Pennsylvania HB 2711: State Moves to Regulate Prediction Markets Rather Than Ban Them

Updated: July 2026

Pennsylvania lawmakers have introduced House Bill 2711, a bipartisan measure that would establish a state-level regulatory framework for prediction market platforms rather than prohibit them. Introduced July 22, 2026 by State Representative Tarik Khan (D-Philadelphia), the bill has drawn 24 co-sponsors across party lines and would make Pennsylvania one of the first US states to formally oversee platforms such as Kalshi and Polymarket through state law, without banning the sports event contracts that rival operators and regulators elsewhere have sought to eliminate.

• HB 2711 introduced July 22, 2026, by Rep. Tarik Khan (D-Philadelphia) with 24 bipartisan co-sponsors
• The bill explicitly permits sports event contracts, contradicting the American Gaming Association's push for a federal ban
• Licensed gaming operators, including affiliates and subsidiaries, would be barred from acting as liquidity providers or market makers on prediction platforms
• Minimum participation age set at 21; insider trading monitoring required for platform employees
• No prediction market revenue tax included, distinguishing Pennsylvania from states like Kentucky
• Oversight would fall to the Pennsylvania Attorney General and district attorneys, not the Gaming Control Board
• Penalties range from $10,000 per violation to $1 million per day for operating after a court injunction
• Referred to the House Consumer Protection, Technology and Utilities Committee; no vote scheduled yet

What Does Pennsylvania HB 2711 Actually Do?

The bill creates a formal legal status for prediction market platforms operating in Pennsylvania, requiring them to register with the state, maintain fraud detection and market manipulation safeguards, and comply with a set of consumer protection rules that do not currently apply to CFTC-regulated platforms at the state level. It treats prediction markets as a distinct product category that is neither a traditional sports wager nor a conventional commodity future, and builds a regulatory structure around that classification.

The practical effect for operators is a new layer of Pennsylvania-specific compliance obligations alongside the existing CFTC framework. Platforms would need to verify user ages, maintain self-exclusion programmes, monitor employees for insider trading, and report suspicious activity. The Attorney General, rather than the Gaming Control Board that regulates licensed sportsbooks, would serve as the primary enforcement authority.

Who Introduced the Bill and What Is the Political Rationale?

Representative Tarik Khan, a Democrat from Philadelphia, framed the bill as a consumer protection measure grounded in the reality that prediction markets are already operating and attracting Pennsylvania users. Rather than attempt to block platforms that the CFTC has jurisdiction to license at the federal level, the bill accepts prediction markets' presence and seeks to impose state-level guardrails on how they operate.

The 24 co-sponsors include 20 Democrats and 4 Republicans, a broader coalition than most state gambling bills attract. The bipartisan backing reflects a calculation shared by several of the legislators that prohibition bills face legal obstacles, given the Third Circuit Court of Appeals ruling that supported Kalshi's challenge to Nevada's attempt to restrict its operations. Regulation, rather than a ban that is likely to be challenged in federal court, is the more durable path under that legal analysis.

Why Are DraftKings and FanDuel Potentially Affected?

The most consequential provision for incumbent operators is the ban on gaming businesses acting as liquidity providers or market makers on prediction market platforms. The bill defines gaming businesses broadly to include affiliates, subsidiaries, and joint ventures, which means companies that hold Pennsylvania gaming licenses through their sportsbook operations could be barred from supplying capital or market-making services to prediction market operators.

FanDuel, which holds 39% of the US sportsbook market through its Flutter Entertainment parent, and DraftKings both hold Pennsylvania gaming licenses. If either company has invested in or entered commercial arrangements with prediction market platforms that could be characterized as market-making activity, those arrangements would require restructuring to comply with HB 2711. The provision effectively creates a wall between the licensed gaming sector and the prediction market sector within Pennsylvania, even as both operate in the same geography and compete for the same customers.

How Does HB 2711 Contrast With Nevada's Approach?

Nevada's response to prediction markets has been the most restrictive of any US jurisdiction. The state moved to prohibit Kalshi from offering sports and election contracts to Nevada users, citing its existing gaming control framework. Kalshi negotiated a settlement and GeoComply deadline of August 12 to implement geographic blocking of Nevada users, while simultaneously pressing its federal court challenge that the CFTC framework should pre-empt state gaming laws.

Pennsylvania's bill takes the opposite position: it starts from acceptance of prediction markets' legal operation and imposes state rules on top of the federal framework rather than displacing it. This approach is more likely to survive federal court scrutiny because it is not attempting to ban what the CFTC has licensed; it is adding a consumer protection layer that operates in parallel. The trade-off is that it requires platforms to incur additional Pennsylvania compliance costs without generating state tax revenue, since the bill includes no prediction market GGR tax.

What Prediction Market Contracts Would Be Banned?

