Pennsylvania lawmakers introduced House Bill 2711 on July 22, legislation that would prohibit gambling companies from serving as liquidity providers or market makers on prediction platforms operating in the state. Rep. Tarik Khan introduced the bipartisan bill, which carries 24 sponsors including 20 Democrats and four Republicans, and was referred to the House Consumer Protection, Technology and Utilities Committee. The bill targets sportsbook operators expanding into prediction-market infrastructure, restricting platforms from contracting with entities that conduct gaming activity in their ordinary course of business. The measure arrives as traditional betting companies including DraftKings and Flutter have pursued market-making operations, with DraftKings recently launching its proprietary DKeX exchange after acquiring CFTC-registered Railbird Technologies. Pennsylvania's proposal represents a state-level regulatory response distinct from outright bans, focusing instead on separating prediction-market trading infrastructure from gambling-company control amid ongoing federal-state jurisdictional disputes over event contracts.
HB 2711 Prohibits Gambling Companies from Prediction-Market Liquidity Provision
House Bill 2711 would prohibit a provider from offering a prediction market in Pennsylvania when its liquidity provider or market maker knowingly conducts gaming activity in the ordinary course of business, whether inside or outside the commonwealth. The restriction extends to parents, subsidiaries, affiliates, joint ventures, employees and entities acting for another company's financial benefit. Prediction platforms would also be barred from entering contracts or sharing revenue with businesses that ordinarily engage in gaming.
The bill does not define "gaming activity" within its new prediction-market chapter and does not specify how the provisions would apply to platforms affiliated with sportsbook operators. The bill would establish a minimum age of 21 and require platforms to exclude self-excluded users, company employees, settlement-source employees and people possessing inside information. Providers would need commercially reasonable safeguards against fraud, manipulation and the misuse of material nonpublic information.
The legislation would prohibit markets involving high-school sports, sporting events with minor participants, individual health conditions, and what it defines as "death markets" — contracts tied to a person's death, assassination, attempted killing or mass-casualty events. Athletes, coaches, officials, candidates, campaign workers and others able to influence an outcome could face liability for trading on related contracts.
Attorney General Receives Enforcement Authority Under New Framework
Because the proposal creates no licensing regime, enforcement falls to the Attorney General, who would receive authority to investigate, impose penalties and shut down platforms operating outside the rules. This distinguishes HB 2711 from its companion measure, House Bill 2497, introduced May 8 by Rep. Danilo Burgos and co-sponsored by Khan, which sits in the House Gaming Oversight Committee.
Companion Bill HB 2497 Proposes Licensing and 22% Tax Rate
House Bill 2497 would require Pennsylvania Gaming Control Board licenses costing $1 million upfront and $1 million annually. The bill imposes a 20% tax on gross prediction-wagering revenue plus a 2% local share assessment, and would fine unlicensed operators up to $25,000. The combined 22% rate sits below Pennsylvania's existing rates for licensed operators, who pay 36% on sports wagering revenue and 54% on online slots.
Burgos framed the bill around regulatory arbitrage, arguing platforms claiming to offer financial derivatives rather than gaming products bypass safeguards built for casinos and sportsbooks. The two measures emerged from parallel tracks: Burgos circulated a licensing-and-tax memo in March, while Khan filed his insider-trading proposal in late April. Khan co-sponsors both bills, and contemporaneous coverage has described them as companion measures.
Third Circuit Ruling Creates Federal Preemption Precedent
The Third Circuit ruled 2-1 on April 6 in KalshiEX LLC v. Flaherty that the Commodity Exchange Act preempts state gambling laws as applied to sports event contracts on CFTC-registered exchanges, affirming an injunction that barred New Jersey from enforcing against Kalshi. That precedent binds federal courts in Pennsylvania. In dissent, Judge Jane Roth argued Kalshi's contracts are "virtually indistinguishable" from products offered by DraftKings and FanDuel.
Pennsylvania's gaming regulator has taken a confrontational position. The PGCB told the Commodity Futures Trading Commission in May that sports event contracts constitute illegal wagering under state law and accused federally regulated exchanges of operating as unlicensed sportsbooks accessible to people under 21. Pennsylvania joined a 40-state coalition arguing that sports contracts belong under state gambling oversight.
Neither Pennsylvania bill has received a committee vote or hearing.
FAQ
What does Pennsylvania House Bill 2711 restrict?
House Bill 2711 would prohibit gambling companies from serving as liquidity providers or market makers on prediction platforms operating in Pennsylvania. The bill, introduced July 22 by Rep. Tarik Khan, bars platforms from contracting with entities that conduct gaming activity in their ordinary course of business, including parents, subsidiaries, affiliates and joint ventures.
How does HB 2711 differ from companion bill HB 2497?
HB 2711 assigns enforcement to the Attorney General and creates no licensing regime, while HB 2497 would require Pennsylvania Gaming Control Board licenses costing $1 million upfront and $1 million annually. HB 2497 imposes a combined 22% tax rate on prediction-wagering revenue, compared to Pennsylvania's existing 36% rate on sports wagering and 54% on online slots. Both bills were introduced in the current legislative session, with HB 2497 filed May 8 by Rep. Danilo Burgos.
What federal court ruling affects Pennsylvania's prediction-market regulation?
The Third Circuit ruled 2-1 on April 6 in KalshiEX LLC v. Flaherty that the Commodity Exchange Act preempts state gambling laws as applied to sports event contracts on CFTC-registered exchanges. The ruling affirmed an injunction barring New Jersey from enforcing against Kalshi and binds federal courts in Pennsylvania, creating a precedent that limits state authority over federally regulated prediction platforms.
