Ted Cruz Eyes Prediction Market Legislation After Midterms

Senator Ted Cruz (R-TX) is already eyeing legislative priorities for the final weeks of the 119th Congress, including prediction markets.

According to a recent Bloomberg Law report, the Texas Senator plans to introduce a bill addressing state regulation of gambling-related contracts in prediction markets after the midterms. This comes amid growing legal disputes over whether federally regulated prediction markets can circumvent state gambling laws.

Although the bill has yet to be officially introduced by Sen. Cruz, he did hint at the issue during a Senate Commerce subcommittee hearing on sports betting integrity and prediction markets in May.

“There is serious disagreement about whether the [Commodity Futures Trading Commission] CFTC can unilaterally allow prediction markets to offer sports events contracts pursuant to the Commodity Exchange Act,” Sen. Cruz said.

This means the proposed legislation would require prediction markets offering gambling-related event contracts, including sports contracts, to obtain authorization from state or tribal governments. Kalshi, the federally regulated prediction market platform, is explicitly among the platforms that could be affected.

Kalshi has argued that federal oversight allows it to offer sports contracts nationwide, while some state regulators argue the platform must obtain state gambling licenses to operate legally. Several states have sued the platform over alleged violations of state gambling laws and its offering of sports event contracts without the required licenses.

Sen. Cruz also compares sports contracts to “sports bets,” pointing to the similarities between sports event contracts and traditional sports wagering, as well as concerns that prediction markets may bypass state gambling regulations.

“Many simply see prediction markets as a workaround to state gambling laws,” Sen. Cruz said. “The courts are split. Ultimately, unless Congress acts, the Supreme Court may have to decide the issue.”