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Pennsylvania Gaming Control Board’s Executive Director Kevin F. O’Toole has formally sounded the alarm to Pennsylvania’s congressional delegation over the growth of sports “prediction markets” trading on commodity or futures market models.
O’Toole warns that they may erode the state’s carefully built sports wagering structure.
In a letter dispatched to both US senators from Pennsylvania and 17 House members, O’Toole urged federal pressure on the Commodity Futures Trading Commission (CFTC) to scrutinize and curtail what he described as a proliferating dual-track system.
Under that system, traditional state-licensed online sportsbooks operate side-by-side with privately run “event contracts” markets that claim to function under federal oversight but which lack the consumer protections states enforce.
PGCB’s argument against predictions markets
O’Toole argues that these prediction markets often present themselves as derivatives or swaps, thus shielding themselves from state gambling laws.
Yet in practice, he contends, they act as back-door sports wagering sites, without age verification, problem gambling safeguards, or the same oversight that licensed operators must satisfy.
In his letter, O’Toole wrote:
“By seeking classification as financial derivatives, predictions markets aim to sidestep these crucial state-level requirements.
“This creates an uneven playing field where predictions markets could gain a competitive advantage by exploiting a loophole between federal financial regulation and state gaming law.”
Pennsylvania’s current regulatory framework for sports wagering dates to the aftermath of the Supreme Court striking down the Professional and Amateur Sports Protection Act in 2018. In response, the commonwealth chose a model that routes all wagering through regulated and vetted licensees, with robust consumer protections, age limits, and responsible gaming controls.
By contrast, O’Toole warns, prediction markets often allow self-certification for compliance with federal law, avoiding any real review or enforcement by the CFTC. He cautions that the CFTC’s traditional oversight apparatus was built for large, institutional markets, not bets from everyday consumers on sporting event outcomes.
“The jurisdictional clash carries a significant risk of resulting in inconsistent and inadequate regulation.”
He adds that it could take years for federal regulators to design a regime matching the consumer protections already in place at the state level, if ever. A parallel wagering ecosystem, he warns, may mislead bettors into thinking they are protected when, in fact, they are operating in a much less regulated environment.
O’Toole also mentioned that the PGCB could punish operators for not complying with the requirements to operate legally within the state.
More risks involved
Pennsylvania’s regulated gaming market already generates substantial tax revenue and oversight, and state regulators view these new models as a direct threat to the integrity, transparency, and consumer safety built into the system.
O’Toole’s letter follows earlier testimony submitted by the PGCB to the CFTC in April 2025. He concludes that letting sports wagering slip into loosely regulated predictive markets could introduce risk of match-fixing, insider abuse, or market manipulation, which is all exacerbated by weaker oversight.
As congressional response remains unclear, Pennsylvania’s gaming regulators are pressing their case: The dual track is not only unfair to licensed operators but potentially dangerous for consumers who may assume they enjoy protections they do not actually receive.
