Democrats Demand a Public Prediction Markets Hearing After Kalshi Talks

Eleven Democrats on the Senate Banking Committee asked Chair Tim Scott on September 23 for a public prediction markets hearing. The letter landed the same day committee Republicans met Kalshi CEO Tarek Mansour at 10 a.m.

Ranking Member Elizabeth Warren and Sen. Catherine Cortez Masto led the request. They want the full panel, not a GOP-only roundtable, to test how event contracts sit next to securities law.

All 11 Banking Democrats Signed the Same Letter

The minority office posted the demand from all 11 Democrats on the panel. Jack Reed, Mark Warner, Chris Van Hollen, Tina Smith, Raphael Warnock, Andy Kim, Ruben Gallego, Lisa Blunt Rochester and Angela Alsobrooks signed with Warren and Cortez Masto.

They wrote that security-based prediction markets now reach both retail and institutional accounts, and that event contracts tied to corporate performance could meet the test for security-based swaps, which would put them under the Securities and Exchange Commission.

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.

Senate Banking Committee Democrats, September 23 letter to Chair Tim Scott

The letter also warned that the products can invite manipulation and insider trading. It quoted early research that profits cluster among a small share of users while most accounts lose money. Those claims are why Warren’s side wants witnesses under oath, not a private briefing.

A Closed-Door Session With Kalshi’s CEO

Republicans on the committee sat with Mansour at 10 a.m. on September 23. Scott said he called the session to understand securities-linked products, how investors use them, how to protect retail accounts, and which questions Congress still has to answer. He framed the goal as keeping the United States ahead in financial design while writing clearer rules.

My goal is to ensure that America leads in financial innovation while protecting investors and providing the regulatory clarity these emerging markets need.

Sen. Tim Scott, Chair, Senate Banking Committee

The Democrats’ letter still described the roundtable as planned for later in the week. The meeting had already been set for that morning. Scott has not announced a full-committee hearing, and Kalshi has not issued a public readout of what Mansour told the majority.

WHAT WE KNOW

• The letter: Every Democrat on Banking asked Scott, in writing, for a public hearing on September 23.
• The meeting: Committee Republicans met Mansour at 10 a.m. the same day to discuss securities-linked products.
• The regulator on the books: Kalshi already lists event contracts as a CFTC-supervised designated contract market.

WHAT IS UNCONFIRMED

• A hearing date: Scott has not said whether the full committee will convene in public.
• The room: No transcript or attendee list from the 10 a.m. session has been released.
• SEC treatment: No Commission order has classified Kalshi-style sports or election contracts as security-based swaps.

A closed majority briefing is ordinary committee practice. The fight is over whether prediction markets belong in that informal lane, or in an open Banking hearing that treats them as securities products.

Banking Wants a Market the CFTC Already Runs

Most U.S. prediction venues do not wait for the SEC. Kalshi lists binary event contracts priced between $0 and $1, with the price meant to track the chance of a yes-or-no outcome. A contract bought at 40 cents pays $1 if the event happens. That structure is how the Commodity Futures Trading Commission has described the product to the public.

Polymarket’s international books sit outside that CFTC wrapper. Polymarket US, opened in late 2025 as a CFTC-regulated venue, grew from 4% of Polymarket’s volume in January to 39% in July, according to Pew Research Center. The legal split is already messy before Banking adds a third referee.

WHO CLAIMS WHICH PIECE

• The CFTC: Supervises designated contract markets, including Kalshi and Polymarket US, that list event contracts.
• The SEC: Would take products that qualify as security-based swaps or as listed options on company metrics.
• Senate Agriculture: Holds the CFTC and has been the main congressional home for event-contract fights.
• Senate Banking: Oversees the SEC, which is the door Warren’s letter is trying to open.
• The states: Treat sports event contracts as gambling and have already moved against the platforms.

Self-certifying a contract at the CFTC is a different grind from registering a security. If Banking can recast a slice of the book as securities, Scott’s panel, not Agriculture, writes the next round of questions. That is the move inside the sunlight request.

Sports Contracts Now Dominate the $53 Billion Book

The growth the senators cite is real, and it is not mainly about stocks. Pew Research Center, using figures compiled by The Block, found combined notional trading on Kalshi and Polymarket doubled from $26 billion in May to $53 billion in July. The Center’s May snapshot, which the Democratic letter echoed, had already tracked a rise from less than $5 billion in September 2025 to about $24 billion in April 2026. Combined volume eased to $47 billion in August, then began to firm again as football started.

KALSHI AND POLYMARKET NOTIONAL VOLUME

Those dollars are notional taker volume. Pew counts each contract at a $1 face value if it wins, not the cash the trader actually put down. A 40-cent yes still shows up as a dollar in the table. That is why a sports-heavy prediction book can print figures that sit beside, and sometimes above, licensed sportsbook handle without being the same thing.

