Kalshi warns Texas Senate: a prediction market ban sends bettors offshore

A Kalshi executive warned a Texas Senate committee this week that banning federally regulated prediction markets would drive Texas bettors to offshore operators instead, as the state weighs how to treat the fast-growing platforms.

Robert DeNault, Kalshi’s head of enforcement and legal counsel, testified before the committee alongside Tres York, vice president of the American Gaming Association, the trade body for the US casino industry, which said in a post on X that its testimony put the case for treating the platforms as gambling.

“You can go the combative route and ban something that’s federally regulated. But what you’ll end up with is a bunch of customers in Texas just going offshore,” DeNault told lawmakers. He argued that prediction markets regulated by the Commodity Futures Trading Commission offer a safer alternative than offshore operators with no comparable consumer protections.

York urged the state to go the other way. York advised Texas to seek an order requiring prediction markets to geofence their platforms, meaning to block access statewide, and to pursue litigation in state court. “Prediction markets think they can mess with Texas. I hope you prove them wrong,” York said. The American Gaming Association, in its own statement, called the platforms backdoor sportsbooks operating in states without legal betting.

High volumes at stake

Sports betting remains illegal in Texas, yet the state is one of the largest sources of sports-event contract activity in the country. Research from Eilers & Krejcik Gaming found that 43% of US sports-event contract activity comes from Texas and California combined.

The money on the table is substantial. Trading on the Dallas Cowboys and New York Giants game on 13 September topped $208 million across US markets. Kalshi’s volume on that single game exceeded any NFL regular-season game last year, and the platform reportedly posted its two biggest trading days ever in mid-September, with a combined $4.9 billion in contract volume.

Senator Bob Hall, who chaired the hearing, pressed witnesses on how Texas should proceed.

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