Pennsylvania Moves to Regulate Prediction Markets, Allows Sports Wagering
Pennsylvania prediction markets are set to operate under a comprehensive regulatory framework as Rep. Tarik Khan introduces HB 2711, addressing a sector that has seen varying state approaches. The bipartisan bill, sponsored by 24 House members, including 20 Democrats and four Republicans, aims to establish consumer protection standards similar to those governing sports betting. Under the proposed legislation, participants must be at least 21 years old, and providers would implement self-exclusion programs while monitoring for market manipulation and insider trading. The framework includes significant enforcement measures, with civil penalties ranging from $10,000 per violation to $50,000 for persistent breaches. Operators defying court orders could face fines reaching $1 million per day.
Pennsylvania’s HB 2711 Sets New Framework for Prediction Markets
HB 2711 was introduced on July 22, 2026, and referred to the Consumer Protection, Technology & Utilities Committee the same day. The legislation creates Chapter 20 within Title 4 (Amusements) of the Pennsylvania Consolidated Statutes, establishing a regulatory structure that mirrors Act 42 of 2017, which governs sports wagering in the state.
The bill grants the Pennsylvania Gaming Control Board exclusive jurisdiction to license and audit all operators. If a provider inadvertently allows someone under 21 to open an account, the provider must immediately suspend the account, close all speculative positions, pay out any money in the account, and prohibit further participation until the individual reaches 21.
Participation exclusions extend beyond self-excluded individuals. The bill prohibits officers, directors, employees, or agents of the provider or affiliated companies from participating. Individuals who provide settlement sources and anyone possessing insider information on a particular market also face exclusion. The board retains authority to exclude additional categories as necessary.
Providers must implement commercially reasonable and technically feasible measures to detect fraudulent or manipulative conduct, including prediction market manipulation and material nonpublic information. When potential manipulation is detected, providers shall report findings to the Attorney General and, if appropriate, to law enforcement. Unlike other regulatory proposals, HB 2711 does not impose taxes on the industry.
Which Contracts Would Pennsylvania Prohibit?
Section 2005 of the bill establishes three primary categories of prohibited contracts. Providers cannot permit speculative positions on sporting events where participants are minor children or compete for high school teams. Individual health status markets face prohibition, as do death markets.
The legislation bans contracts related to high school or youth sports, besides markets involving assassinations, attempted assassinations, or mass casualty events. Rep. Khan described the high school sports prohibition as a necessary safeguard, stating there exists “too much of a risk of corrupting and adulterating the purity of these sports”.
A notable provision restricts companies already engaged in gaming activities from serving as liquidity providers or market makers within Pennsylvania prediction markets. The bill specifies that providers cannot offer prediction markets in the commonwealth if they include “a person that knowingly engages in a gaming activity in the ordinary course of business”. This restriction would consequently prevent DraftKings and FanDuel, both licensed sportsbooks in Pennsylvania, from operating their prediction market platforms there.
The age requirement of 21 years applies to all traders, aligning with existing sports betting regulations in the state.
How Does Pennsylvania’s Approach Compare to Other States?
States have adopted divergent strategies for addressing prediction markets, creating a patchwork regulatory landscape. North Carolina took a cooperative approach, recognizing CFTC jurisdiction while imposing a 6% tax on net trading fee revenue from residents, effective January 2027. The state simultaneously raised its sports betting tax from 18% to 23%, establishing nearly a four-fold difference between the two activities.
Illinois integrated prediction markets into its Sports Wagering Act, requiring operators to obtain sports wagering licenses at $15 million for four years. The state applies tiered transaction taxes of 1.75% on the first 5 million exchange wagers per fiscal year and 3.5% thereafter. Kentucky enacted a 14.25% excise tax on transaction fees, while New Jersey initially proposed comprehensive regulation before settling on a 9% surtax on gross income.
The CFTC has sued six states to defend its regulatory authority, winning a preliminary injunction in Arizona. Federal courts have reached conflicting conclusions, with the Third Circuit ruling states cannot stop Kalshi from offering contracts, while courts in Nevada, Maryland, and Ohio sided with states. At least 12 states have filed civil actions against operators, and 39 state attorneys general signed an amicus brief supporting enforcement. States have lost more than $700 million in gaming tax revenue as operators argue federal preemption exempts them from state licensing requirements.
