Senate Democrats push public hearing on Kalshi and Polymarket

Democrats seek a public oversight debate

Eleven Senate Democrats have asked Senate Banking Committee Chair Tim Scott to convene a public hearing on prediction markets, according to adbytes.media. A Sep. 23 letter led by Sen. Elizabeth Warren and Sen. Catherine Cortez Masto calls for the full committee to review consumer exposure, trading integrity and the regulatory treatment of products offered by platforms including Kalshi and Polymarket.

The request coincided with a private meeting between Republican committee members and Kalshi CEO Tarek Mansour, according to The Block, as cited by adbytes.media. Scott said the discussion addressed products linked to securities, investor uses, protections for retail participants and questions requiring congressional attention. The Democrats argue that some contracts based on corporate performance could constitute security-based swaps subject to SEC oversight; that classification remains unsettled.

Manipulation is another focus. According to adbytes.media, the CFTC has warned about contracts whose outcomes depend on a particular person’s statements, actions or attendance. The outlet cites agency cases involving a former White House teleprompter operator who traded using advance knowledge of presidential speeches and former Rep. George Santos trading a contract concerning his attendance at the 2026 State of the Union.

Growth figures require context

Pew Research Center figures cited by adbytes.media put combined monthly Kalshi and Polymarket volume at less than $5 billion in September 2025 and nearly $24 billion in April 2026, with later reporting showing around $26 billion in May. That measure uses each contract’s $1 payout value rather than its purchase price: a contract bought for 40 cents still contributes $1. It therefore does not measure the cash users committed or their profits.

Pew’s study of 11,989 active Polymarket wallets found that the typical account was near break-even during a six-week window. The median user completed 46 trades over 10 active trading days, and the average trade was about $6.50. Average spending was a little over $600, with an overall average loss of less than $2; nevertheless, 56% of sampled accounts lost money, while 7% gained more than $1,000 and 9% lost more than $1,000.

Sports disputes and new product proposals

Sports contracts remain central to the conflict between federal derivatives oversight and state gambling enforcement. According to adbytes.media, New Jersey asked the Supreme Court in September to review a ruling favoring Kalshi on sports contracts. That dispute remains unresolved.

Kalshi also submitted rules in September for stock and ETF perpetual futures, proposing 23-hour weekday trading and a minimum customer margin of 15.50%, adbytes.media reported. The CFTC had not approved those submissions at the point covered by the report. A separate Sep. 22 filing proposed margin access for selected event contracts, excluding sports, for eligible participants using a registered futures commission merchant or authorized to clear their own trades. Margin would provide collateral against potential losses rather than require full upfront funding of the exposure.

What it means for prediction markets

• A hearing is being requested, not announced. The letter seeks a public committee examination; the supplied reporting does not establish that Scott has scheduled one.
• Contract classification remains consequential. The SEC argument concerns certain corporate-performance contracts, while sports products face a separate, unresolved dispute over state gambling authority.
• Headline volume needs careful interpretation. Payout-value turnover should not be confused with money invested, user profitability or market quality.
• Product filings are not approvals. Kalshi’s proposed perpetual futures and event-contract margin arrangements should be distinguished from authorized offerings.