Texas to Examine Prediction Markets in 2027 Legislative Session

• Gov. Dan Patrick wants Texas State Senate to examine prediction markets next year
• Election event contracts mentioned in his list of priorities
• Sports wagering isn’t legal in the state

In some form, the Texas State Senate will take up the issue of prediction markets during the 2027 legislative session per a directive from Lt. Gov. Dan Patrick (R-TX).

On Friday, Patrick unveiled his list of priorities he wants lawmakers in the upper house to mull over prior to returning for the 2027 session. Among eight issues he wants members of the State Affairs Committee to chew on is the closing of so-called “gambling loopholes.”

“[To] Study the sudden inundation of prediction market gambling and the exploitation of federal law to circumvent Texas gambling prohibitions by allowing users to place bets on the outcome of elections and other events,” a document issued by Patrick’s office stated.

The lieutenant governor is asking members of that committee to study “the relationship between federally regulated derivative markets and state-prohibited gambling” and then make recommendations relevant to bolstering the integrity of Texas elections and sports.”

Texas an Interesting Prediction Markets Case Study

Though not to the extent of a smaller number of other states, such as Hawaii and Utah, Texas, politically speaking, is anti-gaming with Patrick famously ranking among the most gaming-opposed politicians in the Lone Star state.

Due in part to sports wagering not being legal in Texas, there is some evidence that prediction markets are gaining traction there, but the state isn’t among those where politicians or regulators are applying scrutiny to yes/no exchanges.

While state lawmakers haven’t focused on prediction markets as of yet, Rep. Greg Casar (D-TX), who represents the Austin area in Congress, partnered with Sen. Chris Murphy (D-CT) to introduce the Banning Event Trading on Sensitive Operations and Federal Functions Act.

If signed into law, the bill would ban prediction markets from offering derivatives on government actions, terrorism, war, and other events where prospective bettors can affect outcomes.

California Taking a Hard Line

Patrick’s directive for Texas state senators arrived on the same that California Gov. Gavin Newsom (D) announced state officials there will be barred from leveraging insider knowledge for profit on prediction markets.

“The ban further extends these prohibitions to prevent appointees from using insider information to help others, including spouses, children, other family members, business partners, or others, profit from such information,” according to a statement.

Earlier this month, Mia Bonta (D-Alameda) was among the California lawmakers to introduce a bill aimed at limiting advertising by sportsbooks and yes/no exchanges.

Bonta is the wife of Attorney General Rob Bonta who’s a major benefactor of campaign contributions from California tribal casino operators.