Eleven Democratic senators on the Senate Banking, Housing, and Urban Affairs Committee are asking Chairman Tim Scott to hold a public hearing on prediction markets, arguing that the rapidly expanding market warrants congressional scrutiny.
The request, led by Ranking Member Elizabeth Warren and Sen. Catherine Cortez Masto on Wednesday, comes after reports that Scott plans to hold a Republican-only roundtable on prediction markets later this week, with industry representatives including Kalshi expected to participate.
The 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). The Democrats said a public hearing would allow all committee members to examine the effect of prediction markets on consumers and financial markets.
Democrats cite rapid market growth
The senators pointed to the sharp increase in trading activity on major prediction-market platforms as a reason for congressional oversight.
Combined monthly global trading volume on Kalshi and Polymarket reached about $53 billion in July, more than double the $25.7 billion recorded in May, according to a Sept. 23 analysis from Pew Research Center using data from The Block. Sports contracts accounted for much of the increase during that period.
Pew previously reported that combined monthly volume on the two platforms had risen from less than $5 billion in September 2025 to about $24 billion in April 2026.
The senators said the expansion has increased the number of retail and institutional participants exposed to prediction-market contracts.
Focus turns to securities-based contracts
The Democrats also raised questions about prediction markets offering contracts tied to corporate performance.
In their letter, the senators said contracts linked to corporate performance indicators could potentially fall within the definition of security-based swaps subject to Securities and Exchange Commission oversight. That characterization is a regulatory issue under existing securities laws and remains subject to interpretation and applicable rules.
The letter also cited industry efforts to introduce contracts tied to corporate earnings, pointing to a broader expansion of event-based products into financial markets.
The senators asked the committee to examine how those products should be regulated and which federal agency should oversee them.
CFTC flags manipulation risk in mention markets
The request comes as the Commodity Futures Trading Commission separately warns exchanges about a specific category of prediction contracts.
In a Sept. 22 advisory, the CFTC’s Division of Market Oversight said contracts based on whether a particular person says certain words, appears at an event, or interacts with another person carry a heightened risk of manipulation. The agency said such contracts should be listed only in limited circumstances.
The guidance applies to CFTC-registered designated contract markets, which list event contracts for U.S. traders. The agency said so-called mention market contracts can be difficult to verify independently because their settlement depends on the discrete conduct of an individual.
The CFTC did not prohibit the contracts outright. Instead, its staff outlined factors exchanges should consider when submitting such products and reminded them that contracts listed under the Commodity Exchange Act must not be readily susceptible to manipulation.
The document is a Division of Market Oversight staff advisory rather than a formal CFTC rule or commission vote.
Senators raise market-manipulation concerns
The lawmakers also cited concerns about manipulation and insider trading in prediction markets. They referenced research and commentary warning that participants with access to nonpublic information could have an advantage in markets tied to events or corporate outcomes. They also cited a June 2026 academic paper examining Polymarket activity that found trading profits were concentrated among a small share of users during the study period.
The letter did not allege that Kalshi or another specific platform engaged in manipulation or insider trading.
Separately, Warren has previously raised concerns about possible insider trading involving prediction markets. In April, she questioned Defense Secretary Pete Hegseth about allegations involving Trump administration officials and prediction markets.
Request comes amid broader Senate debate
The hearing request adds to a broader congressional debate over the regulatory treatment of prediction markets.
In July, a separate group of Democratic senators urged the Banking and Agriculture committees to address prediction markets offering nationwide sports and event contracts. That letter raised questions about federal derivatives jurisdiction, state gambling laws and tribal gaming rights.
The latest request is more narrowly focused on holding a public Banking Committee hearing and examining the financial-market implications of prediction markets.
The 11 senators asked Scott to allow all Banking Committee members to participate rather than limiting the discussion to a closed or party-specific industry roundtable.
Public hearing would broaden regulatory debate
A public hearing would allow lawmakers to question prediction-market operators, regulators and other market participants about issues including consumer exposure, market integrity, securities regulation and the treatment of contracts tied to corporate events.
The request does not itself establish a hearing date or change the regulatory status of prediction markets. As trading volumes have expanded, the market has increasingly drawn attention from financial institutions and policymakers.
Also Read: Plume Network Asks SEC Not To Regulate Crypto Vault Protocols
