Senate Banking Committee Democrats have written a letter urging committee chair Tim Scott to hold a congressional hearing on prediction markets.
The demand came the same day Scott and Senate Banking Committee Republicans held a private meeting with Kalshi CEO Tarek Mansour.
Democrats Push For Congressional Hearing
Senate Banking Committee Democrats wrote a letter to Scott stating that the panel has a critical role in overseeing prediction markets and platforms like Kalshi. Several Democratic Senators, including Elizabeth Warren, Catherine Cortez Masto, Jack Reed, Mark Warner, Raphael Warnock, Ruben Gallego, and Angela Alsobrooks, signed the letter.
“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.”
News of the meeting between Senate Banking Committee Republicans and Mansour was first reported by Punchbowl News. Scott confirmed the meeting in a separate statement sent to The Block. The Banking Committee Chair said the committee’s Republican members and Kalshi officials met to “better understand the opportunities and challenges presented by securities-linked products.” The statement read,
“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.”
Who Regulates Prediction Markets
There remains substantial confusion about which body has oversight of prediction markets like Kalshi. The Commodity Futures Trading Commission (CFTC) has stepped in to regulate prediction markets. However, it has faced pushback from states such as New York and Arizona that argue they have the authority to regulate event contracts. State and federal regulators have repeatedly clashed over who should regulate prediction markets, with lawmakers mulling whether Congress should step in to break the deadlock.
Lawmakers have raised doubts about whether existing laws and the CFTC’s limited resources are enough to oversee the rapidly growing sector. Rep. Dusty Johnson, R-S.D., stated during a House Agriculture Committee digital assets subcommittee hearing,
“As with many emerging technologies, our laws are being asked to answer questions that we had never really contemplated when we wrote the laws years ago.”
The House Agriculture Committee and Senate Agriculture Committee have primary jurisdiction over the CFTC. On the other hand, the Securities and Exchange Commission (SEC) falls under the Senate Banking Committee’s jurisdiction. Senate Democrats have argued that prediction market products offer bets tied to company performance indicators, thus falling under the SEC’s regulatory purview.
Cboe Global Markets has also asked the SEC for the green light to list “all-or-nothing options” tied to the earnings results of companies. Senate committee Democrats cited Cboe’s request in their letter, stating,
“As industry participants request SEC approval for options tied to corporate earnings, the full Senate Banking Committee has a critical oversight role to play.”
Meanwhile, prediction markets remain trapped in a high-stakes tug-of-war between federal and state regulators.
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