Texas lawmakers spent Tuesday pressing Kalshi and the American Gaming Association across a pair of testy hearings on prediction markets, part of a series of interim hearings lawmakers are holding ahead of the 2027 legislative session. There was one Texas senator ready to draft legislation to protect Texans, and called on a responsible gambling expert for help.
Kalshi‘s head of enforcement and legal counsel Robert DeNault, AGA’s VP of government relations Tres York and problem gambling policy expert Brianne Doura-Schawohl testified across the Texas House and Senate hearings Tuesday.
Much of the discussion was to learn about how prediction markets work and how they operate in the Lone Star State, since Texas sports betting is illegal.
Texas senator wants legislation
Sen. Bob Hall noted during the Senate hearing that gambling is illegal in Texas outright, and it took constitutional amendments to carve out exceptions for the lottery and bingo. He also noted the various issues faced by the lottery which eventually led to the end of the Texas Lottery Commission.
He does not understand why the law is not being enforced against prediction markets already, calling the law “adequate” to do so.
“I think we’re going to have to do something with legislation to continue protecting the people because I think our founding fathers got it right,” Hall said. “Every time we have tried to do something in crossing the line to allow gambling, we have people that take advantage of it.”
Doura-Schawohl noted that 15 states have passed legislation to address prediction markets, with only six being successful, and half of those being challenged. Later in the hearing, Hall called on Doura-Schawohl’s help to review other states’ legislation so “Texas can be the first state in the nation to truly succeed.”
Hall: ‘Murder Incorporated’ could run under feds using Kalshi’s argument
There was plenty of quotable material in each of the hearings, with Hall dropping numerous, notable quotes.
Hall made the following comparison when addressing the different forms of gambling:
“They’re just dressed up differently. They’re different costumes on gambling is what it is. Wearing a different costume to the ball. Some have high heels and a tiara and others have on miniskirts or a bikini.”
Hall made another harsh comparison when commenting on the state’s power:
“If I follow your line of rationale with the federal government doing it, if they decided to set up ‘Murder Incorporated’ and said, ‘We’re going to regulate the murdering of people and so states you can’t do anything about it because it’s going to be federally regulated,’ I’d just find that absurd.”
DeNault then argued users would use offshore exchanges and sportsbooks. Instead, prediction markets and states can work together to “create constructive solutions, not just combative ones in court.” Hall responded:
“That’s kind of like, we’re going to give you some drugs so when we cut your throat, it won’t hurt so much. Our job is to protect the consumer. This is not anti-business in any way at all.”
Hall then referenced a famous quote attributed to John Quincy Adams on trying to protect Texans: “The duty is ours, the outcome is God’s.”
Play nice, gentlemen
The House hearing was a bit more testy than the Senate, especially when Jonathan Covey, Director of Policy at TEXAS VALUES, testified that Kalshi “made around” $1.8 billion during March Madness. DeNault took the microphone to clarify that volume does not equal handle, and that it likely netted around 1% of that.
Rep. Ken King restored order in the hearing.
“I’m about to make something clear,” King explained. “We don’t grab the microphone. We don’t talk over each other. When it’s your turn to be recognized, I will recognize you. But we’re not doing that. We’re not jumping back and forth. We ask the questions. You get your turn to rebut. But that’s the last time that’s going to happen in this hearing.”
Law, not language, is important
Rep. Richard Raymond and DeNault had a lengthy back and forth around the term “betting.” While DeNault characterized Kalshi’s platform as “trading,” he did admit that financial behavior can look like betting. However, he did say that Kalshi’s contracts do not fit Texas’ gambling definition.
King wrapped the hearing with a final statement:
“If you’re betting on whether or not Democrats are gonna beat Republicans, that’s not playing with dice or other than the phone, but actually what the code says ‘makes a bet on the result of any political nomination, appointment, or election.’ That’s what it says is prohibited. That’s in the definition of gambling in our state. I tend to agree.
“I mean, we’re not a judge or a jury here. There is no bill before us. We’re just gathering information. … If you don’t like it, and I may not like it, I’m not opposed to gaming. But I am opposed to ignoring state law and saying you’re doing something that you’re not.”
