Pennsylvania Moves to Tax and License Prediction Markets
Key Facts
- HB 2497 was introduced May 7 and referred to the House Gaming Oversight Committee the next day
- The bill would create a new Pennsylvania framework for “event outcome prediction wagering,” with duties for the Pennsylvania Gaming Control Board and Department of Revenue.
- The proposal would require state licensing, impose taxes and local assessments, set a minimum age of 21
- The bill will also restrict sensitive event contracts, including elections, military conflicts, natural disasters and judicial rulings.
Pennsylvania’s Bill Would Put Prediction Markets Under Gaming Control
Pennsylvania lawmakers have introduced HB 2497, a Democratic-backed proposal that would require prediction market operators to obtain state approval before offering event contracts to residents.
The bill, led by Rep. Danilo Burgos, would amend Title 4 of Pennsylvania law and create a new category for “event outcome prediction wagering.”
The official bill description says the measure would impose duties on the Pennsylvania Gaming Control Board and Department of Revenue, create an event outcome prediction wagering tax and local share assessment, establish restricted receipt accounts, and impose penalties.
The proposal puts Pennsylvania on a different track from states trying to block prediction markets outright. Rather than treating event contracts as an illegal product to be removed from the state, HB 2497 would fold them into Pennsylvania’s gambling framework, with licensing, taxation, oversight, and penalties handled through existing state agencies.
Licensing, Taxes and a 21+ Standard
HB 2497 would require operators serving Pennsylvania residents to obtain a license from the PGCB. According to PlayPennsylvania’s summary of the bill text, the proposal would set a $1 million initial license fee and a $1 million annual renewal fee, along with a 20% tax on gross event outcome prediction wagering revenue and a 2% local share assessment.
The bill also would raise the minimum participant age to 21. That aligns prediction markets more closely with Pennsylvania’s regulated online casino and sports wagering framework, rather than the 18-plus access model that has been central to some prediction-market growth.
The measure includes additional consumer-protection requirements. Operators would need self-exclusion options and disclosures covering participant rights, fees and complaint procedures, according to the bill summary.
Insider Trading and Sensitive Contracts Are Central to the Bill
The bill also targets market-integrity concerns that have become harder for lawmakers to ignore. It would prohibit wagering tied to criminal activity, insider trading, money laundering and the use of nonpublic information for financial gain.
That provision shows where the policy debate is moving. The early fight over prediction markets focused heavily on whether they are financial instruments or gambling products. HB 2497 adds a second layer: even if event contracts are allowed, lawmakers want rules around who can trade, what information they can use and which events are too sensitive for open markets.
The bill would give the PGCB authority to restrict wagering on sensitive economic, political or social events. The summary specifically identifies elections, military conflicts, natural disasters and judicial rulings as examples.
Burgos Framed the Bill as a Response to Regulatory Arbitrage
In a March co-sponsorship memo, Burgos said he planned to introduce legislation bringing the “prediction market” industry under PGCB oversight. He argued that platforms often claim to offer “financial derivatives” rather than gaming products, allowing them to bypass safeguards built for casinos and sports betting.
Burgos called that structure “regulatory arbitrage” and said it leaves residents vulnerable while depriving the Commonwealth of tax revenue. In the same memo, he wrote: “We cannot allow ‘the Wild West’ of unregulated digital trading to continue operating in a legal gray area.”
The introduced bill appears to have softened at least one major fiscal point from the memo. Burgos originally described a 34% state tax and 2% local share assessment, but the introduced version was reported as using a 20% tax plus the 2% local share assessment.
Why This Matters For Bettors
If HB 2497 advances, prediction-market platforms that currently serve Pennsylvania users under a federal commodities theory could face a choice: seek a state gaming license, limit certain markets, raise the age threshold, change product design or challenge the law.
That matters because prediction markets have increasingly occupied territory that looks familiar to bettors: sports outcomes, political outcomes, parlays, moneyline-style structures and binary pricing. A state licensing model could make those products more predictable from a consumer-protection standpoint, but it could also reduce availability if operators decide the cost, tax rate or legal exposure is too high.
The broader industry impact is more significant. Pennsylvania is not taking the cleanest anti-prediction-market position, which would be an outright ban. It is taking the more durable regulatory position: if the activity looks and functions like wagering, the state should license it, tax it and supervise it.
That approach is easier for other states to copy. A ban invites a direct federal preemption fight with CFTC-regulated exchanges. A licensing-and-taxation model gives states a more practical argument: they are not necessarily blocking federally regulated markets; they are applying state gambling protections to activity offered to their residents.
The PGCB has already made clear where it stands. In comments submitted to the CFTC, Executive Director Kevin F. O’Toole said prediction markets are “sports wagering being offered in violation of state law” and warned that the platforms have not adequately addressed underage gambling concerns. He also wrote that allowing designated contract markets to “masquerade as unregulated sportsbooks” endangers young adults.
That is the core conflict. The CFTC has opened a federal rulemaking process on prediction markets, saying it is considering how statutory core principles, prohibited event contracts, cost-benefit issues and other rules should apply. CFTC Chair Michael S. Selig said the agency would exercise its “exclusive jurisdiction over prediction markets.”
Pennsylvania’s bill is a direct answer to that claim. It asserts that states still have a role when event contracts begin to resemble retail gambling products offered to residents inside their borders.
What Happens Next
HB 2497 is now in the House Gaming Oversight Committee, where lawmakers can hold hearings, amend the bill, advance it or let it stall. There are no votes listed yet on the bill-tracking page.
The next practical question is whether prediction-market operators respond publicly. Kalshi and other platforms will likely argue that federally regulated event contracts fall under CFTC authority, not state gambling law. Pennsylvania regulators and lawmakers are signaling the opposite: federal oversight does not erase state authority over gambling-like products offered to state residents.
Market behavior could shift even before the bill moves. Operators may become more cautious with Pennsylvania-facing sports, election and sensitive-event markets. Other states will also be watching whether Pennsylvania’s licensing-and-taxation model gains traction, because it offers a middle path between doing nothing and attempting a flat prohibition.
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Marcus has spent over 20 years navigating the legal side of online betting - from his early days consulting for offshore operators to helping licensed U.S. sportsbooks launch in regulated markets. He’s worked with compliance teams, reviewed licensing frameworks in 15+ states, and advised on some of the biggest regulatory shifts since PASPA was repealed.
At BettingScanner, Marcus serves as the voice of reason - translating legalese into plain English and helping bettors understand what’s legal, what’s risky, and where the gray areas live. If you’re ever unsure about the rules, Marcus is your man - as he probably helped write them.
