Prediction Markets Are Unregulated Sportsbooks, Pennsylvania Regulator Claims

The Pennsylvania Gaming Control Board has urged the Commodity Futures Trading Commission to take action against prediction markets, arguing that they function as unregulated sportsbooks. Therefore, these platforms put vulnerable groups, especially young players at risk.

In comments submitted to CFTC Secretary Christopher Kirkpatrick, Executive Director Kevin F. O’Toole said platforms offering contracts on event outcomes are “fundamentally sports wagering,” which is prohibited under Pennsylvania law.

Concerns grow over access and risks for underage users

O’Toole raised concerns about how easily individuals under 21 can access prediction markets. He argued that the current regulatory approach exposes younger users to gambling-like products without adequate safeguards.

“By allowing Designated Contract Markets (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 said.

Historical safeguards weaken as markets expand beyond sports

The PGCB submission references legislative concerns dating back nearly 15 years. O’Toole cited former U.S. Senator Blanche Lincoln’s warning that Designated Contract Markets could operate as unregulated sportsbooks.

Earlier safeguards had limited the scope of prediction markets. However, the expansion of these platforms into areas such as politics and entertainment has increased their reach and appeal.

Addiction risks and regulatory tensions continue to build

The regulator highlighted research linking youth engagement in sports wagering to higher rates of addiction. O’Toole pointed to findings describing prediction markets as “wildly addictive,” particularly for younger and less experienced users.

“This is not speculation. These comments and statistical findings are grounded in facts and science that can’t be ignored,” he said.

The CFTC maintains that prediction markets fall under federal oversight as event contracts regulated by the Commodity Exchange Act. It has also issued an Advance Notice of Proposed Rulemaking seeking public input on how these markets should be governed.

At the same time, state regulators argue that these platforms resemble gambling, creating regulatory conflict across jurisdictions. O’Toole acknowledged the CFTC’s authority but urged caution in expanding access to such markets.

“Just because the Commission may be able to authorise DCMs offering these markets doesn’t mean it should,” he said.

The PGCB also pointed to its “What’s Really at Stake” campaign, which focuses on educating young people about gambling risks. This includes those linked to prediction markets and offshore platforms where age verification may be limited.

Another legal action might be in the offing for prediction markets in Pennsylvania. The state’s  Gaming Board is seeking support from the CFTC to regulate these platforms in a bid to protect vulnerable groups. The overarching claim is that prediction markets are too similar to sports betting, seeming more like an unregulated version.