Pennsylvania Proposes Bill to Ban Betting Firms from Providing Liquidity to Prediction Markets

ChainCatcher report: On July 22, Pennsylvania State Representative Tarik Khan introduced HB 2711, co-sponsored by 24 bipartisan legislators (20 Democrats and 4 Republicans), which has been referred to the House Consumer Protection, Technology, and Utilities Committee. The bill seeks to prohibit the provision of prediction market services to Pennsylvania residents in connection with gambling activities conducted by liquidity providers or market makers in the ordinary course of their business. The restrictions extend to parent companies, subsidiaries, affiliates, and joint ventures, and prohibit prediction platforms from sharing revenue with gambling enterprises. This legislation may impact sports betting groups such as DraftKings—which has acquired CFTC-registered Railbird Technologies and launched its own DKeX exchange—and Flutter, which are expanding into market-making within prediction markets. The bill also establishes a minimum age of 21, prohibits contracts related to high school sports, events involving minors, and death markets, and requires platforms to implement anti-fraud and insider information abuse prevention mechanisms. The bill does not establish a licensing regime; enforcement authority rests with the state Attorney General. Previously, in April, the U.S. Court of Appeals for the Third Circuit ruled 2-1 that the federal Commodity Exchange Act preempts state gambling laws. However, Pennsylvania has joined a coalition of 40 states asserting that sports contracts should fall under state-level regulation.