Pennsylvania lawmakers are advancing proposals aimed at tightening oversight of prediction markets, with one bill targeting insider betting practices and another seeking to place the industry under state gaming regulation.

The measures arrive as prediction market platforms continue expanding in the United States. These services allow users to wager on outcomes tied to sports, politics, weather, economic events, and other future developments. State officials argue the platforms increasingly resemble sportsbooks while operating outside Pennsylvania’s gambling framework.

State Rep. Tarik Khan, a Democrat from Philadelphia, introduced legislation on April 29 that would prohibit individuals with insider knowledge from profiting through prediction market wagers. His proposal would also prevent athletes from betting on games in which they participate and stop politicians from wagering on their own elections.

Khan said the bill was designed to address concerns about fairness and public trust.

“We have a duty to make sure that these markets are legit and that people are not getting scammed,” Khan said according to WHYY. “To think that people that have inside information — people in power — are able to game this system and make millions off the backs of people that are trying to do it the honest way — it’s a problem.”

The legislation has support from several Democratic lawmakers, including fellow Philadelphia Rep. Danilo Burgos and Bucks County Rep. Jim Prokopiak. Republican lawmakers Jeremy Shaffer of Allegheny County and Jamie Flick of Lycoming County also signed on as co-sponsors.

Bills Focus on Oversight and Restrictions

Khan’s proposal would not ban prediction market platforms outright. Instead, it would establish restrictions on certain forms of wagering and require safeguards intended to protect users. The bill would prohibit minors from participating and would block betting tied to mass casualty incidents or death-related events. It would also ban wagers on Pennsylvania high school sports.

Khan said his concerns grew after reports involving U.S. Army Special Forces Master Sgt. Gannon Ken Van Dyke. Federal prosecutors charged Van Dyke with using classified information for personal gain after he allegedly earned $400,000 through bets on Polymarket connected to an operation involving Venezuelan President Nicolás Maduro before details became public. Authorities alleged Van Dyke participated in planning and carrying out the mission. He pleaded not guilty and is awaiting trial.

Khan also pointed to reports involving another Polymarket user who allegedly profited more than $300,000 after correctly wagering that President Donald Trump would pardon specific individuals. Under Khan’s proposal, platforms would face obligations to identify and report suspicious activity tied to insider information.

Separate Proposal Targets Licensing and Taxes

A second proposal, House Bill 2497, would create a formal state regulatory structure for prediction markets through oversight by the Pennsylvania Gaming Control Board. Rep. Danilo Burgos introduced the bill Friday before it was referred to the House Gaming Oversight Committee. The legislation would establish a new section of Pennsylvania gaming law focused on “event outcome prediction wagering.”

The bill defines event contracts broadly, covering agreements tied to sports, elections, weather, awards, and other economic, political, or social events. It also classifies exchange wagering, parlays, over-under bets, moneylines, pools, and straight bets as forms of prediction wagering. Lawmakers behind the bill argued state regulation became necessary because of what they described as a “noninterference approach” by the Commodity Futures Trading Commission toward prediction market operators.

The legislation would require companies offering prediction market contracts in Pennsylvania to obtain licenses from the gaming control board. Operators would pay a $1 million licensing fee along with a $1 million annual renewal cost. Businesses operating without approval could face penalties reaching $25,000.

The proposal also includes a 20% tax on gross event outcome prediction wagering revenue and an additional 2% local share assessment. Funds collected through the local assessment would support grants for projects considered in the public interest through the Commonwealth Financing Authority.

Consumer Protections Included in Proposal

House Bill 2497 also contains several provisions modeled after existing gaming regulations in Pennsylvania. Participants would need to be at least 21 years old to legally use prediction market platforms in the state.

The proposal would prohibit activity connected to money laundering, insider trading, and the use of nonpublic information for financial gain. Regulators would also receive authority to limit wagering tied to “sensitive economic, political or social events,” including elections, military conflicts, judicial rulings, and natural disasters.

One section of the bill introduces a three-day cooling-off period, giving users the ability to cancel an event contract after entering into it. Short-term wagering could not begin until the waiting period ended. Operators would also need to provide self-exclusion tools and disclose participant rights, fees, and complaint procedures.

In a March memo supporting the legislation, Burgos wrote: “Currently, Pennsylvania residents are participating in digital ‘event markets’ – platforms that allow users to trade on the outcome of everything from economic shifts to political elections. Because these platforms often claim to be ‘financial derivatives’ rather than gaming products, they currently bypass the rigorous safeguards we have spent decades building for our casinos and sportsbooks. This ‘regulatory arbitrage’ leaves our constituents vulnerable and deprives the Commonwealth of significant tax revenue.”

The debate in Pennsylvania reflects broader disputes unfolding across the country as states challenge prediction market operators that maintain their products fall under federal commodities law rather than state gambling rules. Meanwhile, state regulators continue arguing that those platforms function similarly to sportsbooks and should follow the same licensing, taxation, and consumer protection requirements.