling, according to Noah Intelligence and NEXTPredict.

Key Details

• Attorney General Ken Paxton did not sign a July letter from 44 state attorneys general asserting state authority over prediction markets, as per The Dallas Morning News.
• Lieutenant Governor Dan Patrick intends to ask lawmakers to address “gambling loopholes” related to online prediction markets, according to The Dallas Morning News.
• Prediction market platforms like Kalshi operate in Texas under federal regulation by the CFTC, asserting their legality as financial contracts, according to Noah Intelligence and NEXTPredict.

Why It Matters

The situation highlights a jurisdictional conflict between state and federal perspectives on the regulation of prediction markets. While Texas officials, including Lieutenant Governor Patrick, view these platforms as a form of gambling that requires state-level intervention, federal regulators like the CFTC have permitted their operation, classifying them differently. This divergence creates regulatory uncertainty for operators and participants in the state. The Texas Tribune reported in May 2026 that Texas is examining prediction market limits, with federal regulations posing an obstacle.

The state’s historically strict approach to gambling contrasts with the federal allowance of certain prediction market activities, creating a complex regulatory environment. The lack of a public stance from Attorney General Paxton on the multi-state letter further complicates the ongoing debate over regulatory authority in Texas, as highlighted by The Dallas Morning News.

What’s Next

Lieutenant Governor Dan Patrick plans to bring the issue of prediction market regulation before state lawmakers, signaling potential legislative action to address what he perceives as “gambling loopholes,” according to The Dallas Morning News. The outcome of this legislative effort will likely depend on the interplay between state legislative intent and existing federal regulatory frameworks governing these markets.

Originally reported by The Dallas Morning News·Published 2 Sep 2026, 11:00