Ted Cruz plans state and tribal approval bill for gambling-linked prediction markets

Sen. Ted Cruz plans to introduce legislation after the Nov. 3 midterm elections that would require state or tribal authorization before federally regulated prediction markets could offer contracts tied to gambling, including sports betting.

The proposal would seek to prevent platforms from bypassing state gambling laws. Bloomberg Law reported details of the planned bill on Oct. 16. Cruz, who chairs the Senate Commerce, Science and Transportation Committee, had not introduced the measure or released its text as of Oct. 22.

Key details therefore remain unsettled. Reporting has not established whether the requirement would reach all event contracts or only gambling-linked ones, how states and tribes would give approval, which statute the bill would amend, or whether Cruz has co-sponsors. No bill number, effective date or committee referral was public.

Cruz had raised the issue at a May Senate Commerce subcommittee hearing on sports integrity, asking whether prediction markets were operating legally or “improperly infringing on state sovereignty.” Operators characterize sports contracts as financial products subject to exclusive Commodity Futures Trading Commission oversight, while states and tribes argue they are sports wagers governed by their licensing rules.

The dispute has produced conflicting court decisions. A divided Third Circuit panel sided with Kalshi in its April dispute with New Jersey, but the Ninth and Sixth Circuits reached the opposite conclusion in August and September. New Jersey has asked the Supreme Court to take Flaherty v. KalshiEX, backed by 39 states and the District of Columbia; Kalshi’s response is due Nov. 9.

Tribal authority is also part of the legal argument. The Cabazon Band of Cahuilla Indians told the Supreme Court that Kalshi had accepted sports wagers on its California reservation, where sports betting is prohibited, and said the Third Circuit’s reasoning weakened tribal power under the Indian Gaming Regulatory Act.

The CFTC has separately proposed amendments on when event-contract derivatives may be contrary to the public interest and therefore barred from listing or clearing on a registered entity. The agency says such platforms recorded more than $25 billion in trading volume in 2025, and maintains that Congress gave it exclusive jurisdiction over swaps and futures transactions covered by the Commodity Exchange Act.

Cruz’s prospective bill would join an already crowded congressional debate. Sens. Adam Schiff and John Curtis have introduced the bipartisan Prediction Markets Are Gambling Act, which would prohibit CFTC-registered entities from listing prediction contracts resembling sports bets or casino-style games. That bill remains in the Senate Agriculture, Nutrition and Forestry Committee.

Utah sued Kalshi in state court on Oct. 20, alleging that its event contracts amount to illegal gambling. Disputes involving prediction markets are also under way in Ohio, Michigan and Missouri.