Texas Lt. Gov. Dan Patrick has officially directed the Senate State Affairs Committee to study prediction markets and deliver policy recommendations ahead of the state’s 2027 legislative session, putting operators on notice in the second-most populated state in the country.

Patrick, who also serves as president of the Texas Senate, shared his priorities for the upcoming session with members this week. Among them: an instruction for the State Affairs Committee to examine what Patrick characterized as “the sudden inundation of prediction market gambling” and to “make recommendations to ensure the integrity of Texas elections and Texas sports,” The Texas Tribune reported.

Patrick’s framing conflicts with how platforms like Kalshi and Polymarket describe themselves, as CFTC-regulated derivatives markets, not gambling products.

That tension is already built into the committee’s mandate. The State Affairs Committee page states it will “examine the relationship between federally regulated derivative markets and state-prohibited gambling,” language that effectively puts the federal regulatory question at the center of any Texas deliberations.

Because the lieutenant governor serves as president of the Texas Senate, Patrick holds substantial sway over which legislation comes up for a floor vote. His decision to flag prediction markets as a 2027 priority makes it a live issue regardless of where individual senators stand.

Texas has taken a largely hands-off approach since prediction markets scaled nationally. No Texas state agency has issued guidance or enforcement actions against operators, as Nevada, Arizona, Massachusetts, and several other states have. The number of CFTC-regulated prediction markets available in Texas is now in the double-digits, and most of them joined the market in the past six months.

The legislature’s last session ended in mid-2025, making 2027 the first opportunity for members to act.

The State Affairs Committee is chaired by Sen. Bryan Hughes, whose own Senate page describes him as “the most conservative member of the Senate.” Despite that label, Hughes has not been uniformly hostile to gaming expansion. He previously sponsored legislation that would have authorized physical casinos in Texas and has received campaign donations from Las Vegas Sands Corp. and tribal gaming authorities, according to reporting by Kellen McGovern Jones of The Dallas Express. Sands has been among the most active corporate advocates for gaming expansion in Texas, suggesting Hughes may be more receptive to regulated markets than his ideological profile implies.

The vice chair is Sen. Angela Paxton, who also serves as Texas Senate Majority Leader, meaning she holds significant procedural influence alongside Hughes. Paxton is the ex-wife of Texas Attorney General Ken Paxton, a prominent figure in Texas Republican politics. She has voted against gaming expansion measures in the past, though without taking a particularly vocal public stance. Gaming interests have not appeared among her top 20 campaign donors since 2022, according to OpenSecrets.

The remaining committee members reflect a range of views on gaming that makes the committee’s ultimate posture toward prediction markets difficult to predict:

Hall, Hughes, and Perry are all up for reelection in November. Hall was the only one of the three to defeat a primary challenger, though all three face contested general election races. The composition of the committee could shift depending on those outcomes.

Any state effort to restrict prediction markets would almost certainly trigger federal preemption litigation. Kalshi has already invoked federal preemption arguments in state-specific legal battles, arguing that as a CFTC-designated contract market, state regulators lack jurisdiction over its products. A similar challenge in Texas, a state with roughly 30 million residents, would represent one of the highest-stakes preemption fights in the industry’s short history.

How much latitude Texas actually has may depend less on what happens in Austin than in federal court. Kalshi’s active preemption challenges in Nevada, Massachusetts and other states could produce rulings ahead of the 2027 session, and those decisions will shape the legal landscape the Texas legislation would have to navigate.

The 2027 Texas legislative session is not expected to convene until January 2027, giving the committee roughly nine months to conduct its study and develop recommendations. For now, prediction markets are officially on the Texas Senate’s agenda.

The post Texas Elevates Prediction Markets to 2027 Priority as Courts Shape the Rules appeared first on DeFi Rate.

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