Seven Senate Banking Democrats wrote to Chairman Tim Scott asking that prediction markets be examined in a public, bipartisan hearing rather than the Republican-only roundtable held Wednesday morning with Kalshi's chief executive. Their letter points at Cboe's request to list all-or-nothing options on corporate earnings, a product they argue could reach the SEC's jurisdiction.
Seven Democrats on the Senate Banking Committee asked Chairman Tim Scott on Wednesday to hold a public hearing on prediction markets, hours after committee Republicans met privately with Kalshi chief executive Tarek Mansour.
Elizabeth Warren, Catherine Cortez Masto, Jack Reed, Mark Warner, Raphael Warnock, Ruben Gallego, and Angela Alsobrooks signed the letter, according to The Block, which reported its contents. The senators wrote that prediction markets should be examined “on a bipartisan basis in a public hearing” rather than “behind closed doors in a Republican-only, industry-friendly roundtable,” and that “Congress has a critical oversight role to play.”
The roundtable took place at 10 a.m. Wednesday and was open to Republican members. Punchbowl News first reported that it was being arranged. Scott's office framed the session around the opportunities and challenges of securities-linked products, investor protection, regulatory clarity, and bringing innovation onshore. The format has a recent precedent: House Financial Services held a Republican-only roundtable in June with executives from Kalshi, Polymarket, and Robinhood.
The procedural complaint sits on top of a jurisdictional question that neither agency nor Congress has resolved. Event contracts listed on designated contract markets answer to the CFTC. The Democrats argue that a growing set of these products reference corporate performance, which would pull them toward the SEC instead. Cboe asked the SEC in July to list all-or-nothing options tied to corporate earnings, a contract that pays a fixed amount when a reported result clears a stated threshold.
PredictionNews reported that the letter raised the prospect that event contracts tied to corporate performance indicators could qualify as security-based swaps. That classification matters because it carries SEC registration, reporting, and business-conduct obligations that the CFTC's event-contract regime does not impose. Where a contract lands decides who writes the rules for it, who examines the venue listing it, and what the venue has to disclose.
The same argument is running in other venues with no settled answer. Hyperliquid's policy arm wants equity perpetuals classed as security futures, and two federal appeals courts now disagree over whether sports event contracts are swaps after a Ninth Circuit panel held that Kalshi's sports contracts are bets, contradicting the Third Circuit. The CFTC has said only the Supreme Court can settle that split.
State regulators have not waited for the federal question to close. PredictionNews reported that Connecticut's halt order covered nine markets and that Missouri acted against both Polymarket and Kalshi. Those moves run against the federal position: the CFTC ordered Kalshi to keep trading through New York's $36 billion suit using its Section 8a(9) emergency powers, warning that a state shutdown could force liquidation of federally regulated bitcoin-price contracts.
Congress had a route to settle the allocation and did not take it. The CLARITY Act fell 11 votes short of opening Senate debate on September 15, drawing 49 of the 60 votes cloture required, with Thom Tillis switching to no and entering a motion to reconsider. Until a bill assigns these products to one regulator, the boundary stays where it is now, in agency interpretation and in the courts.
The products themselves keep moving closer to regulated securities. Charles Schwab moved to launch S&P 500 binary options with Cboe in June, putting fixed-payout index contracts in a mainstream brokerage. Cboe's July request to the SEC extends that direction from index levels to individual company earnings, which is the specific step the Democrats' letter objects to being discussed without public testimony.
A letter requesting a hearing does not produce one. The committee's calendar belongs to the chairman, and neither Wednesday's roundtable nor the Democrats' request commits the committee to a public session.
