TLDR
- Pennsylvania Rep. Tarik Khan introduced HB 2711 to regulate prediction markets in the state
- The bill would not tax, license, or ban sports event contracts
- Oversight would move to the state attorney general instead of the gaming control board
- The bill would block sportsbooks like FanDuel and DraftKings from also running prediction markets
- The timing is unusual since courts keep siding with federal oversight over state law
Pennsylvania lawmakers are looking at a new way to handle prediction markets. Rep. Tarik Khan, a Philadelphia Democrat, introduced House Bill 2711 this year. The bill would add consumer protection rules for platforms like Kalshi and Polymarket.
HB 2711 does not tax prediction markets. It does not require a license. It also does not ban sports event contracts, which some states have tried to stop.
Attorney Doug Mishkin of BCLP Sports, Entertainment & Media told Gambling Insider the bill could still matter. He said it might act as a first step, similar to how daily fantasy sports and sports betting were eventually regulated instead of banned.
What the Bill Would Change
The bill would set a minimum player age of 21. It would also add insider trading rules for people using these platforms.
Political event contracts tied to topics like assassinations or death would be banned under the bill. Oversight would shift to the Pennsylvania attorney general instead of the Pennsylvania Gaming Control Board, which currently handles casino and sports betting rules.
An earlier bill, HB 2497, took a different approach. It called for state licensing and a 22 percent tax on revenue, lower than the 36 percent tax on sports betting in the state.
One part of HB 2711 stands out. It would stop companies from offering prediction markets in Pennsylvania if any part of their business also acts as a liquidity provider for that platform.
This would affect DraftKings and FanDuel, the two largest sports betting companies in the country. Both launched prediction markets this year and both act as market makers on their own platforms.
Mishkin said this part of the bill is confusing. He questioned why lawmakers would single out companies that already hold gambling licenses, since any company entering prediction markets could raise the same concerns.
Timing Raises Questions
The bill comes at an odd moment. States have been winning legal battles against Kalshi in court, while the Commodity Futures Trading Commission keeps stepping in to support the company.
Last week, the CFTC used emergency authority to tell Kalshi to ignore a cease-and-desist order issued in New York. In July, the agency told Kalshi to keep honoring sports contracts even after a Michigan court ordered the company to stop.
Mishkin called the bill ironic. He pointed out that prediction markets have argued for years that they answer only to federal law, not state law.
A regulated approach at the state level could appeal to companies like Kalshi. Still, it would not resolve the deeper legal fight over whether states have any authority at all.
The timing may connect to a court ruling from April. The U.S. Court of Appeals for the Third Circuit, which includes Pennsylvania, ruled that federal law overrides state law when it comes to Kalshi’s sports contracts.
Judge David J. Porter wrote that Kalshi’s contracts count as swaps under federal commodities law. That ruling favored federal oversight over New Jersey’s gambling laws.
Mishkin noted the ruling was tied to a preliminary injunction, not a final decision. Even so, it showed the court leaning toward Kalshi’s argument that state law does not apply.
HB 2711 remains in the Pennsylvania House Consumer Protection, Technology and Utilities Committee. No vote date has been set.
