Update, 9 November 2026: DraftKings Denies Using Tech to Exploit Vulnerable Consumers in Congressional Letter
Sports betting companies FanDuel and DraftKings, alongside prediction market sites Polymarket and Kalshi, are advertising and taking wagers in Texas, where most forms of gambling are illegal. These platforms assert they operate as federally regulated derivative trading, exempting them from state anti-gambling statutes.
What Happened
Despite Texas constitutional provisions making it illegal to bet on the outcome of a game, an athlete’s performance, or a candidate’s electoral success, major sports betting firms like FanDuel and DraftKings are actively advertising in the state. Additionally, prediction market platforms such as Polymarket and Kalshi are accepting wagers on a range of events, from sports to politics, according to The Dallas Morning News.
Rob Kohler, a former Texas Lottery executive and lobbyist for the Baptist General Convention of Texas, explained that these companies operate by classifying their activities as a form of derivative trading. They claim regulation by federal authorities, typically overseeing commodities and futures, which they contend supersedes state-level anti-gambling laws, as reported by The Dallas Morning News.
Key Details
- FanDuel and DraftKings are advertising and taking bets in Texas, where betting on game outcomes or athlete performance is illegal under the state constitution, according to The Dallas Morning News.
- Prediction market sites Polymarket and Kalshi accept wagers on sports and political outcomes in Texas, operating under the assertion that they are federally regulated derivative trading platforms, The Dallas Morning News reported.
- Kalshi stated to The Dallas Morning News that its platforms are regulated by the U.S. Commodity Futures Trading Commission (CFTC), similar to how the SEC regulates stock markets, and that state anti-gambling laws do not apply to them.
- Utah’s Attorney General Derek Brown filed a lawsuit against Kalshi, alleging it runs an “online casino” in violation of Utah law, according to a news release cited by The Dallas Morning News.
- Texas is not among the almost 40 states challenging these gambling outlets, according to information provided by Rob Kohler in The Dallas Morning News.
Why It Matters
The operational presence of these platforms in Texas highlights a tension between federal regulatory frameworks for derivative markets and state-level anti-gambling statutes. The classification of prediction markets as derivative trading allows these entities to potentially bypass state prohibitions, creating a regulatory ambiguity that has been exploited in Texas, according to Rob Kohler, as reported by The Dallas Morning News. This situation underscores a broader debate on jurisdiction and the interpretation of gambling laws in the digital age, particularly in states like Texas that have historically maintained strict prohibitions on most forms of wagering. The Dallas Morning News article suggests that Texas has not actively challenged this expansion, unlike nearly 40 other states.
What’s Next
Rob Kohler expressed hope that the “next Texas attorney general will do their job the way they’re supposed to be doing it” regarding these predictive markets, as reported by The Dallas Morning News. This suggests potential future legal or regulatory action from the state, although no specific timeline or commitment was provided in the source material.