All 11 Democrats on the US Senate Banking Committee called Wednesday for a public hearing on prediction markets as committee Republicans met privately with Kalshi CEO Tarek Mansour.
In a Sept. 23 letter to committee Chairman Tim Scott, the Democrats said “security-based prediction markets” are increasingly reaching institutional and retail investors.
“These markets offer event contracts tied to corporate performance indicators, which could meet the definition of security-based swaps that would be subject to SEC regulation,” the senators wrote.
The senators also cited efforts to win approval from the US Securities and Exchange Commission (SEC) for products tied to corporate earnings, arguing that those developments give the Banking Committee “a critical oversight role to play.”
The request came the same day Scott and other Republican committee members held a private roundtable with Mansour focused on securities-linked products. The Block reported that the discussion included investor protections and regulatory questions surrounding those markets.
Banking Committee turns attention to prediction markets
Prediction-market oversight in Congress has largely centered on the House and Senate agriculture committees, which oversee the Commodity Futures Trading Commission (CFTC). The CFTC regulates federally registered derivatives exchanges like Kalshi and Polymarket US, where prediction markets are offered as event contracts.
The Senate Banking Committee, however, oversees the SEC, giving it a role as prediction-market operators move into products that may fall under securities laws.
The Democrats, including committee ranking member Elizabeth Warren and Sen. Mark Warner, also framed their request as a transparency issue. They said Congress should examine prediction markets “on a bipartisan basis in a public hearing,” rather than through what they called a Republican-only, industry-friendly roundtable.
A similar Republican-only House Financial Services Committee roundtable was reportedly held in June with representatives from Kalshi, Polymarket, Robinhood and the American Gaming Association. Punchbowl News reported ahead of the meeting that committee Chairman French Hill had said lawmakers were exploring whether federal event-contract law needed changes.
Platforms expand into securities-linked products
The securities question raised by the senators is already surfacing at the SEC. Cboe has proposed binary options tied to company performance metrics, including revenue, earnings per share and other figures disclosed by individual companies. Its filing covers metrics from companies including Apple, Amazon, Coinbase, Nvidia and Tesla.
Those products are different from another recent push into single-stock futures. On Sept. 18, Kalshi filed proposed perpetual futures tied to dozens of individual stocks and exchange-traded funds, while Coinbase Derivatives filed plans for its own single-stock perpetual futures. The CFTC classifies both sets of products as security futures products, and CFTC approval remains pending.
Security futures are already subject to joint SEC and CFTC oversight. A CFTC-regulated exchange must also register with the SEC before it can list them, reflecting the products’ status as both securities and futures.
Other derivatives operators have also entered that regulatory framework. Bitnomial, which is owned by Kraken parent Payward, and Crypto.com Derivatives North America registered with the SEC as national securities exchanges for the purpose of trading security futures products.
Scott points to regulatory questions
Scott said Wednesday’s private discussion was intended to help committee Republicans understand the “opportunities and challenges presented by securities-linked products.”
“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 told The Block.
Scott did not address whether he would hold the public hearing requested by committee Democrats.