Senate Democrats demand public hearing on prediction markets as GOP meets privately with Kalshi

Democrats call for public hearing, not private meetings

All Democrats on the Senate Banking Committee are asking the committee's chair, Republican Senator Tim Scott, to hold a public hearing on prediction markets. Prediction markets are platforms where people bet on the outcome of future events, such as elections or financial results.

The request came on the same day that Scott and other Republican committee members met privately with Kalshi, a prediction market company. The Democrats said in a letter sent to Scott on Wednesday that the committee has a “critical oversight role to play” in overseeing prediction markets.

“It is critical that Congress examine prediction markets on a bipartisan basis in a public hearing – not behind closed doors in a Republican-only, industry-friendly roundtable,” the letter said. It was signed by several Democratic senators, including Elizabeth Warren, Catherine Cortez Masto, Jack Reed, Mark Warner, Raphael Warnock, Ruben Gallego, and Angela Alsobrooks.

Key points

• Senate Banking Committee Democrats sent a letter to Chair Tim Scott on September 23, urging a public hearing on prediction markets.
• On the same day, Senate Banking Republicans met privately with Kalshi CEO Tarek Mansour, as first reported by Punchbowl News.
• Scott said the meeting aimed to better understand the opportunities and challenges of “securities-linked products” and to discuss how to protect retail investors and bring innovation onshore.
• The Democrats argue that prediction market contracts tied to company performance could fall under the SEC's authority, which is overseen by the Senate Banking Committee.
• This comes as Cboe Global Markets has asked the SEC for permission to list “all-or-nothing options” tied to companies' earnings results, according to Bloomberg reporting from July.

Scott's statement on the private meeting

In a statement sent to The Block, Scott said he brought Senate Banking Committee Republicans and Kalshi together “to better understand the opportunities and challenges presented by securities-linked products.”

He added, “We discussed the importance of bringing innovation onshore, how investors use these products, ways to protect retail investors, and the regulatory questions Congress should address. My goal is to ensure that America leads in financial innovation while protecting investors and providing the regulatory clarity these emerging markets need.”

Kalshi did not immediately respond to a request for comment from The Block.

Oversight dispute between committees

The letter highlights a dispute over which committee should oversee prediction markets. The Commodity Futures Trading Commission (CFTC) has asserted a leading role in regulating prediction markets, but states argue they have authority over sports event contracts.

The House Agriculture and Senate Agriculture Committees have primary jurisdiction over the CFTC and have both weighed prediction market regulation over the past year. However, the Senate Banking Committee oversees the Securities and Exchange Commission (SEC) and would handle “securities-linked products” related to prediction markets.

Senate Banking Democrats said such products offer bets tied to company performance indicators and could be within the SEC's regulatory remit.

What is confirmed

It is confirmed that Senate Banking Committee Democrats sent a letter to Chair Scott on September 23, calling for a public hearing on prediction markets. It is also confirmed that Senate Banking Republicans met with Kalshi CEO Tarek Mansour on the same day at 10 a.m., as reported by Punchbowl News. Scott's statement about the meeting is also confirmed.

What is still unclear

It is unclear whether Scott will agree to hold a public hearing on prediction markets. It is also unclear whether the SEC will approve Cboe's request to list “all-or-nothing options,” which is still pending. Kalshi has not yet responded to requests for comment.

Why this matters

The dispute between congressional committees over who regulates prediction markets matters because the resolution will determine which agency has authority over these growing platforms. The Senate Banking Committee's request for a public hearing could set the stage for formal congressional oversight of prediction markets and products tied to company earnings.

What happens next

The source does not specify any definite next step other than the ongoing pressure from Democrats for a public hearing and the pending SEC decision on Cboe's request.

Sources

• The Block