'Not behind closed doors': Senate Banking Democrats call for prediction markets hearing as GOP meets privately with Kalshi

Every Democrat on the Senate Banking Committee is urging its chair, Republican Sen. Tim Scott, to hold a congressional hearing on prediction markets — a demand that comes the same day Scott and others met privately with Kalshi. 

In a letter sent to Scott on Wednesday, Senate Banking Committee Democrats said the panel has a "critical oversight role to play" in overseeing prediction markets.

"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 Democrats said. Sens. Elizabeth Warren, Catherine Cortez Masto, Jack Reed, Mark Warner, Raphael Warnock, Ruben Gallego, and Angela Alsobrooks were among those who signed the letter.

At 10 a.m. on Wednesday, Senate Banking Committee Republicans met with Kalshi CEO Tarek Mansour. Punchbowl News first reported the news of the meeting.

In a statement sent to The Block, Scott said he brought Senate Banking Committee Republicans and Kalshi together "to better 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 said in the statement. "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.

The Commodity Futures Trading Commission has asserted a leading role for itself in regulating prediction markets, despite pushback from states, which argue they have authority over sports event contracts. The House Agriculture and Senate Agriculture Committees have primary jurisdiction over the CFTC — both have weighed prediction markets regulation over the past year.

However, the Senate Banking Committee has jurisdiction over the Securities and Exchange Commission and would oversee "securities-linked products," as that pertains to prediction markets. Senate Banking Democrats said those products offer bets that are tied to company performance indicators and so could be within the SEC's regulatory remit.

This comes as Cboe Global Markets is asking the SEC if it can list "all-or-nothing options" which would be tied to companies' earnings results, according to reporting from Bloomberg in July.

"As industry participants request SEC approval for options tied to corporate earnings, the full Senate Banking Committee has a critical oversight role to play," the Senate Democrats said in the letter.