Pennsylvania Regulator Raises Alarm Over Prediction Markets in Letter to Congress

Pennsylvania Gaming Control Board (PGCB) Executive Director Kevin F. O’Toole has urged state and federal lawmakers to take action on the growing influence of prediction markets, warning that they threaten the state’s carefully built sports wagering system.

Good to Know

• O’Toole sent letters to Pennsylvania’s two U.S. Senators and 17 Congressional members.
• The PGCB warns prediction markets lack consumer safeguards and oversight.
• The CFTC has yet to issue clear guidance on sports events futures.

In his letter, O’Toole expressed concern that sports event contracts — often presented as financial derivatives — operate outside state gambling laws while using a “facade of federal regulation.” He argued that these markets create an unregulated “backdoor” to sports betting that bypasses the strict consumer protections implemented by state authorities.

“Sports prediction markets operate under the assertion that they are financial derivatives, or swaps, and therefore claim to not be gambling under state law,” O’Toole wrote. “These markets effectively create a backdoor to legalized sports betting, operating parallel to, but outside of, the state-regulated system, and without strict oversight.”

O’Toole further criticized the Commodity Futures Trading Commission (CFTC) for lacking a consumer protection framework comparable to state gaming regulators. He warned that the agency’s oversight — built for institutional financial markets — leaves retail users vulnerable to unclear standards and weak enforcement.

“With all due respect to the CFTC, it would take years for them to create the regulatory system and oversight that state gaming authorities have in place,” he added. “Even worse, the parallel tracks risk confusing patrons who engage in these markets by utilizing the veneer of a highly regulated market when, in reality, their markets are more akin to the ‘wild west’.”

His comments echo growing frustration across the U.S. gaming landscape. Earlier this year, the Michigan Gaming Control Board and NBA Chair Adam Silver submitted similar concerns to the CFTC, highlighting the absence of clear regulatory direction for prediction market operators.

The CFTC has not issued any formal response, leaving state regulators uncertain about how to handle platforms like Kalshi, which recently filed a federal lawsuit against the Ohio Casino Control Commission over its removal from the state’s market.