Texas bill would set a 21-year minimum for prediction-market trading

Texas Rep. Salman Bhojani has prefiled H.B. 598, a proposal that would bar people younger than 21 from trading prediction-market event contracts while imposing location checks, advertising limits and restrictions on contracts tied to deaths, crime, war and other sensitive events.

The bill would apply to operators that offer event contracts to people physically located in Texas, wherever the operator itself is based. It defines prediction markets as exchanges or platforms for contracts whose value depends on the occurrence, outcome, timing or magnitude of future events.

Before allowing trading, operators would have to use commercially reasonable measures to establish whether a participant is in Texas and block access to prohibited contracts. They could not knowingly help someone evade those controls through a virtual private network or proxy server.

Participants in Texas would have to be verified as at least 21 through a commercial system using government identification or public and private transactional data. An operator could not rely solely on an individual's self-reported age or date of birth, and would have to promptly remove trading access when it knew or had reason to know that an underage person had gained it.

The measure would also limit how operators handle data collected solely for age checks. They could use or sell that information only for age verification, fraud prevention or legal compliance.

H.B. 598 would prohibit contracts based on criminal investigations and proceedings, pending civil cases, executions and clemency decisions, and an individual's death, illness or health status. Its restrictions would also cover suicide and overdoses; kidnappings and assassination attempts; terrorism and mass violence; war and military strikes; disasters; disease outbreaks; and immigration-enforcement actions.

The proposal does not target sports event contracts. It also explicitly says it would not authorize, legalize or license gambling, sports wagering or conduct otherwise prohibited under Texas law. Authorized insurance contracts, pari-mutuel wagering, the state lottery, and legally conducted bingo and raffles would be outside its scope.

Advertising aimed primarily at people under 21 would be prohibited, as would marketing on school premises or through paid promotional agreements with primary or secondary schools. Operators could not use people under 21 to promote event-contract trading, and Texas advertisements would have to clearly state the minimum age. The Texas Medical Association had previously advocated a 21-year threshold, arguing that teenagers could be vulnerable to problematic wagering habits from high-speed yes-or-no exchanges.

The Texas attorney general could seek injunctions, civil penalties or other relief against knowing violations. General penalties could reach $10,000 per violation, while allowing an under-21 person to trade could bring penalties of up to $25,000. Each prohibited contract, underage participant and prohibited advertisement would count separately.

The filing sets up a potential conflict with federal rules for designated contract markets. DefiRate reported that Commodity Futures Trading Commission rules allow trading from age 18, and that the agency has contested state prediction-market statutes in Illinois, Kentucky and Minnesota on federal-pre-emption grounds. Operators have separately argued that state restrictions can conflict with federal requirements for uniform nationwide access.

Texas's Legislature reconvenes in January. The bill would apply only to conduct after its effective date, which is set for Sept. 1, 2027, if enacted. As covered in October, Sen. Ted Cruz has separately planned federal legislation that would require state or tribal approval for prediction markets offering gambling-linked contracts.