Cruz Plans Bill Giving States Say On Prediction Markets

Sen. Ted Cruz, the Texas Republican who chairs the Senate Commerce Committee, plans to introduce legislation that would stop federally regulated prediction markets from offering gambling-linked event contracts unless a state or tribal government approves them. Bloomberg Law reported the plan on October 16, after obtaining details of the proposal.

According to Bloomberg Law, the measure is aimed at prediction markets that sidestep state gambling laws. Event contracts tied to gambling activities, including sports betting, would need authorization from a state or a tribal government before a federally regulated platform could list them.

The report says Cruz intends to file the bill after the midterm elections. As of the Bloomberg Law report, the text had not been made public and no bill number or co-sponsors had been announced, so details on how a state or tribe would grant approval, or exactly which contracts would count as gambling-linked, remain unconfirmed.

Why It Matters For Kalshi?

Kalshi and other CFTC-registered exchanges currently list sports contracts nationwide under a federal framework, and several states dispute that they can do so without state licences. 

Bloomberg Law described lawmakers from both parties as poised to step up efforts aimed at platforms such as Kalshi, at a time when the Trump administration is asserting federal control over the industry.

A state-or-tribe approval requirement would flip the default. Rather than operating nationally unless a court says otherwise, a platform would need permission first, state by state. That is close to how licensed US sportsbooks already work.

The Legal Fight Behind It

The proposal lands while the courts are split. Our coverage has tracked a Sixth Circuit ruling backing Ohio’s right to regulate Kalshi, a Ninth Circuit decision against Kalshi in a Nevada case, and a request in which New Jersey asked the Supreme Court to settle the question. 

Congress stepping in could resolve the dispute by statute rather than leaving it to the justices. Cruz has raised the issue before. 

At a May 20 Senate Commerce hearing titled No Sure Bets: Protecting Sports Integrity in America, the committee examined sports betting and the integrity of games. Cruz used his time to ask whether prediction markets operate within the law or infringe on state sovereignty, a framing that matches the approach in the planned bill.

What To Look Out For

Timing is the main constraint. A bill introduced after the midterms would arrive late in the current Congress, and a measure filed in the lame-duck session may need reintroduction in the next one unless it moves quickly. 

Watch for the bill text, any co-sponsors from either party, and how the CFTC and platforms respond. Until then, the plan is a reported intention rather than a filed proposal, and nothing changes for bettors today.