Pennsylvania lawmakers have introduced a bill to regulate prediction markets without imposing a tax on the industry. The approach sets the state apart from other jurisdictions that have focused on taxation, contract bans or enforcement actions against operators.
What the bill proposes
The House registered House Bill 2711 on 22 July. Representative Tarik Khan and more than two dozen co-sponsors authored the measure, which creates a separate chapter in state law for prediction markets and sets operational standards for platforms.
Key requirements include a minimum age of 21, blocking self-excluded users and operator employees, and a ban on individuals holding insider information. Prohibited contracts cover school sports, events involving minors, a person's health status and 'death markets' — contracts on death, murder or terrorist acts. Operators must implement fraud and manipulation detection measures.
The bill also bars operators from working in the state if their market-maker or liquidity provider is engaged in gambling as ordinary business. How this applies to platforms such as DraftKings and FanDuel remains unspecified. Oversight goes to the state attorney general and district attorneys, not the gaming commission. Violations after a court injunction carry fines up to $1m per day.
State divergence
States take different approaches to prediction markets. Minnesota this year banned operation, service and advertising of such platforms across a broad list of topics, from sports to politics. Kentucky imposed a 14.25% tax on revenue, Illinois a tax plus licensing. North Carolina introduced a 6% tax on net trading revenue without separate regulation. Tennessee made it a criminal offence to manipulate outcomes for market profit. Operators Kalshi and Polymarket are in litigation with several state authorities and the CFTC.
