Democrats Call For Congressional Hearings on Prediction Markets
David Genge Published 24/09/2026
All 11 Democratic Senators on the Senate Banking, Housing, and Urban Affairs Committee want Chair Tim Scott to hold public hearings on prediction markets. The call for these hearings came after it was learned that Scott and other Republican committee members plan to hold a Republican-only roundtable session later this week on prediction markets with industry leaders, including representatives from Kalshi.
Democrats are demanding the hearings as a more transparent method for discussing the impact and future of prediction markets on the gaming industry. It would likely lead to open discussion over the debate of whether certain prediction market event contracts are betting.
Democrats are demanding transparency in prediction markets discussions
Each of the 11 Democrats on the committee was signing the letter. They include Ranking Member Elizabeth Warren (D-Mass.) and Senator Catherine Cortez Masto (D-NV). Other signers of the letter include Senators Jack Reed (D-RI), Mark Warner (D-VA), Chris Van Hollen (D-MD), Tina Smith (D-MN), Raphael Warnock (D-GA), Andy Kim (D-NJ), Ruben Gallego (D-AZ), Lisa Blunt Rochester (D-DE), and Angela Alsobrooks (D-MD). They called for public hearings over the prediction market issue.
“In the interest of transparency, we ask you to hold a public committee hearing on this critical topic and allow all members of the Committee to participate,” the letter read. "According to reports, you are planning on holding a roundtable session this week on securities-based prediction markets with only Republican members of the Committee. The reports claim that executives from Kalshi will be in attendance.
"It is important for the Senate Banking Committee to hold a public hearing about how these markets are impacting consumers and our financial system."
SEC regulation of prediction markets could be an issue
Across the USA, state sports betting regulators are arguing in court that prediction market sports-event contracts are illegal sports betting. The Commodity Futures Trading Commission (CFTC) counters that they are derivative trades under federal regulation.
This is a debate that Democratic Senators feel the federal government should be taking an interest in and investigating.
"Security-based prediction markets are a growing segment of the financial sector that institutional and retail investors are increasingly exposed to," read the letter from the Democratic Senators. "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."
And some could be nothing more than illegal sports betting, as state gaming regulators insist. This is a state vs. federal government showdown. The Democratic members of this committee believe it should be open to listening to what both sides have to say.
Insider trading and market manipulation are other matters worth discussing
Prediction market sites have rapidly blossomed into major players in the gambling industry. Prediction markets have experienced rapid growth in recent years. Total trading volume increased from $5 billion in September 2025 to $24 billion in April 2026. This is according to data compiled by the Pew Research Center. On Kalshi and Polymarket alone, December trading accounted for $12 billion. That was a 400% increase over the previous year.
In the midst of this explosion in usage, there have been several cases of insider trading. These instances have included episodes involving a former member of Congress and a member of the military. Even President Donald Trump's teleprompter operator was found to be using insider trading.
"Experts warn that prediction markets are prone to encourage market manipulation and insider trading," the Democratic Senators wrote in their letter to Chair Scott.