Pennsylvania Bill Seeks to Ban Sports Betting Companies from Market Making in Prediction Markets

On July 28, according to Bitcoin.com News, bipartisan lawmakers in Pennsylvania have introduced HB 2711, a bill that would prohibit sports betting companies and their affiliates from acting as liquidity providers or market makers in prediction markets, aiming to restrict traditional gambling companies from entering federally regulated event contract markets. Companies like DraftKings and Flutter have expanded into market making, with DraftKings recently launching its proprietary exchange DKeX after acquiring CFTC-registered Railbird Technologies. The bill also stipulates a 21-year-old age limit, excludes insider traders, and prohibits contracts involving high school sports, events with minor participants, personal health conditions, and "death markets." Enforcement authority rests with the State Attorney General, who can investigate, penalize, and shut down non-compliant platforms. Another companion bill, HB 2497, proposes establishing a licensing system that requires prediction platforms to pay an initial annual fee of $1 million and imposes a comprehensive tax rate of 22% (20% state tax plus 2% local tax). Previously, the federal Third Circuit Court of Appeals ruled that the Commodity Exchange Act takes precedence over state gambling laws, a precedent that binds Pennsylvania federal courts.