Pennsylvania Bill Proposes Regulation for Prediction Markets

The state of Pennsylvania has introduced a legislative proposal to regulate prediction markets without applying taxes, distinguishing itself from other states that prioritize tax imposition. Bill 2711, introduced by Representative Tarik Khan on July 22, establishes a regulatory framework that promotes market integrity and consumer protection.

Regulation for Prediction Markets

Bill 2711 clearly defines the regulations for prediction markets in Pennsylvania. Some of its key provisions include:

• Minimum participation age set at 21 years.
• Consumer protection measures excluding self-excluded users and individuals with insider information.
• Prohibition of contracts involving school sports events or events involving minors.
• Prohibition of markets based on individuals' health status and "death markets".

The bill also requires the implementation of commercial measures to detect fraud and market manipulation, prohibiting the use of insider information to influence financial outcomes.

Restrictions and Compliance

This bill seeks to separate prediction markets from traditional betting businesses. Providers will not be able to operate in Pennsylvania if a liquidity provider or market maker is involved in gaming activities. Penalties for violations include fines of up to $1 million per day.

Compliance will be overseen by the Pennsylvania Attorney General and local district attorneys, rather than the Pennsylvania Gaming Control Board.

Different State Approaches

Pennsylvania's approach contrasts with other states. Minnesota has adopted very restrictive measures, while Kentucky and Illinois combine taxes with broader regulations. North Carolina imposes a lower tax without a dedicated regulatory framework. These models illustrate how states are addressing prediction markets with different strategies. Pennsylvania focuses on operational regulations rather than taxes or prohibitions.