The real risk for prediction markets may come from Texas and Georgia

Democrats won the midterm elections, but prediction markets are not in immediate danger. The industry reportedly sees the main pressure coming from the state level. The CFTC's authority over event contracts is under debate, especially for contracts covering sports and politics.

Legal experts speaking to Gambling Insider say that even a Congress controlled by Democrats would struggle to fully ban prediction markets under the Trump administration. For that reason, state enforcement and the courts could be more effective arenas for challenges.

Attorney Daniel Wallach said that on election night, apart from Congress, there were two important developments. In Texas, Democrat Nathan Johnson declared victory and described it as a great honor and a great responsibility. In Georgia, Tanya Miller was reported to have won and is set to become the state's first female attorney general. However, neither of them has announced a plan to sue Kalshi.

Wallach argued that the new leadership could revive state enforcement actions that previously seemed unlikely. He said that in Georgia, Miller's victory could open a path to legal enforcement in state courts, which could in turn draw the Eleventh Circuit Court of Appeals into the debate over federal priority.