Share 
ProphetX is urging federal regulators to preserve peer-to-peer sports prediction exchanges as the Commodity Futures Trading Commission (CFTC) develops rules for the growing market and considers how the platforms should operate.
The company says its exchange structure allows for neutral, competitive price formation and should not be treated in the same way as Pennsylvania sportsbooks.
That position conflicts with the Pennsylvania Gaming Control Board (PGCB), which views sports event contracts as wagering products subject to state gambling laws, regardless of how trades are classified.
ProphetX seeks federal standards for sports contracts
ProphetX CEO and co-founder Dean Sisun submitted the recommendations in connection with the CFTC’s Aug. 20 Innovation Advisory Committee meeting.
The company operates a CFTC-designated contract market where users trade directly with one another by buying and selling opposing positions on sporting events.
ProphetX earns a commission for facilitating those trades rather than a betting margin and does not hold a directional position in the outcomes. Sportsbooks generally set the odds and serve as the customer’s counterparty.
Sisun said consumer protection should include identifying behavior that runs counter to responsible trading early and building safeguards around it.
Sisun also said liquidity provided by an exchange affiliate should supplement rather than displace independent participation, allowing customers and market makers to compete on both sides while the exchange remains neutral.
The letter further recommended using Section 4(c) of the Commodity Exchange Act to establish a conditions-based framework for eligible sports-event contracts. The proposed standards could cover clear settlement criteria, market surveillance, information controls, and market-integrity protections, ProphetX wrote.
Board focuses on state gambling safeguards
Pennsylvania regulators argue that the trading structure does not change the legal nature of the underlying product.
In comments submitted to the CFTC in April, PGCB Executive Director Kevin O’Toole said contracts that allow customers to take opposing positions on sporting events meet Pennsylvania’s definition of sports wagering. He argued that offering those products in the commonwealth without a state gaming license violates Pennsylvania law.
The board noted that bettors must be at least 21 to use regulated Pennsylvania sportsbooks, while most CFTC-regulated prediction exchanges allow participation beginning at age 18.
Licensed sportsbooks must also enforce the state’s self-exclusion system, follow Pennsylvania responsible gambling requirements, and operate under consumer-protection rules established by the board.
However, the letter does not propose a minimum age of 21 or explain how federally regulated exchanges would interact with Pennsylvania’s self-exclusion system and other player protections.
Pennsylvania bill would require state licensing
House Bill 2497 would address those concerns by placing prediction markets under PGCB oversight and require operators serving Pennsylvania residents to obtain a state license before offering event contracts in the commonwealth.
The proposal would set the minimum participation age at 21 and require operators to honor requests for placement on a self-exclusion list.
It also includes consumer disclosures and complaint procedures, restrictions on the use of nonpublic information, a 20% tax on gross event outcome prediction wagering revenue, and a 2% local share assessment.
The bill has remained with the House Gaming Oversight Committee since May 8 and has not received a vote.
ProphetX’s recommendations are intended to shape future CFTC rules, while HB 2497 would establish a separate set of requirements at the state level. For now, both represent proposed approaches to oversight rather than changes to existing law.
