Every Democrat on the Senate Banking Committee has called for a public congressional hearing on prediction markets, on the same day the committee’s Republican members held a private meeting with Kalshi chief executive Tarek Mansour.
In a letter sent to committee chair Tim Scott on Wednesday, the Democrats said the panel had a “critical oversight role to play” in examining the rapidly developing market.
They argued that the issue should be considered in an open, bipartisan session rather than through a private meeting involving only Republicans and industry representatives.
“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.
The signatories included Elizabeth Warren, Catherine Cortez Masto, Jack Reed, Mark Warner, Raphael Warnock, Ruben Gallego and Angela Alsobrooks.
At 10:00 on Wednesday, Senate Banking Committee Republicans met with Mansour. Punchbowl News first reported the meeting.
Scott said he had arranged the discussion to give lawmakers a clearer understanding of the potential benefits and risks associated with products linked to securities.
“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,” Scott said in a statement sent to The Block.
“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.
Prediction markets allow users to trade contracts based on the outcome of future events. Their regulation has become a point of disagreement between federal and state authorities, particularly over contracts linked to sporting events.
The Commodity Futures Trading Commission has claimed a leading role in regulating prediction markets, but states have challenged that position, arguing they have authority over sports event contracts.
The House Agriculture Committee and Senate Agriculture Committee have primary jurisdiction over the CFTC. Both panels have considered prediction market regulation during the past year.
The Senate Banking Committee, meanwhile, oversees the Securities and Exchange Commission. Its Democrats said the committee should examine prediction market products connected to company performance indicators, which could place them within the SEC’s regulatory remit.
The issue has also emerged as Cboe Global Markets asks the SEC whether it can list “all-or-nothing options” linked to companies’ earnings results, according to Bloomberg reporting in July.
The Senate Banking Democrats said that development made a full committee hearing particularly important.
“As industry participants request SEC approval for options tied to corporate earnings, the full Senate Banking Committee has a critical oversight role to play,” they wrote.
