Every Democrat on the Senate Banking Committee called on Republican Chair Tim Scott on Wednesday to hold a public hearing on prediction markets, the same day committee Republicans met privately with Kalshi CEO Tarek Mansour, according to The Block.
The dispute comes as prediction markets move well beyond a niche corner of trading. Combined monthly volume on Kalshi and Polymarket more than doubled from about $26 billion in May to $53 billion in July 2026, according to Pew Research Center. Bernstein, meanwhile, is modeling annual activity in the trillions, raising the stakes around who writes the rules and which regulator gets the final say.
A letter, a roundtable, and a fight over who gets in the room
All 11 Democratic senators on the panel signed the letter to Scott, led by Ranking Member Elizabeth Warren and Catherine Cortez Masto. The other signers were Jack Reed, Mark Warner, Chris Van Hollen, Tina Smith, Raphael Warnock, Andy Kim, Ruben Gallego, Lisa Blunt Rochester and Angela Alsobrooks, according to the committee release.
The senators said security-based prediction markets should be examined publicly and on a bipartisan basis. They also raised concerns about consumer protection, insider trading and manipulation.
“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.” — Senate Banking Committee Democrats, committee letter
Scott described the private meeting differently. He told The Block that he brought Republicans and Kalshi together “to better understand the opportunities and challenges presented by securities-linked products.”
“My goal is to ensure that America leads in financial innovation while protecting investors and providing the regulatory clarity these emerging markets need.”— Senate Banking Committee Chair Tim Scott, statement to The Block
Why Banking wants a seat at a CFTC table
The jurisdictional split sits at the heart of the dispute. The CFTC regulates event contracts traded on registered derivatives exchanges and has been developing a clearer framework for prediction markets. Senate Agriculture has primary CFTC oversight, while Banking oversees the SEC and securities markets.
That puts Banking directly into the conversation when prediction contracts begin to resemble securities products. The Democrats’ letter argues that contracts tied to corporate performance indicators could qualify as security-based swaps and therefore come under SEC regulation.
Kalshi is already part of the federal derivatives system. A February Federal Reserve paper described it as the largest federally regulated prediction market under CFTC oversight.
The number that explains the urgency
The growth forecasts help explain why this regulatory fight is becoming harder to ignore. Bernstein projects annual prediction-market trading volume of roughly $410 billion in 2026, rising to about $10 trillion by 2035. Its analysts expect financial-asset contracts, including crypto, equities and commodities, eventually to overtake sports, according to TechFlow.
“We expect new products such as KPI markets, which allow users to trade a single corporate metric…” — Bernstein analysts led by Gautam Chhugani, September 22 client note
Analyst Gautam Chhugani’s team also found that about 80% of Kalshi users had never used a sports-betting app, suggesting the market is attracting users beyond traditional bettors.
Regulators outside the U.S. are already taking different paths. ESMA says event contracts that qualify as financial instruments can fall under existing EU binary-options restrictions. Across parts of Asia, gambling laws have also limited prediction-market access, potentially pushing users and liquidity toward offshore or Western platforms, as Cryptopolitan previously reported.
That matters for crypto as well as traditional finance. Chainalysis notes that crypto-native prediction markets can settle activity on-chain, while mainstream financial firms are building regulated distribution channels. The U.S. framework that emerges could therefore help determine where prediction-market platforms, capital and market data concentrate as the sector grows.
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