Pennsylvania Looks to Create State Rules for Prediction Markets

Pennsylvania lawmakers are considering new legislation that would introduce a state level framework for prediction markets, taking a different approach from states that have focused only on bans or legal challenges.

House Bill 2711, introduced by Representative Tarik Khan, would establish a set of rules for prediction market operators without needing a state gaming license or introducing a new tax. Instead, the proposal focuses on consumer protections, market integrity and participation requirements, offering what supporters describe as a middle ground in this debate over how prediction markets should be regulated.

Focus on Consumer Protection

If passed, the bill would require users to be at least 21 years old and introduce restrictions aimed at preventing insider trading and market manipulation.

The proposal would also stop markets involving high school sports, events involving minors, and certain sensitive topics, while requiring operators to monitor suspicious activity and also enforce responsible participation standards. Unlike rules introduced in some other states, the legislation does not seek to ban prediction markets completely.

A Different Approach

The bill arrives as prediction market operators continue to challenge enforcement actions in courts across the United States.

Rather than pointing that sports event contracts should be prohibited, Pennsylvania lawmakers are exploring whether state level safeguards can coexist with the federal oversight provided by the Commodity Futures Trading Commission (CFTC). That approach is an alternative from the legal battles currently unfolding in states such as New York, Connecticut and Wisconsin, where regulators have requested to restrict or block prediction market platforms.

The proposal would also place limits on who can act as a market maker, preventing companies with ties to traditional gambling businesses from providing trading activity to prediction market platforms. Supporters say the measure is intended to reduce potential conflicts of interest and strengthen market integrity.

A Potential Model for Other States?

Although HB 2711 is still in the early stages of the legislative process, it has already attracted attention because it offers a different path forward for regulating prediction markets.

As more states are considering how to respond to the growth of federally regulated event contracts, Pennsylvania's proposal could become an important test of whether state level consumer protections can be introduced without directly challenging the industry's federal regulatory framework.

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