Pennsylvania Bill Would Regulate Prediction Markets, Allow Sports Event Contracts

Pennsylvania lawmakers are taking a markedly different approach to prediction markets than states that have moved to ban or tax them outright. State Rep. Tarik Khan introduced House Bill 2711, a bipartisan proposal that would create a full regulatory framework for platforms like Kalshi and Polymarket rather than shutting them out of the Commonwealth.

The bill, sponsored by 20 Democrats and four Republicans, was referred to the House Consumer Protection, Technology & Utilities Committee for a reading and vote. It marks one of the more detailed state-level attempts yet to bring prediction markets under a formal set of rules while still allowing sports event contracts to operate.

What HB 2711 Would Actually Do

Rather than banning event contracts tied to sports, HB 2711 adds a new Chapter 20 to Pennsylvania’s Title 4 — the same section of state law that governs casino and gaming regulation. The bill sets the minimum participation age at 21 and requires operators to run self-exclusion programs similar to those already mandated for licensed sportsbooks in the state.

Operators would also be required to detect market manipulation involving employees or others with access to nonpublic information, and to report suspected insider trading to the state. That insider-trading focus has been a centerpiece of Khan’s push since he first floated the concept in a memo back in May, and it’s aimed squarely at people — athletes, coaches, market employees, or anyone else with material nonpublic information — using that edge to profit on a contract’s outcome.

The legislation also draws hard lines around what can’t be traded. HB 2711 would prohibit contracts tied to high school sports or events involving minors, ban markets based on an individual’s health status, and outlaw so-called “death markets” — contracts tied to assassinations, attempted killings, or mass casualty events.

A Firewall Between Prediction Markets and Sportsbooks

One of the more consequential provisions targets the relationship between prediction market platforms and the gaming industry itself. The bill states that a provider “may not offer a prediction market in this Commonwealth if the prediction market includes, as a liquidity provider or market maker, a person that knowingly engages in a gaming activity in the ordinary course of business.”

In practice, that clause would likely block DraftKings and FanDuel — both licensed sportsbook operators in Pennsylvania that have also launched their own prediction market products elsewhere — from bringing those platforms into the state under this framework. It’s a notable structural choice: rather than folding prediction markets into the existing sports betting regulatory system overseen by the Pennsylvania Gaming Control Board, HB 2711 hands enforcement authority to the state attorney general and local district attorneys instead.

Penalties for violations are steep. Individual infractions could draw fines up to $10,000, with persistent violations around market-making or nonpublic information rising to $50,000. The attorney general could also seek a court injunction against repeat offenders, and continuing to operate in defiance of that order would carry a fine of $1 million per day.

Where This Fits in the Broader Prediction Markets Fight

Pennsylvania’s approach stands apart from other states that have gone after prediction markets through taxation or attempted outright bans, even though platforms like Kalshi and Polymarket argue they operate under federal oversight from the Commodity Futures Trading Commission rather than state gaming law. HB 2711 doesn’t attempt to tax the industry at all — a contrast to states like Kentucky, which has moved to apply gaming-style tax rates to prediction market revenue.

The bill still has a long way to go before it could become law in a state with an already well-established, heavily regulated Pennsylvania sports betting market. It hasn’t yet had a committee hearing or vote. But with two dozen co-sponsors across party lines, it represents a serious attempt to define how prediction markets and traditional sports wagering can coexist under one state’s laws — and its insider-trading and consumer-protection provisions could become a template other states look to as the prediction markets debate continues to spread nationally.