Texas Atty. Gen. Ken Paxton has spent years taking hardline positions against gambling, but he has stayed out of the growing state-led campaign against Kalshi and other prediction markets.
Money could be part of that equation. Politico reported that Kalshi gave $5,000 to Paxton’s Lone Star Liberty PAC in May 2025, followed a month later by a $7,000 contribution from Kalshi co-founder and CEO Tarek Mansour to Paxton’s Senate campaign. He is in the midst of a tight race with Democratic candidate James Talarico.
The donations do not establish a quid pro quo, and neither Paxton’s campaign nor attorney general’s office commented on the report. But the contrast is hard to ignore as Paxton has challenged other forms of online gambling while declining to join colleagues across the U.S. in a broad legal and political push against prediction markets.
Kalshi money and Paxton’s silence
The reported $12,000 in contributions came as Kalshi was scaling its political presence and entering a period of expanding legal fights with state regulators. Mansour and fellow Kalshi co-founder Luana Lopes Lara have contributed more than $1 million in the 2026 election cycle, with a larger share directed toward Republicans than Democrats.
For Paxton, the issue is not simply that he has yet to sue Kalshi. Texas has not joined the bipartisan state coalitions that have filed briefs arguing prediction market platforms are operating what amounts to unlicensed sports betting, nor has Paxton’s office joined the Commodity Futures Trading Commission-related lawsuits challenging the federal regulator’s attempt to claim exclusive authority over the industry.
That absence is notable given Texas’ overall gaming posture. Texas remains one of fewer than a dozen states that prohibit online sports betting, and Paxton’s office previously concluded that daily fantasy sports contests offered by DraftKings and FanDuel constituted illegal gambling under Texas law.
Paxton’s earlier fantasy sports opinion led to years of litigation with DraftKings. The company eventually dropped its lawsuit against the attorney general.
Patrick wants loophole closed
Paxton’s position puts him at odds with Texas Lt. Gov. Dan Patrick, one of the state’s most consistent opponents of gambling expansion and a leading obstacle to sports betting and casino legalization in Texas.
In March, Patrick directed the Texas Senate State Affairs Committee to study what he called the “sudden inundation of prediction market gambling” and the exploitation of federal law that allows platforms to operate in Texas without a state gaming license.
Patrick asked senators to examine the relationship between federally regulated derivatives markets and state-prohibited gambling, including whether lawmakers should close the gaps that allow event contract platforms to list markets on sports, elections and other real-world outcomes. He also instructed the committee to recommend protections for the integrity of Texas elections and sports ahead of the 2027 legislative session.
The Texas lieutenant governor’s position is straightforward: Prediction markets may describe themselves as financial exchanges, but the products look like gambling and are operating in a state that has otherwise chosen not to legalize online sports betting.
States line up against prediction markets
Paxton has declined to join an unusually broad group of state attorneys general opposing the prediction market industry. In April, attorneys general from 38 states and the District of Columbia filed an amicus brief supporting Massachusetts’ challenge to Kalshi’s sports contracts.
The coalition included Republican and Democratic attorneys general from states with wildly different gambling laws, including Nevada, New Jersey, Ohio, Arizona, Illinois, Michigan, Connecticut, New York, Utah and Texas neighbors Oklahoma, Louisiana and New Mexico
Since then, the opposition has only grown. Forty-four states have aligned in arguing that prediction market products are effectively unlicensed gambling, pointing to consumer safeguards, tax revenue, sports integrity and state and tribal authority over gaming.
Paxton has not joined that broader effort, even as other conservative attorneys general have signed on. His absence is particularly conspicuous because the United States Court of Appeals for the Ninth Circuit recently ruled that Kalshi’s sports event contracts are likely sports bets rather than swaps protected from state gaming law.
Prediction markets fight likely headed to Supreme Court
The jurisdiction fight is likely now headed toward the United States Supreme Court. New Jersey filed a petition this week asking the justices to review the Third Circuit’s decision that protected Kalshi from New Jersey enforcement, and the petition arrives after the Ninth Circuit reached the opposite conclusion in Nevada.
The Third Circuit held Kalshi’s sports contracts were CFTC-regulated swaps subject to exclusive federal jurisdiction. The Ninth Circuit ruled that the products are likely gambling contracts and said the Commodity Exchange Act does not prevent Nevada from enforcing its gaming laws.
That circuit split is the kind of conflict that can prompt Supreme Court review. It also puts Paxton’s inaction into sharper relief. If the court takes the case, Texas could eventually be bound by a national decision about whether prediction markets may offer sports contracts in a state that has not authorized legal online sports betting.