HB 2711 would prohibit markets on high school sports events, on activities involving minors, on individual health outcomes, on deaths, assassinations, or mass casualty events, and on any event that regulators determine creates unacceptable integrity risks. These exclusions mirror restrictions that the CFTC has applied to some contract categories at the federal level and that most prediction market operators have voluntarily adopted to avoid regulatory backlash.

Sports event contracts, the specific contract type that the American Gaming Association and Interactive Gaming Association have urged Congress to prohibit outright, remain fully permitted under HB 2711. This is the sharpest ideological divergence between the bill and the position of incumbent sportsbook operators. Pennsylvania, with some of the most active sportsbook volumes in the US, is effectively signaling that it does not accept the AGA's argument that sports event contracts are inherently incompatible with integrity or should be reserved exclusively for licensed sportsbooks.

What Happens to Kalshi's Current Pennsylvania Operations?

Kalshi, the largest US prediction market operator with over $2 billion in daily volume, currently operates in Pennsylvania under its CFTC designation without a state-specific license. HB 2711 would require Kalshi to register under the new state framework, comply with its consumer protection provisions, and submit to Attorney General oversight for enforcement purposes.

For Kalshi, the bill is a preferable outcome to a ban. Registration requirements create compliance costs but do not restrict the company's ability to offer sports event contracts or expand its Pennsylvania user base. The provisions most likely to require operational adjustment are the insider trading monitoring requirements for employees and the self-exclusion programme mandate, both of which would need to be built out or integrated with existing CFTC-required procedures.

How Does This Fit Into the National Prediction Markets Debate?

Pennsylvania's bill arrives at a moment when the regulatory treatment of prediction markets is one of the most actively contested questions in US gambling law. The CFTC asserts federal pre-emption. Nevada asserts state authority to regulate gambling within its borders regardless of federal licensing. The Third Circuit ruled in favor of the federal pre-emption argument in the Kalshi case. Congress has been lobbied by the AGA and IGA to pass legislation banning sports event contracts. And now Pennsylvania has proposed a third model: a state layer that adds consumer protection rules without trying to override the federal framework or eliminate the product.

If HB 2711 advances, it could become a template that other states adopt, creating a patchwork of state-level oversight requirements alongside the CFTC's federal rules. That outcome would raise compliance costs for prediction market platforms but would also establish them as a legitimate, regulated product in a major US state, which may be a more durable position than relying solely on federal jurisdiction in an environment where Congress is actively debating restrictions.

What Is the Outlook for HB 2711?

The bill has been referred to the House Consumer Protection, Technology and Utilities Committee, where it faces an uncertain path. Pennsylvania's legislative session calendar and the committee's existing workload mean that no hearing or vote has been scheduled. The bipartisan co-sponsorship list improves its prospects of advancing out of committee compared with partisan bills, but the absence of a gaming industry tax revenue component removes one of the incentives that typically accelerates gambling legislation in state houses.

The prediction markets debate is moving quickly at both the federal and state level, which could either accelerate HB 2711's progress or render it moot depending on how Congressional action and the ongoing federal court proceedings develop. If the Supreme Court takes up the CFTC pre-emption question, as analysts expect in late 2027 or early 2028, the outcome could either validate Pennsylvania's regulatory approach or change the legal foundation on which it rests.

Frequently Asked Questions

What is Pennsylvania HB 2711?

House Bill 2711 is a Pennsylvania state bill introduced July 22, 2026, by Rep. Tarik Khan (D-Philadelphia) that would create a regulatory framework for prediction market platforms. It would require platforms to register with the state, impose consumer protections including a minimum age of 21, and bar licensed gaming operators from acting as market makers on prediction platforms. It permits sports event contracts.

Does HB 2711 tax prediction market revenue?

No. The bill does not include a gross gaming revenue tax or any other prediction market-specific tax. This distinguishes Pennsylvania's approach from states like Kentucky, which have proposed taxing prediction market revenue. The absence of a tax component reflects the bill's framing as a consumer protection measure rather than a revenue-generating regulation.

Would Kalshi need a Pennsylvania license under this bill?

Under HB 2711, Kalshi and similar platforms would need to register with the state and comply with the new framework, but the bill does not require a gaming license of the kind issued by the Pennsylvania Gaming Control Board. Oversight would fall to the Attorney General rather than the gaming regulator.

How does Pennsylvania's approach differ from Nevada's?

Nevada attempted to ban or restrict prediction market sports and election contracts outright under its state gaming law authority. Pennsylvania's bill accepts prediction markets' presence and adds state consumer protection rules on top of the existing CFTC framework without trying to prohibit the product or override federal jurisdiction. Pennsylvania's approach is less likely to face successful federal pre-emption challenges.

Why would DraftKings and FanDuel be affected?

HB 2711 bars licensed gaming operators and their affiliates, subsidiaries, and joint ventures from acting as liquidity providers or market makers on prediction market platforms. Both DraftKings and FanDuel hold Pennsylvania gaming licenses, so any arrangement either company has that could be characterized as market-making for prediction markets would need to be restructured to comply with the bill.