Texas Could Be Back in Play for Kalshi Enforcement After Midterms, Analyst Says

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Texas may be back in play for state enforcement against the prediction exchange Kalshi after the Democratic Party swept statewide elections in Texas and Georgia, according to Deadspin, which cited Miami Law School professor and legal analyst Daniel Wallach.

Wallach: Texas and Georgia results change the enforcement outlook

Kalshi is described by Deadspin as the country’s most prominent CFTC-regulated prediction exchange. Wallach posted on Tuesday evening, after the midterm results, that "For prediction market litigation watchers, Georgia and Texas may be the two biggest developments of Election Night."

He added: "Under the status quo, there was no prospect of state enforcement against Kalshi. In one night, two of the country’s most populous states may be back in play."

Deadspin’s headline asks whether Texas and Georgia will bring legal action against prediction markets in early 2027. The article reports no filing or ruling in either state.

PlayTexas reported in October that Texas Sen. Ted Cruz plans a state authorization bill for prediction markets.

Second Circuit ruling moves New York and Connecticut closer to geo-restrictions

Deadspin also points to ongoing state efforts in New York and Connecticut against prediction market sports contracts. The Second Circuit denied motions by Kalshi and Coinbase for injunctions pending appeal, a ruling that brings both states one step closer to forcing prediction markets to geo-restrict sports contracts.

Wallach anticipates that Kalshi and other platforms will likely be forced to geofence at least sports-event contracts in New York and Connecticut by early 2027. Deadspin says blocking those contracts in the two states would restrict roughly 15% of the US population.

According to Deadspin, serious challenges to the legal classification and market availability of sports contracts will persist until newly elected officials take office and begin working on policy decisions.

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Source: As reported by Deadspin.