AUSTIN — Texas lawmakers from both parties’ chambers pressed experts Tuesday over whether prediction markets are effectively sports books operating under a different label. The Senate State Affairs Committee and House State Affairs Committee held hearings as platforms such as Kalshi expand in Texas. Traditional sports betting remains prohibited under the Texas Constitution, but prediction markets are licensed by the federal Commodity Futures Trading Commission rather than regulated through state gambling laws. Prediction markets let users buy and sell contracts tied to the outcome of future events. Kalshi, the first such platform licensed by the CFTC, describes its system as a peer-to-peer financial exchange in which participants trade against one another and the company collects fees on transactions. A conventional sportsbook generally makes money from the wagers customers lose. But the products available to Texans can closely resemble familiar sports bets. For the University of Texas’ game against UTSA, Kalshi offered contracts on the winner, the margin of victory, total points and whether the game would go to overtime. State Sen. Bob Hall, R-Rockwall, argued that the distinction between a financial contract and a wager does not resolve the underlying issue. “I don’t understand why or how it continues to operate,” Hall said, questioning why Texas law was not being enforced against the platforms. Brianne Doura-Schawohl, a mental-health and anti-gambling advocate, told lawmakers that the terminology used by platforms does not change the risks for users. She said problem gambling has the highest suicide rate among addictions. The American Gaming Association, which represents commercial gaming interests, also challenged the platforms’ position. Tres York, the group’s vice president of government relations, said prediction markets offer contracts on the same outcomes as sportsbooks and are functionally indistinguishable. The disagreement reflects a broader legal battle over whether states may regulate prediction markets that fall under federal commodities law. The Third U.S. Circuit Court of Appeals ruled that Kalshi’s federal oversight under the Commodity Exchange Act prevented state gambling regulation. The Ninth Circuit reached a different result this month, allowing Nevada to regulate the company. The conflicting rulings could eventually put the question before the U.S. Supreme Court. Texas has not sued Kalshi or another prediction-market operator. The state’s lack of legal action has also raised questions about Attorney General Ken Paxton, the Republican nominee for U.S. Senate. A report published earlier this month said Paxton did not join a bipartisan letter from 34 state attorneys general urging the Third Circuit to recognize states’ authority to regulate Kalshi. The letter came four days after Kalshi CEO Tarek Mansour gave $7,000 to Paxton’s campaign. Paxton also was among 12 attorneys general who did not sign a December filing supporting Maryland in its legal fight with Kalshi. Paxton’s campaign and the attorney general’s office did not respond to requests for comment about his position on whether prediction markets constitute illegal gambling. A Kalshi representative said the company’s leaders, like executives at other federally regulated businesses, support candidates from both political parties. For Texans, the debate has immediate practical consequences: prediction markets are increasingly providing a way to wager on sports in a state that has declined to legalize conventional sports betting. The hearings offered no resolution, leaving residents, lawmakers and regulators to navigate a fast-growing market whose legal status remains unsettled.