- DraftKings and FanDuel, the two largest U.S. sportsbooks, have been operating in Texas for months through prediction market apps that offer trading on sports outcomes under federal commodities rules, no state license required.
- DraftKings Predictions launched December 19, 2025 across 38 states, with sports event contracts explicitly available in Texas, and FanDuel Predicts followed days later, expanding into Texas within weeks.
- The Texas Tribune reports that opening the DraftKings sportsbook app in Texas now pivots users straight into its prediction market, and the company cites “clear consumer interest” in the state.
- Both companies paid a real price for the strategy, giving up their Nevada positions after regulators there balked, and Flutter is investing $250 million to $300 million in FanDuel Predicts this year.
- Courts are split on whether the products are legal trading or unlicensed gambling, a fight analysts expect the U.S. Supreme Court to settle.
AUSTIN – Texas has never legalized sports betting. The Legislature has voted it down, the lieutenant governor has buried it, and no referendum has ever reached the state’s voters. And yet DraftKings and FanDuel, the two companies that define American sports betting, are live in Texas right now, taking Texans’ money on the Cowboys, the Astros and the World Cup.
They arrived through a door the Legislature never built. In December, DraftKings launched DraftKings Predictions, a standalone app offering event contracts, yes-or-no positions on real-world outcomes, in 38 states, with sports contracts explicitly available in states that ban sportsbooks, including Texas, California, Florida and Georgia. Because the product runs under the oversight of the Commodity Futures Trading Commission, through a subsidiary registered as a federal introducing broker, it needs no Texas license, pays no Texas gaming tax and answers to no Texas regulator. Days later, FanDuel launched FanDuel Predicts in partnership with CME Group, one of the world’s largest derivatives exchanges, starting in five small states before expanding into Texas within weeks. Fanatics beat them both through the same door earlier that month.
The companies are not being subtle about what Texas means to them. As the Texas Tribune has reported, opening the DraftKings sports betting app inside Texas now automatically pivots users into its prediction market, and DraftKings told the outlet there is “clear consumer interest” in the state. For a Texan, the experience is nearly indistinguishable from betting: pick a game, take a position on the outcome, win or lose money on the result. Legally, the industry insists, it is trading in federally regulated derivatives, the same framework this site has covered as Kalshi and Polymarket built the loophole the sportsbooks are now driving through. The minimum age is 18, three years below the standard at licensed sportsbooks elsewhere.
The strategy carried genuine costs, which is the clearest evidence the companies believe in it. Nevada regulators would not tolerate licensed operators selling federally regulated sports contracts, so Flutter, FanDuel’s parent, surrendered its Nevada license and DraftKings withdrew its application there, a sacrifice of the industry’s historic home state reported across the gaming trade press. Flutter told investors it plans to pour $250 million to $300 million into FanDuel Predicts this year while splitting revenue with CME, and analysts at Truist Securities have said both giants are proceeding on the bet that their state licenses elsewhere will survive the gamble.
Whether the products themselves survive is genuinely unsettled. The Third Circuit sided with Kalshi in April, holding that the CFTC’s jurisdiction over event contracts is exclusive, while courts in Massachusetts and Maryland have ruled the opposite way, more than 20 lawsuits are pending nationwide, and analysts widely expect the question to reach the U.S. Supreme Court. Texas officials are circling too: Lt. Gov. Dan Patrick directed senators in March to study closing the state’s “gambling loopholes,” and the Texas Medical Association is pushing an age limit, but any state action collides with the same federal preemption wall. For now, nothing stops a Texan from trading on tonight’s game through the two biggest brands in betting, alongside the other prediction markets in Texas.
The quiet part is what this does to the legalization debate. The industry’s argument to Texas lawmakers has always been that legalizing sports betting would capture tax revenue the state currently loses. But every trade Texans place on DraftKings Predictions weakens that pitch, because the companies are already serving the market without paying the state a dime, and FanDuel has said it would exit sports contracts in any state that legalizes the real thing. The result is a strange equilibrium: no legal Texas sportsbooks, no state oversight, and yet the biggest sportsbook brands in America operating openly, with the sports betting fight itself now spilling into this year’s elections through industry political spending first reported by Axios.
Texas cannot vote on any of it before the Legislature returns in 2027. By then, DraftKings and FanDuel will have been running in Texas for more than two years, and the most consequential change in the state’s gambling reality will have happened the way it began: without a single vote being cast. The full picture of what is and is not legal here sits in our guide to the gambling sites in Texas.