PGCB Raises Alarm Over Sports Contracts
- Executive Director Kevin O’Toole urges Pennsylvania’s congressional delegation to act
- Calls on the Commodity Futures Trading Commission (CFTC) to prohibit sports-based contracts
- Warns prediction markets threaten the integrity of Pennsylvania’s regulated sports betting industry
The Pennsylvania Gaming Control Board (PGCB) is sounding the alarm over the rise of prediction markets offering contracts tied to sporting events. Executive Director Kevin O’Toole has asked the state’s congressional delegation to pressure the CFTC to block such products on federally regulated trading platforms.
O’Toole’s Concerns
O’Toole, who has led the PGCB for more than 16 years and brings nearly three decades of gaming regulatory experience, argues that prediction markets pose a “grave threat” to Pennsylvania’s carefully designed sports wagering framework.
Originally focused on politics and cultural events, exchanges like Kalshi have expanded into sports outcomes, framing their contracts as financial derivatives rather than gambling. By doing so, they claim oversight by the CFTC, not state gaming regulators.
Regulatory Conflict
In a letter to Sens. John Fetterman (D) and Dave McCormick (R), along with 17 U.S. representatives, O’Toole stressed the conflict between federal derivatives law and Pennsylvania’s authority to regulate gambling.
“These markets claim primary oversight falls under the federal CFTC. This creates a direct conflict regarding regulatory authority, pitting federal law against Pennsylvania’s established power to regulate gambling activities within its borders,” O’Toole wrote.
How Prediction Markets Work
Prediction markets allow users to buy and sell shares tied to event outcomes. For example:
- Yankees vs. Blue Jays: Yankees win shares trade at $0.61, Blue Jays at $0.39. Winning shares redeem at $1.
- A $100 stake on the Yankees would return $161 (net $61).
By comparison, a $100 Yankees wager at DraftKings (-180 odds) would return $155.55 (net $55.55). DraftKings’ revenue is taxed at 36% in Pennsylvania, while Kalshi pays no state taxes on its trading fees.
Responsible Gaming Gaps
O’Toole also highlighted consumer protection concerns:
- Age restrictions: Prediction markets allow users 18+, while Pennsylvania requires 21+ for sports betting.
- Lack of safeguards: Platforms aren’t required to provide responsible gaming tools or display resources like 1-800-GAMBLER.
- Minimal oversight: The CFTC is a financial regulator, not a gambling authority, and lacks the infrastructure to monitor problem gambling.
“With all due respect to the CFTC, it would take years for them to create the regulatory system and oversight that state gaming authorities already have in place,” O’Toole said.
Next Steps
O’Toole had been scheduled to testify at the CFTC’s Prediction Markets Roundtable in March before the session was canceled. He instead submitted written testimony urging the commission to prohibit sports-related contracts on federally regulated exchanges.
