Pennsylvania Proposes $1 Million Fee and New Regulations for Prediction Market Licenses

(AsiaGameHub) –   While some states are moving to prohibit prediction market platforms, Pennsylvania legislators are looking to capitalize on the trend. A proposed bill would impose a $1 million charge for an event wagering license and require operators to remit 20% of in-state revenue as tax.

Twelve Democrats are backing House Bill 2497, which was filed in Pennsylvania on Friday. It would place prediction markets under oversight similar to sports betting, though at a reduced rate. Sportsbooks currently face a $10 million licensing fee and a 36% tax on revenue to the state.

The bill would assign the Pennsylvania Gaming Control Board regulatory authority over prediction markets, as it holds for sports betting and casinos.

Bill Introduces New Age Limit and Market Limits

Alongside the fees, the bill would restrict prediction market participation to individuals aged 21 or older, aligning with the state’s legal gambling age.

The legislation would also permit the Board to restrict certain markets tied to “sensitive matters,” including elections, military conflicts, judicial rulings, and natural disasters.

Individuals are likewise barred from using prediction markets for money laundering, insider trading, or gains derived from nonpublic information.

Users may not leverage “nonpublic information acquired through employment, position, or social or business connections, or otherwise, to obtain financial or other benefit.”

Last week, political campaign staff acknowledged using nonpublic polling data to place bets on prediction markets, an act that would be unlawful under the bill’s provisions.

Insider Trading Incidents Drive Lawmakers to Act

One sponsor, Rep. Tarik Khan, cited high-profile insider trading cases as motivation to regulate the sector, such as a U.S. special forces soldier who won $400,000 betting on the capture of Nicolas Maduro in Venezuela.

“We have an obligation to ensure these markets are legitimate and that participants are not being defrauded,” Khan said. “The idea that insiders with privileged information can exploit the system and profit at the expense of those playing fairly is a concern.”

The bill would also prohibit wagering on high school sports, which Khan described as “common sense.”

“There is simply too much risk of undermining the integrity of these sports,” he said. “That is an issue.”

Oversight or Ban?

Although the bill imposes certain restrictions on prediction markets, its primary aim is regulation rather than prohibition. Notably, it does not prevent platforms from offering sports markets, except for high school events.

This approach contrasts with that of other states. In Minnesota, lawmakers are advancing a bill to ban sports prediction markets, meme markets, and election wagering.

Legal disputes between state regulators and prediction markets are also underway in at least 16 states. The Commodity Futures Trading Commission (CFTC) is actively defending its licensed operators, filing suits in New York, Arizona, Connecticut, and Illinois.

Given the agency’s claim of exclusive jurisdiction over the industry, it is unlikely to support Pennsylvania’s legislation and would probably contest the state’s authority to enact the proposed measures if the bill becomes law.