Democrats on the Senate Banking Committee are calling for a public hearing on prediction markets as lawmakers increase their scrutiny of the rapidly expanding event-contract industry.
All 11 Democratic members of the Senate Committee on Banking, Housing, and Urban Affairs sent a letter to Republican Chairman Tim Scott on September 23 requesting a transparent hearing involving the full committee.
The request followed reports that Scott planned a private Republican-only roundtable with representatives from the prediction market industry.
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Why Do Senate Democrats Want a Prediction Market Hearing?
The Democratic senators argue that the Banking Committee has an oversight role as prediction markets expand into products connected to financial markets. Their letter specifically highlights event contracts tied to corporate performance indicators.
According to the senators, some of those products could meet the definition of security-based swaps and therefore potentially fall under the regulation of the Securities and Exchange Commission.
The lawmakers also raised concerns about market manipulation and insider trading, while citing early research suggesting that trading profits are concentrated among a relatively small proportion of users.
Ranking Member Elizabeth Warren and Senator Catherine Cortez Masto led the letter, with other signatories included Senators Jack Reed, Mark Warner, Chris Van Hollen, Tina Smith, Raphael Warnock, Andy Kim, Rubin Gallego, Lisa Blunt Rochester and Angela Alsobrooks.
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Republican Senators Met Privately with Kalshi
The letter followed reports of a Republican-only discussion with prediction market representatives.
Senate Banking Republicans met with Kalshi CEO Tarek Mansour on September 23. Scott said afterward that the meeting focused on securities-linked products, including how investors use them, protections for retail investors, and the regulatory questions Congress may need to address.
He also framed the discussion around keeping financial innovation in the US while establishing clarity around regulations. Democrats objected primarily to being left out of the discussions rather than the discussions themselves.
They argued that prediction markets should instead be examined through a bipartisan public hearing where every committee member can participate.
Prediction Market Oversight Is Attracting Wider Attention
The September 23 request isn't the first time senators have pressed federal regulators over prediction markets this year. In June, a group of 16 senators called on the Commodity Futures Trading Commission to strengthen its oversight of the sector
That letter raised concerns about the large proportion of retail participants in prediction markets, as well as the potential for consumer harm, insider trading, and manipulation.
Other senators have separately challenged the CFTC over the balance between federal oversight and the states' authority to regulate products they consider gambling.
The result is complicated, since the CFTC oversees event contracts offered on federally regulated derivatives exchanges but lawmakers are also questioning whether some securities-linked products could trigger SEC jurisdiction.
Will the Senate Hold a Public Hearing on Prediction Markets?
For now, the Democrats' letter from September 23 is a request rather than a confirmation that another hearing will take place.
The Banking Committee has not established a hearing in response to that request, but the letter still demonstrates that attention from Congress is expanding with the prediction market industry itself.
With lawmakers debating consumer protection, insider trading, federal-vs-state authority, and the regulatory status of different contracts, oversight of the prediction market industry is likely to remain an active issue in Washington.
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politics predictions, which cover event contracts connected to elections and government.
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