Pennsylvania bills target sportsbook ties to prediction market infrastructure

Restrictions on market making

House Bill 2711 was introduced on July 22 by Democratic Representative Tarik Khan. The bipartisan proposal would not create a state licensing regime or ban prediction markets outright. Instead, it would set operating standards and consumer protection rules.

Its central provision would bar a prediction market provider from operating in Pennsylvania if its liquidity provider or market maker knowingly conducts gaming activity. The restriction would also apply to parent companies, subsidiaries, affiliates, joint ventures, employees, and entities acting for another company’s financial benefit. In addition, operators would be prohibited from entering into contracts or revenue-sharing arrangements with businesses that ordinarily engage in gaming.

The bill leaves some uncertainty over how broadly those restrictions could apply. It does not define “gaming activity,” and it does not clearly spell out how the rule would affect exchanges linked to sportsbook operators.

Consumer protection measures

HB 2711 also includes a set of conduct and safety requirements. Participants would need to be at least 21 years old. People on self-exclusion lists would be blocked from taking part, as would employees connected to the sources used to settle contracts.

The proposal would require safeguards against fraud, market manipulation, and the misuse of confidential information. It also contains limits on the kinds of contracts that could be offered. Contracts tied to high school events, events involving minors, certain health conditions, and so-called death markets would be prohibited. The bill defines those death-related contracts as markets linked to a person’s death, assassination, or mass-casualty events.

If enacted, enforcement would fall to the Pennsylvania Attorney General.

Separate licensing and tax bill

A second measure, HB 2497, approaches the industry from a different angle. Rather than focusing on conduct alone, it would require prediction market operators to obtain licenses from the Pennsylvania Gaming Control Board.

Under that bill, operators would face a $1 million initial licensing fee, a $1 million annual renewal fee, and a 22% tax on gross prediction wagering revenue. That total includes a 2% local share. According to the proposal, the combined tax rate would still be lower than Pennsylvania’s tax levels on other forms of licensed gambling.

Parallel tracks, no vote yet

The two bills are moving on parallel tracks rather than replacing one another. One is designed to regulate conduct and business relationships around trading infrastructure, while the other would establish a formal licensing and tax framework.

The proposals arrive as sportsbooks continue expanding into prediction market infrastructure and as legal disputes over federal and state authority remain unresolved. So far, however, neither HB 2711 nor HB 2497 has received a committee hearing or a vote in the Pennsylvania House.

In effect, Pennsylvania lawmakers are testing two approaches at once: one that seeks to police how prediction markets interact with gaming companies, and another that would fold operators into a state-regulated licensing and tax system. Whether either path advances remains uncertain.