A group of bipartisan Pennsylvania legislators has introduced a bill that could prohibit sportsbooks and other gambling companies from serving as liquidity providers or market makers on prediction platforms. House Bill 2711 was introduced on July 22 by Representative Tarik Khan and referred to the House Consumer Protection, Technology and Utilities Committee. It has a total of 24 co-sponsors—20 Democrats and four Republicans.
The bill would ban a provider from offering a prediction market in Pennsylvania if its liquidity provider or market maker knowingly engages in gambling activities in the course of regular business, both within and outside the state. The restriction applies to parent companies, subsidiaries, affiliates, joint ventures, employees, and legal entities operating for the financial interest of another company.
Prediction platforms would also be barred from entering into contracts or sharing revenue with companies ordinarily engaged in gambling. A new chapter in the bill dedicated to prediction markets does not define the term “gambling activity” nor clarify how these provisions would apply to platforms affiliated with sports betting operators, leaving uncertainty about how broadly courts or regulators would apply this restriction.
This provision emerges as traditional sports betting groups move beyond consumer-facing prediction apps to the infrastructure underpinning their contracts. Companies like DraftKings and Flutter engage in market-making activities, and DraftKings recently launched its own DKeX exchange after acquiring CFTC-registered firm Railbird Technologies.
If HB 2711 is passed and applied broadly, it could prevent sportsbook-controlled market makers from supporting contracts offered to Pennsylvania residents. It could also complicate partnerships where a prediction exchange shares revenue with a casino, sportsbook, or gambling-affiliated company. Furthermore, unlike proposals in several other states, this bill treats prediction markets as an activity to be regulated, not banned. Thus, the focus of the restrictions imposed on gambling operators is limiting liquidity, not an outright prohibition.
The bill sets a minimum age of 21 and requires platforms to exclude self-excluded users, company employees, employees of settling organizations, and individuals with insider information. Providers would need to implement commercially reasonable safeguards against fraud, manipulation, and misuse of material nonpublic information. Additionally, the bill prohibits markets related to scholastic sports, sporting events involving minors, individual health conditions, and so-called “death markets”—contracts tied to a person’s death, attempted murder, assassination, or mass casualty events. Athletes, coaches, officials, candidates, campaign staff, and others capable of influencing an event’s outcome could be held liable for trading related contracts.
Since this proposal does not establish a licensing regime, enforcement functions are assigned to the Attorney General, who would gain powers to investigate, impose fines, and shut down platforms operating in violation. This distinguishes it from House Bill 2497, introduced on May 8 by Representative Danilo Burgos and co-sponsored by Khan, which is before the House Gaming Oversight Committee. The earlier bill proposed licensing by the Pennsylvania Gaming Control Board, with fees of $1 million for an initial permit and $1 million annually, a tax of 20% on prediction betting gross revenue plus a 2% local assessment, and fines for unlicensed operators of up to $25,000.
A combined 22% rate would be significantly lower than what Pennsylvania already charges its licensed operators, who pay 36% on sports betting revenue and 54% on online slots revenue—among the highest rates in the nation. Burgos framed his bill around what he calls “regulatory arbitrage,” arguing that platforms claiming to offer financial derivatives rather than gambling products circumvent safeguards established for casinos and sportsbooks.
These two measures did not emerge as competing initiatives but developed in parallel: in March, Burgos circulated a memo on licensing and taxation, and in late April, Khan filed his insider trading bill. Khan is a co-sponsor of both bills, and in contemporary publications they are described as complementary measures: HB 2497 treats sports event contracts as bets regulated by the state, while HB 2711 supplements them with conduct and consumer protection rules.
Pennsylvania’s gambling regulator has taken a more confrontational stance. In May, the PGCB informed the Commodity Futures Trading Commission (CFTC) that sports event contracts constitute illegal wagers under state law and accused federally regulated exchanges of operating as unlicensed sportsbooks accessible to individuals under 21. Pennsylvania also joined a coalition of 40 states arguing that sports event contracts should fall under state gambling oversight.
On April 6, the Third Circuit Court of Appeals in KalshiEX LLC v. Flaherty ruled 2–1 that the Commodity Exchange Act preempts state gambling laws concerning sports event contracts on CFTC-registered exchanges and upheld an injunction preventing New Jersey from taking enforcement action against Kalshi. This precedent is binding on federal courts in Pennsylvania. In her dissent, Judge Jane Roth argued that Kalshi’s contracts are “virtually indistinguishable” from products offered by DraftKings and FanDuel—the very intersection targeted by HB 2711’s liquidity provisions, but from the opposite side.
Neither Pennsylvania bill has received a committee vote or hearing. Nevertheless, HB 2711 introduces a new fault line in the nationwide struggle: states may not only challenge whether prediction markets can function but also attempt to separate their trading infrastructure from the gambling companies increasingly seeking to control it.
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