Full Breakdown
Pennsylvania Gaming Board Warns Casinos on Prediction Market Apps
12/17/2025, 11:34:04 AM
Regulatory Concerns Over Prediction Markets
The Pennsylvania Gaming Control Board (PGCB) has issued a warning to licensed casinos regarding their involvement with online prediction market applications, which it describes as operating in a "Wild West" environment. These apps, including Kalshi and Polymarket, allow users to place monetary bets on the likelihood of future events, ranging from sports outcomes to political elections. Unlike traditional sports betting, these platforms function as futures contracts and argue that they fall under the jurisdiction of the federal Commodity Futures Trading Commission (CFTC), which regulates them lightly. Kevin O’Toole, executive director of the PGCB, expressed concerns that these apps are circumventing state regulations designed to protect consumers and ensure responsible gaming.
Impact on Young Gamblers
The rise of prediction market apps has coincided with a notable increase in problem gambling among younger demographics. Josh Ercole, executive director of the Council on Compulsive Gambling of Pennsylvania, reported that individuals aged 18-24 now represent the largest segment of callers to the state's problem gambling hotline. This demographic shift is attributed to the accessibility and appeal of prediction markets, which have seen significant trading volumes—Kalshi and Polymarket reported $5.8 billion and $3.7 billion in trades, respectively, last month. Lawmakers have raised alarms about the psychological similarities between prediction markets and traditional gambling, with Rep. Manny Guzman stating, “We are quickly entering the end-stage of degenerate gambling.”
Financial Implications for the State
The PGCB has highlighted the financial ramifications of prediction markets not contributing to state revenue. Unlike regulated casinos, which are taxed at a rate of 36%—funding programs for gambling addiction and other social services—prediction market apps do not remit taxes to Pennsylvania. Steve Cook, chief counsel for the PGCB, noted that this situation results in a "direct wealth transfer from Pennsylvania public services to private entities," placing an additional burden on state-regulated operators.
Calls for Regulatory Action
In response to these challenges, the PGCB has urged Pennsylvania's Congressional delegation to advocate for a more stringent regulatory framework for prediction markets or to allow states to impose their own regulations. While the CFTC has indicated that it may permit some state oversight, the resolution of this issue is expected to unfold in the courts. The PGCB is exploring legal avenues to enforce tax obligations on prediction markets, citing a provision in the 2017 gaming law that allows for the taxation of unauthorized sports wagering.
Official Statements & Responses
The PGCB has advised casinos to avoid partnerships with prediction market apps, warning that such associations could jeopardize their gaming licenses. Cyrus Pitre, the PGCB’s chief enforcement counsel, cautioned that engaging with non-traditional prediction markets could lead to serious regulatory consequences for licensed operators.
Verbatim Quotes
- “are essentially offering high-volume wagering mechanisms that operate entirely outside of Pennsylvania’s comprehensive consumer protection, responsible gaming, and tax frameworks,” — Kevin O’Toole, Executive Director, PGCB
- “We are quickly entering the end-stage of degenerate gambling,” — Rep. Manny Guzman, D-Berks County
- “constitutes a direct wealth transfer from Pennsylvania public services to private entities,” — Steve Cook, Chief Counsel, PGCB
What's Next
The PGCB continues to consult with other state agencies to determine the necessary legal and administrative mechanisms to pursue tax revenues from prediction markets while awaiting federal action. The situation remains fluid, with ongoing discussions about the regulatory landscape for these emerging platforms.
