Ted Cruz to file bill giving states control over sports prediction markets

A bill granting state and tribal governments say over sports contracts sold by prediction markets is being drafted by US Senator Ted Cruz, Bloomberg Law reported. He plans to introduce it once the November 3 midterm elections are over. As of now, the text is absent from Congress' website.

Under the measure, operators of prediction markets could not list contracts tied to gambling activities, sports betting among them, unless the state or tribe with jurisdiction approves. Sports contracts would remain permitted in principle rather than being prohibited. Today, exchanges holding CFTC registration, Kalshi included, sell sports event contracts across the country within a federal framework.

Filing the bill only after the midterms would give Congress a narrow window to enact it prior to the close of the 119th Congress in early January. Unlike this plan, separate bills in Congress seek a full ban on sports and casino-style contracts traded on CFTC-regulated exchanges; among them are the Prediction Markets Are Gambling Act and the Fair Markets and Sports Integrity Act.

Texas, where Cruz is from, stands to feel the impact strongly. Sports betting and casinos are both banned there, and Lieutenant Governor Dan Patrick has long blocked legalisation: a sports betting bill cleared the Texas House in 2023 yet he kept it from reaching the Senate floor, and attempts in 2025 likewise came up short. According to Eilers & Krejcik Gaming, 43% of Kalshi's trading volume came from Texas and California, while the 19 states where online sports betting is not legal made up 69% of that volume.

Patrick earlier this year tasked the Senate State Affairs Committee with examining prediction market gambling and proposing ways to safeguard the integrity of Texas elections and sports. In September the panel received testimony from Robert DeNault, Kalshi's Head of Enforcement, and Tres York, a Vice President at the American Gaming Association. DeNault cautioned that a prohibition on prediction markets might drive Texans to unregulated offshore platforms, whereas York maintained that sports and parlays generate 85% of Kalshi's volume.

Attorneys general from 39 states and the District of Columbia have backed New Jersey's petition urging the US Supreme Court to review a ruling on Kalshi's sports contracts; Texas Attorney General Ken Paxton is not among them.

Utah Attorney General Derek Brown then brought a state court suit against Kalshi and two Susquehanna trading entities, aiming to halt their Utah operations and claw back profits. The earlier decision is now being appealed by Kalshi.

Cruz raised concerns about prediction markets at a 20 May Senate Commerce subcommittee hearing on sports betting integrity and prediction markets. He described sports event contracts as "for all intents and purposes, sports bets" and called on Congress to address disagreements over the CFTC's authority.

"There is serious disagreement about whether the CFTC can unilaterally allow prediction markets to offer sports events contracts pursuant to the Commodity Exchange Act," Cruz said. "Many simply see prediction markets as a workaround to state gambling laws. The courts are split. Ultimately, unless Congress acts, the Supreme Court may have to decide the issue."

Regulators in the Trump administration have taken a different course. An interim final rule adopted by the CFTC, effective Monday, keeps casino-style gambling products, sportsbook wagers among them, outside the definition of swaps when state- or tribal-supervised operators offer them off-exchange. A companion proposal would place event contracts, sports contracts included, within the agency's jurisdiction as swaps.