BREAKING: Paxton Refuses to Regulate Prediction Markets After Pocketing Kalshi Cash
AUSTIN, TX — A bombshell new investigation by Politico found that Corrupt Ken Paxton has been pocketing Kalshi cash – then refused to join bipartisan efforts with nearly every Attorney General in the country on regulating the prediction market industry.
Politico found that “after Paxton and his PAC took thousands of dollars from Kalshi and its CEO, the attorney general declined to sign onto several nationwide efforts by Republican and Democratic state attorneys general to rein in the prediction market platform.”
Paxton began refusing efforts to regulate Kalshi just “four days” after receiving the check, which was “unusual” given his previous strict gambling enforcement, raising concerns of a pay-to-play deal as he now declines to join 44 state AGs in calling for regulations. And of course: “Paxton’s campaign declined to comment.”
Read more below:
September 3, 2026
By Daniel Lippman
As Texas attorney general, Ken Paxton has pushed for strict enforcement of Texas gambling laws, especially for fantasy sports sites and gaming machines. But after Paxton and his PAC took thousands of dollars from Kalshi and its CEO, the attorney general declined to sign onto several nationwide efforts by Republican and Democratic state attorneys general to rein in the prediction market platform.
In May 2025, Kalshi donated $5,000 to Paxton’s Lone Star Liberty PAC and a month later, on June 13, the Republican Senate candidate accepted $7,000 from Tarek Mansour, the CEO of Kalshi, according to FEC records.
Four days later, 34 Republican and Democratic state attorneys general asked the Third Circuit Court of Appeals to allow states to regulate Kalshi. But Paxton didn’t join the bipartisan effort, which included Ohio, Illinois, Pennsylvania, South Carolina and Utah. Last December, Paxton also declined to team up on an amicus brief filed by 38 states and D.C., in a case between Kalshi and Maryland.
The decision to not sign on to these briefs was unusual, given Paxton’s position on fantasy sports a decade before when he was not running for office. At the time, he determined that operators of fantasy sports platforms DraftKings and FanDuel were taking illegal bets, which led to a fight in court between the DraftKings and Paxton that the company recently dropped. Texas is still one of the less than a dozen states that outlaw online sports betting.
It also suggests that Paxton’s stance on the prediction markets — where users can wager on everything from sports and the temperature in Dallas to Paxton winning his Senate race this year — may be more aligned with that of President Donald Trump, a close Paxton ally, than of his fellow state attorneys general, who argue the platforms should be overseen by the states. Trump endorsed Paxton over incumbent Sen. John Cornyn, who lost the GOP Texas primary.
Trump has said he wants prediction markets to “thrive.”
Paxton’s position has put him at odds with other Texas GOP leaders, including Lt. Gov. Dan Patrick, who has worked with Paxton on enforcing other anti-gambling laws. In March, Patrick urged the Texas Senate to look for ways to close loopholes in state laws that let prediction markets operate in the state.
Prediction markets like Kalshi and its chief rival Polymarket have unleashed a torrent of bets over the last two years, arguing all the while that they are federally regulated financial exchanges — and not betting platforms in the traditional sense. A state-led legal fight against the platforms is now working its way through the courts and expected to soon reach the Supreme Court.
A spokesperson for Paxton’s campaign declined to comment, and spokespeople for the Texas attorney general’s office didn’t respond to a request for comment.
Paxton’s actions on prediction markets are more notable for what he hasn’t done than what he has done. This year, Paxton declined to join a series of other legal actions that many states have taken against prediction markets, including not joining the National Association of Attorneys General and 39 state attorneys general in a separate legal brief that argued that the Commodities Futures Trading Commission shouldn’t be the only government body to regulate prediction markets. His office reportedly didn’t reply when asked to sign on, according to the Texas Tribune. In April, 37 states filed a similar motion and even though Texas was asked to join, it didn’t.
In June, Paxton’s office said that Texas’ rules prohibiting gambling extended to gambling devices where “chance plays any role” in the outcome. (A strict interpretation of that standard would make prediction markets illegal in the state, the gambling news site Gaming America reported.)
But two days later, more than three dozen state attorneys general filed an amicus brief supporting Ohio’s ability to enforce its sports gaming and anti-gambling laws against Kalshi. Paxton was one of 12 attorneys general who didn’t sign on.
In August, Paxton also didn’t sign onto a letter from 44 state AGs to the CFTC that its foray into trying to do light-touch regulation of prediction markets usurped states’ traditional role regulating gambling.
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