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Pennsylvania gaming regulators are urging federal officials to reject the expansion of prediction markets into sports-related contracts, warning such offerings threaten public safety and undermine state gaming laws, which includes regulated Pennsylvania sportsbooks.
In an April 30 comment letter to the Commodity Futures Trading Commission (CFTC), Kevin F. O’Toole, executive director of the Pennsylvania Gaming Control Board (PGCB), outlined the agency’s “profound opposition” to how prediction markets are evolving under federal oversight.
“Just because the commission may be able to authorize Designated Contract Markets (DCMs) offering these markets doesn’t mean it should.”
The letter responds to the CFTC’s Advance Notice of Proposed Rulemaking (ANPRM) on prediction markets and event contracts.
PGCB: Sports event contracts are sports wagering
At the core of the PGCB’s position is a clear assertion that prediction markets tied to sports outcomes fall squarely within the definition of gambling. The letter states:
“To be clear, the PGCB believes that prediction markets offering the ability to purchase a contract on the outcome of a sporting event is sports wagering.
“The board further believes a DCM dressing these wagers up as financial instruments does not pre-empt state gaming or criminal law.”
Regulators accuse CFTC of enabling ‘unregulated sportsbooks’
The PGCB’s criticism of the CFTC was direct, arguing the agency has strayed from its historical role.
“By allowing DCMs to masquerade as unregulated sportsbooks, the commission has abandoned its historical mandate, ignored its own regulations, and actively endangered a highly vulnerable demographic of young adults.”
O’Toole also pointed to former Sen. Blanche Lincoln (D-Ark.), who warned in 2010 that sports-related event contracts would be “quite easy to construct” and “would be used solely for gambling.”
“Today, the landscape has deteriorated.”
Blanche served as the former chairwoman of the Senate Agriculture Committee and was the primary author of the Dodd-Frank Act’s Commodity Exchange Act provisions, which oversees the CFTC.
Markets may appear similar, but risks are ‘stark’
While acknowledging that prediction markets and regulated sports wagering sites may look similar on the surface, the PGCB emphasized key differences in oversight and safeguards.
“To the casual observer, sports wagering with a licensed and regulated sportsbook and purchasing a contract predicting the outcome of a sporting event may appear largely indistinguishable and nonproblematic.
“The reality, however, and the distinction between the two forms of gaming is stark and dangerously flawed.”
One of the central concerns raised in the letter is access among younger users.
In Pennsylvania, bettors must be 21 to place a legal sports wager. Prediction markets, however, often allow participation at 18.
O’Toole wrote:
“In stark contrast, the majority, if not all, DCMs make what is essentially the same activity available to anyone 18 years of age or older.”
The board argued that younger demographics are particularly vulnerable to gambling-related harms, citing research on addiction, impulsivity, and financial consequences.
CFTC not equipped to regulate retail-style betting
The PGCB also questioned whether the CFTC is capable of overseeing markets that increasingly resemble consumer-facing wagering platforms:
“The CFTC is simply not built to adequately monitor retail transactions valued at $100 or less and entered into by a teenager.”
The board contrasted complex regulatory questions posed in the ANPRM with the reality of everyday users engaging with low-dollar contracts.
Rep. Danilo Burgos (D-Philadelphia) circulated a co-sponsorship memo in March for plans to introduce the Event Market Regulatory Act, which would establish licensing, taxation and consumer protection rules for prediction market operators in the commonwealth.
Once officially introduced and if passed, the PGCB would be in charge of overseeing prediction markets in the Keystone State.
This is the not the first time the PGCB has warned against prediction markets. O’Toole wrote another letter to Pennsylvania senators and 17 House members with concerns in October.
Public interest should guide decision, PGCB says
Even if federal regulators ultimately determine they have the authority to allow prediction markets tied to sports, the PGCB argued that approval would not serve the public good.
“… even if the CFTC can authorize these markets, it is not necessarily in the best interest of the citizens of this great country to do so.”
The letter closes by reiterating the board’s central message: Federal approval of sports-related prediction markets could have unintended consequences, particularly for younger and at-risk populations.
In the letter, Pennsylvania regulators made their stance clear: Even if the CFTC can oversee sports wagering, that doesn’t mean it should.
