Pennsylvania Bill Targets Sportsbook Influence on Prediction Markets

House Bill 2711, introduced by Democratic Representative Tarik Khan, proposes a regulatory framework focused on conduct rather than traditional licensing. The legislation prohibits prediction market providers from partnering with companies that engage in gaming activity, a move that could disrupt existing commercial ties between emerging prediction exchanges and established sportsbooks like DraftKings or Flutter. By targeting the financial infrastructure behind these platforms, the bill aims to enforce a strict separation between state-regulated gambling and federally overseen prediction contracts.

Beyond liquidity restrictions, the proposal mandates age verification and insider trading safeguards, explicitly banning contracts involving high school sports, individual health conditions, or mass-casualty events. Enforcement would fall to the Pennsylvania Attorney General rather than the state’s gaming board. This approach contrasts with a separate, pending proposal—House Bill 2497—which seeks to impose a 22% tax on revenue and require formal state licensure. While neither bill has reached a committee vote, they reflect a broader push to assert state control over platforms that critics argue function as unlicensed sportsbooks.

This legislative maneuvering occurs against the backdrop of a significant legal clash between state regulators and the U.S. Commodity Futures Trading Commission. Although a Third Circuit Court of Appeals ruling recently bolstered the position that federal law preempts state gambling statutes regarding event contracts, Pennsylvania officials continue to challenge the expansion of these markets. By attempting to restrict the participation of gaming entities, the proposed legislation creates a new front in the battle to define the boundaries of sports-based derivatives.