Democratic members of the U.S. Senate Banking Committee call for a public hearing on prediction markets

Democratic members of the U.S. Senate Banking Committee sent a letter to the committee's chairman, Republican Senator Tim Scott, calling for a congressional hearing on prediction markets. The Democrats stated in the letter that the committee has a "critical oversight responsibility" in regulating prediction markets and emphasized that Congress should examine prediction markets through public hearings on a bipartisan basis, rather than in closed-door roundtable meetings limited to Republicans and industry-friendly discussions. Senators including Elizabeth Warren signed the letter.

On the same day, Republican members of the Senate Banking Committee met with Tarek Mansour, CEO of the prediction market platform Kalshi. Scott stated in a statement to The Block that he convened Republican lawmakers to meet with Kalshi to better understand the opportunities and challenges presented by securities-linked products. The two sides discussed keeping innovation within the United States, how investors use these products, protecting retail investors, and regulatory issues that Congress should address. Kalshi did not immediately respond to a request for comment.

Currently, the U.S. Commodity Futures Trading Commission (CFTC) advocates for a leading role in the regulation of prediction markets but faces opposition from various states, which claim jurisdiction over sports event contracts. The Senate Banking Committee, on the other hand, has jurisdiction over the SEC and is responsible for regulating "securities-linked products" related to prediction markets. Democrats pointed out that the bets offered by such products, which are linked to company performance metrics, may fall under the SEC's regulatory scope. It has been reported that Cboe Global Markets is seeking SEC approval for its listing of "all-or-nothing options" linked to company earnings results.