Sports now leads both platforms. In June and July, during the FIFA World Cup, sports trading topped $58 billion on Kalshi and neared $22 billion on Polymarket, two-month totals. Kalshi’s crypto book ran about $6 billion in July, a distant second. Politics, the category that made both venues famous in 2024, averaged about $2 billion a month on Polymarket in 2026 and stayed under $300 million a month on Kalshi. Since July 2024, sports has been 80% of Kalshi’s volume.

Americans wagered more than $40 billion through legal sportsbooks in the first quarter of 2026, a handle figure Pew set beside prediction-market sports volume over the same stretch. State officials and sportsbook lobbyists already argue that sports event contracts are nationwide betting under another name. A Banking hearing framed around SEC swaps would still be walking into a sports fight.

After CLARITY Failed, the Same Names Reappeared

The letter arrived eight days after the Senate refused to take up the Digital Asset Market Clarity Act. Cloture on the motion to proceed failed 49-50 on September 15, eleven votes short of the 60 required. Every Democrat present voted no. Sen. Thom Tillis changed his vote to no so the motion could be brought back later. Sen. Chris Coons did not vote.

Cortez Masto, Warner, Gallego, Warnock and Alsobrooks had been in the group of Democrats who called that result “a setback, but not the end.” All five signed Wednesday’s prediction-markets letter. A public hearing is not a 60-vote bill. It also does not replace the market-structure statute they just blocked.

THE EIGHT DAYS AROUND THE LETTER

1. September 15, 2026: Senate cloture on the Clarity Act fails 49-50, with every Democrat present voting no.
2. September 23, 2026: Committee Republicans meet Kalshi’s CEO at 10 a.m. on securities-linked products.
3. September 23, 2026: All 11 Banking Democrats ask Scott, in a joint letter, for a public hearing.
4. October 9, 2026: Public comments close on NYSE Arca’s filing to list binary options on company earnings metrics.

Before the floor vote, some Democrats had wanted a prediction-markets add-on in the crypto bill, aimed at platforms they described as unlicensed sports books. That provision never became law. The hearing request now does the work a statute did not: it puts Kalshi in front of Banking without a deal on digital-asset lines.

Company Earnings Contracts Are the SEC Wedge

The cleanest securities hook is not a World Cup match. It is a yes-or-no bet on a company’s own numbers. Cboe Global Markets launched Cboe Predicts in June with Mini-S&P 500 binary options that trade as listed securities. In July it filed to add company-level contracts on 23 heavily traded U.S. names, tied to metrics such as earnings, revenue and margins.

NYSE Arca followed. On September 3 it asked the SEC for permission to list binary options on company earnings metrics, in a proposal it described as similar to Cboe’s July filing and to a parallel MEMX request. The contracts would pay all or nothing based on whether a figure in an 8-K, 10-K or 10-Q filing clears a strike, not on the stock’s print. The Commission published the notice in the Federal Register on September 18 and set a comment deadline of October 9.

Names in that Arca filing include Apple, Alphabet, Amazon, Microsoft, Nvidia, Tesla’s listed peers in the mega-cap tape, plus Coinbase, SoFi and Palantir. If those products are securities, Banking’s claim to the microphone is straightforward. Kalshi’s sports book still is not. The letter uses the earnings contracts to justify a hearing that would also cover the much larger sports tape.

Why Agriculture Still Owns the CFTC Brief

Event contracts did not move to Banking because the CFTC left town. Designated contract markets still file with the futures regulator. Senate Agriculture still writes that agency’s oversight letters. House and Senate agriculture panels spent the past year on the same products Warren now wants in a Banking room.

States are already in court and in their own legislatures over sports contracts. Pew noted a bipartisan bill from Sens. John Curtis and Adam Schiff to ban sports prediction-market contracts outright. Licensed books see handle leaving shops that pay state tax. Kalshi sees a federal derivatives product. Those two stories do not need an SEC swap theory to stay in conflict.

Scott can grant the hearing, ignore the letter, or keep holding majority roundtables on “securities-linked” slices while Agriculture keeps the rest. None of those choices writes a 60-vote rule. The October 9 comment file on Arca’s earnings options will close either way, and that is the first concrete securities decision on the calendar.

Until Scott names a public date, the only session on the record is the one Democrats were not in.

Disclaimer: This article is news reporting and analysis of congressional and regulatory developments around prediction markets. It is informational only and is not investment, trading, legal or gambling advice. Readers who are considering event contracts, listed options or sports wagers should consult a licensed financial adviser, attorney or, where betting is involved, review the rules in their own state before acting. Figures, hearing requests and product filings reflect the public record as of the dates named above and can change as committees, the SEC and the CFTC act.