A bipartisan coalition of Pennsylvania lawmakers led by Representative Tarik Khan has introduced House Bill 2711 (HB 2711) to establish a state regulatory framework for prediction market platforms. Referred to the House Consumer Protection, Technology & Utilities Committee, the proposed legislation targets insider trading, market manipulation, and predatory contracts on platforms such as Kalshi and Polymarket. Rather than enacting an outright prohibition on exchange trading, HB 2711 creates a structured oversight framework.
The bill permits sports event contracts under specific state oversight while imposing strict consumer safeguards and civil penalties of up to $1m per day for persistent violations.
Key Provisions of Pennsylvania’s HB 2711 Framework
The legislative proposal establishes comprehensive operational parameters for prediction market operators and individual traders active in the Commonwealth.
- Insider Trading Penalties: Prohibits individuals from using material non-public information for personal gain, with individual and corporate fines ranging from $10,000 to $1m daily for continued non-compliance.
- Age Limits and Responsible Gaming: Restricts platform access strictly to individuals aged 21 and older, requiring operators to implement self-exclusion and identity verification protocols.
- Prohibited Event Contracts: Outlaws prediction markets tied to high school or youth sports, individual health statuses, assassinations, deaths, or mass casualty events.
- Separation of Gaming and Liquidity: Prevents entities engaged in commercial gaming from acting as market makers or liquidity providers for prediction exchanges.
- Mandatory Manipulation Reporting: Mandates that operators maintain technically feasible detection systems and immediately report suspected market manipulation or fraud to the Pennsylvania Attorney General.
Consumer Safeguards and Mandatory Age Restrictions
To shield younger audiences from market risks, HB 2711 strictly limits exchange participation to adults aged 21 and older while requiring operators to deploy self-exclusion capabilities. Pennsylvania’s focus on establishing rigorous age-gating mechanisms aligns with broader statewide responsible gaming initiatives, such as the underage gambling awareness campaign launched back in March 2026.
Beyond age restrictions, the legislation places a strict embargo on speculative contracts linked to sensitive or unethical outcomes. Operators are explicitly banned from offering markets on high school or youth sports, individual health statuses, assassinations, or mass casualty events. Through these boundaries, state lawmakers seek to draw a definitive legal line between legitimate economic or sporting event derivatives and exploitative wagering formats.
Severe Civil Penalties and the Separation of Sportsbooks from Liquidity Pools
HB 2711 outlines robust civil liability for users and platform providers that fail to maintain market integrity. In a sponsorship memorandum, Representative Khan warned that insider trading turns emerging event markets into a “corrupt, rigged system” that penalises retail consumers.
Under the bill, individuals who exploit non-public information or manipulate contract prices face direct civil enforcement from the state Attorney General.
A critical element of HB 2711 is its structural restriction on liquidity provision. The bill specifies that prediction market platforms may not utilise market makers or share revenue with entities that conduct commercial gaming operations in the ordinary course of business. If enacted into law, this firewall would effectively block established Pennsylvania sportsbooks, such as DraftKings and FanDuel, from supplying liquidity to or operating prediction market exchanges within the state.
Emerging Regulatory Standards Across U.S. Event Markets
Pennsylvania’s decision to regulate event exchanges reflects growing scrutiny from state executives and federal authorities over individuals leveraging non-public data or political outcomes for financial gain. These state-level executive interventions have gained momentum across the country, as seen when the Arizona governor banned state workers from prediction markets to stop insider trading.
Concurrently, election-based event contracts remain under intense legal debate. Regulators are actively issuing warnings regarding the legal boundaries surrounding political wagers, highlighted when the Wisconsin Elections Commission warned against election betting felony risks. These individual state actions mirror comprehensive federal regulatory proposals, including the CFTC’s proposed rules on prediction markets covering gaming and sports.
Legislative Outlook for Pennsylvania HB 2711
Backed by 24 co-sponsors across both political parties, HB 2711 faces evaluation in the House Consumer Protection, Technology & Utilities Committee during Pennsylvania’s 2026 legislative session. If passed by the General Assembly and signed into law, the bill would position Pennsylvania as one of the first major sports betting states to construct a dedicated regulatory framework for prediction exchanges rather than seeking an outright ban.
For prediction platforms, technology providers, and institutional liquidity sources, HB 2711 signals that state regulators intend to enforce strict market surveillance, corporate separation, and mandatory reporting standards as event contracts gain wider retail adoption.