Senate Banking Democrats seek public hearing on prediction markets as Republicans meet with Kalshi

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Senate prediction markets hearing

Highlights

Senate Banking Committee Democrats requested a bipartisan public hearing on prediction markets oversight, opposing Republicans' private meeting with Kalshi on Wednesday.
Democrats argue securities-linked prediction market products could fall under SEC jurisdiction, expanding the committee's oversight authority and impacting regulatory approaches.
Cboe Global Markets asked the SEC to list all-or-nothing options based on company earnings, intensifying the debate over prediction markets' resemblance to securities and broadening policy scrutiny.

Committee oversight clash widens

As reported by The Block, Senate Banking Committee Democrats sent a letter to Chair Tim Scott on Wednesday saying the panel has a critical oversight role in examining prediction markets and should do so through a bipartisan public hearing rather than in a private Republican-only roundtable.

The letter says Congress should review the sector in public, with signatories including Elizabeth Warren, Catherine Cortez Masto, Jack Reed, Mark Warner, Raphael Warnock, Ruben Gallego and Angela Alsobrooks. Democrats argue the committee’s remit extends to securities-linked products tied to company performance indicators, which they say could fall within the Securities and Exchange Commission’s authority.

At 10 a.m. Wednesday, Senate Banking Committee Republicans meet privately with Kalshi Chief Executive Tarek Mansour. In a statement sent to The Block, Scott says he convenes the meeting to better understand the opportunities and challenges presented by securities-linked products, including investor use, retail protections and the regulatory questions Congress should address.

Regulatory lines and market implications

The fight unfolds amid a broader jurisdictional debate in Washington over who regulates prediction markets. The Commodity Futures Trading Commission has asserted a leading role, even as states push back and argue they have authority over sports event contracts, while the House and Senate Agriculture Committees have also weighed the issue over the past year.

For Senate Banking Democrats, the emerging concern is whether some contracts increasingly resemble securities rather than traditional derivatives. That question gains urgency as Cboe Global Markets asks the SEC whether it can list all-or-nothing options tied to companies’ earnings results, a move that could broaden the market for event-driven financial products and draw the Banking Committee further into the policy debate.

In our earlier article on Senate Banking Committee Democrats’ call for a public hearing on prediction markets, we covered their push to replace a private, Republican-only roundtable with an open, bipartisan review. The lawmakers argued that contracts tied to corporate performance could resemble security-based swaps, raising investor-protection concerns and potentially bringing parts of the market under SEC oversight.

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