Pennsylvania Lawmaker Floats Ban on Gambling Firms Supplying Liquidity to Prediction Markets
AI Market Summary
Pennsylvania's HB 2711 would restrict gambling firms and affiliated entities from providing liquidity or revenue sharing to prediction markets for state residents, targeting market-making expansion by groups like DraftKings and Flutter. While federal preemption has been affirmed in the Third Circuit, the bill signals heightened state-level enforcement risk and operational constraints, including 21+ access, barred contract types, and mandatory anti-fraud/insider-abuse controls. Near-term focus is on regulatory overhang and compliance costs.
Impact level
● Medium
Affected assets
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Pennsylvania State Representative Tarik Khan on July 22 introduced HB 2711, a bill backed by 24 bipartisan cosponsors (20 Democrats and 4 Republicans) and sent to the House Consumer Protection, Technology, and Utilities Committee.
The proposal would bar prediction market services for Pennsylvania residents when those services are tied to gambling activities carried out by liquidity providers or market makers in the ordinary course of their business. The scope would also cover parent companies, subsidiaries, affiliates, and joint ventures. It would further prohibit prediction platforms from sharing revenue with gambling enterprises.
The measure could affect sports betting groups moving into prediction-market market making, including DraftKings—which has acquired CFTCregistered Railbird Technologies and launched its own DKeX exchange—and Flutter.
HB 2711 would set a minimum participation age of 21 and ban contracts tied to high school sports, events involving minors, and "death markets". It would also require platforms to implement mechanisms to prevent fraud and the misuse of insider information.
The bill does not create a licensing regime. Enforcement would be handled by the Pennsylvania Attorney General.
The effort comes after an April ruling by the U.S. Court of Appeals for the Third Circuit that the federal Commodity Exchange Act preempts state gambling laws. Pennsylvania has also joined a coalition of 40 states arguing that sports contracts should remain subject to state-level regulation.
