All 11 Democrats on the Senate Banking Committee have demanded a public hearing on prediction markets, after Republican members met privately with the chief executive of Kalshi — escalating a political fight over one of the fastest-growing corners of American finance, where Kalshi and Polymarket together processed about 53 billion USD in monthly trading volume in July.
By Ana Gonzalez | September 24, 2026
If you have never traded a prediction market, the concept is simple: instead of buying a stock, you bet on whether a specific event will happen — an election result, a sports score, even whether a company beats its earnings forecast. The market has exploded in popularity, and that growth is exactly what has Washington divided. For crypto-curious investors, the outcome matters because prediction markets have become one of the main on-ramps bringing retail money onto blockchain-based platforms.
What Happened: A Letter and a Private Meeting
In a Sept. 23 letter reported by crypto.news, the Democratic members of the Senate Banking, Housing and Urban Affairs Committee asked Chair Tim Scott to convene a hearing open to the full panel. Ranking member Elizabeth Warren and Sen. Catherine Cortez Masto led the request.
The trigger: according to The Block, Republican committee members met Kalshi CEO Tarek Mansour privately that same day. Scott told the outlet the discussion covered securities-linked products, how investors use them, retail protections, and regulatory questions for Congress. Democrats argue that a conversation between one party and industry executives is no substitute for public oversight — and that the full committee, Democrats included, has “a critical oversight role to play.”
The SEC Question at the Heart of the Letter
The policy substance centers on a subtle but consequential legal distinction. A contract on a sports result raises one set of regulatory issues. A contract tied to a public company’s earnings raises another entirely — and the senators said the latter could meet the legal definition of a security-based swap, which would place it under Securities and Exchange Commission rules rather than the lighter-touch commodities framework.
The letter presents that as a possibility for examination, not a settled finding. But the timing is pointed: firms are actively seeking SEC approval for products linked to corporate earnings, and Kalshi itself filed rules for stock and ETF perpetual futures with the SEC and CFTC in September, proposing 23-hour weekday trading and a minimum customer margin of 15.5 percent. Those proposed security futures differ from the event contracts in the letter, but the filings show why both agencies now feature in nearly every question about Kalshi’s product line.
The Numbers Driving the Anxiety: Who Actually Wins?
The scale of the industry is what turned a niche regulatory debate into a Senate standoff. Citing Pew Research Center data, the senators noted that combined monthly global trading volume on Kalshi and Polymarket rose from under 5 billion USD in September 2025 to about 24 billion USD in April 2026, then surged to roughly 53 billion USD in July — with sports contracts accounting for much of the increase. Pew measured about 47 billion USD in August, a slight cooling.
- July 2026 volume — approximately 53 billion USD combined on Kalshi and Polymarket
- Growth trajectory — from under 5 billion USD monthly in September 2025
- Wallet study sample — 11,989 active Polymarket wallets over six weeks in May-June
- Losing accounts — 56 percent of sampled wallets lost money
- Big winners — 7 percent made more than 1,000 USD; 9 percent lost more than 1,000 USD
Pew’s study found that the typical account was close to breaking even — but that profits concentrate in a small share of users while many others bleed slowly. The senators also raised the risk of manipulation and trading by people with advance knowledge of an outcome. That concern is not hypothetical: in cases described in CFTC orders, a former White House teleprompter operator traded contracts tied to President Trump’s remarks using advance access to speeches, and former Rep. George Santos traded a contract on his own attendance at the 2026 State of the Union while making public statements about his plans.
CFTC Warnings and the State Showdown
The hearing call lands on top of an already crowded regulatory docket. CFTC staff have flagged contracts based on what a named person says, attends, or does as especially vulnerable to manipulation, and asked exchanges to explain how they would identify people able to influence an outcome. Meanwhile, New Jersey has asked the Supreme Court to review a ruling favoring Kalshi, arguing that federal derivatives law does not strip states of authority over sports wagering within their borders. Kalshi maintains its CFTC registration keeps the contracts under federal oversight.
Kalshi has also kept expanding in parallel: a Sept. 22 filing proposed a margin framework letting eligible professional participants post margin rather than fund the full possible loss of a position, with sports contracts excluded and access limited to traders going through a registered futures commission merchant.
What This Means For You
For ordinary investors, the stakes are practical. Prediction markets are marketed with the polish of a finance app but can behave like a casino: Pew’s data shows most active accounts lose money, and the biggest winners are a small minority. A public hearing could surface information that private meetings never will — about consumer protections, conflict-of-interest rules, and whether contracts tied to corporate earnings should face the same scrutiny as securities.
If you trade on these platforms, two things to watch: whether event contracts linked to company results get pulled under SEC rules, which would add investor protections but could shrink product offerings; and how the state-federal fight over sports contracts resolves, which could determine what is available in your state.
The Verdict
The letter itself changes no rules — hearings are politics, not policy. But it signals that prediction markets have grown too big for either party to handle behind closed doors. A sector that went from 5 billion to 53 billion USD in monthly volume inside a year is going to get sunlight, whether its executives want it or not. For an industry built on transparency, that may ultimately be a gift.
The cryptocurrency market remains highly volatile. This article is for informational purposes only and does not constitute financial advice.
53 billion a month in combined volume and congress still cannot decide who regulates it. Prediction markets are not going to wait for them.
private meeting with the kalshi ceo, no minutes, no transparency, and now they act surprised that all 11 democrats want a hearing. this optics are beyond bad
the sec vs cftc question in that letter is the real story. earnings contracts look a lot like securities and everyone in that room knows it
earnings contracts are the trojan horse here. the second one of these settles against an actual company filing the securities argument writes itself
settlement against an actual filing is the fun part. wait until a CEO realizes a polymarket pool is pricing their miss before the earnings call, the lobbying gets real then
eleven signatures, zero scheduled hearings. classic banking committee speed, these markets hit 100B monthly before anyone swears in
zero scheduled hearings is the tell, nobody wants those answers on camera. a public session means someone explains why the CFTC ended up with election markets by accident
53 billion a month across kalshi and polymarket and congress still treats this like a fringe hobby. the hearing demand is at least two years late
two years late is generous. polymarket did 53B of that volume without a single lawmaker able to define what it even is
not subtle at all. republicans meet kalshi behind closed doors, democrats demand cameras on. both sides are fundraising off this lol
both sides fundraising off it is exactly right. kalshi gets to say regulated, polymarket gets to say persecuted, everyone cashes in except the traders
regulated vs persecuted is such a tidy duopoly. retail funds the whole thing either way lol
the private kalshi meeting had no minutes and the letter asks exactly one useful thing, who regulates this. 53B a month deserves that answer on the record at least
53B monthly volume in july alone. congress moves at hearing speed, these markets price elections at machine speed. the fight is already over
the earnings contracts angle is the real story. sports contracts are one thing, tying a market straight to a company EPS number is basically inviting the SEC in