Proposed Bill Would See Prediction Markets Under State Regulation
Jesse M. Cox Published 19/10/2026
A bill proposal from Texas Senator Ted Cruz would move gambling elements of prediction markets to state regulation. Any event contract offered by a prediction market site that is related to gambling, including sports-event contracts, would be regulated by state gaming commissions. Cruz intends to introduce the bill when Congress reconvenes following the November midterm elections.
If passed, this bill would do serious damage to the cases being put forth by prediction market sites and the federal regulator of these sites, the Commodity Futures Trading Commission (CFTC), that prediction markets aren't gambling. It would support the case presented by state gaming commissions that these event contracts are betting.
The bill from Senator Cruz would change the prediction market landscape
Senator Cruz is a Republican from Texas. He believes that prediction market sites are skirting state gambling laws with the sports-event contracts that they offer.
His legislation would prohibit prediction markets from providing event contracts that are tied to gambling activities. This would include sports-event contracts. The only way to offer these prediction market event contracts would be through authorization by a state or a tribal government. This is all according to details of the bill that were obtained by Bloomberg Law.
Cruz's stance will also put him in direct opposition to President Donald Trump's opinion on the matter. Trump has backed the federal CFTC as the true regulator of prediction markets. He continues to assert that there is federal control over this burgeoning industry.
This bill would be supporting the argument states are making against event contracts
If this bill were to pass through Congress and become law, it would only serve to bolster the arguments being put forth in court by state gaming commissions and attorneys general. These entities have made the same argument in front of judges in courtrooms across the country. That argument states that the sports-event contracts offered by prediction market sites like Kalshi and Polymarket are nothing more than sports betting in disguise.
Cruz's bill would be offering the potential for state attorneys general to garner explicit congressional license to be able to treat sports-event contracts as gambling. That would mean prediction market sites would face the requirement of seeking a state gaming license in every state that is currently offering legal and regulated sports betting. It would necessitate the payment of licensing fees and the contribution of tax revenue to state coffers.
Prediction market platforms would face the challenge of gaining licenses in many states. Currently, they only require one federal registration.
Several courts have ruled in agreement with this concept in many states. A federal law codifying state jurisdiction would end any hope of restoring federal jurisdiction over prediction market event contracts. In the face of this legislation, the CFTC would likely need to rewrite the rules defining what a derivative swap is.
Cruz has long expressed concern over what prediction markets are offering
Cruz is Chair of the Senate Commerce Committee. In the role, he's been questioning whether prediction markets have the legal right to offer sports-event contracts.
"Are prediction markets operating within the law?" Cruz said during a Senate hearing in May. "Or are they defying the law and improperly infringing on state sovereignty?
“There is serious disagreement about whether the CFTC can unilaterally allow prediction markets to offer sports event contracts pursuant to the Commodity Exchange Act. Many simply see prediction markets as a workaround to state gambling laws.”