Pennsylvania lawmakers move to tax and police prediction markets

Pennsylvania Democrats are moving to bring prediction markets under closer state control, with one proposal led by Rep. Danilo Burgos and another backed by Rep. Tarik Khan. Burgos would put the Pennsylvania Gaming Control Board in charge of the products, levy a 34% state tax and a 2% local share assessment, add consumer protections and give the attorney general prosecutorial authority.

Khan is supporting separate bipartisan legislation that would ban insider trading and market manipulation, limit betting on deaths and youth sporting events, require suspicious-activity reporting and also let the attorney general prosecute violations. According to Bonus.com, the debate in Harrisburg has centred on ethics, taxation and the question of who should regulate prediction markets at all, with officials warning that Pennsylvania could be missing out on tax revenue and consumer protections.

State Sen. Lindsey Williams described prediction markets as “a whole new area that we haven’t dealt with before.” She has also urged Congress to ban insider trading in stocks and prediction markets for federal public employees, underscoring the unease among some Democrats over how the products might be used.

The Pennsylvania Gaming Control Board has already taken its own public position. In comments to the Commodity Futures Trading Commission, the board said prediction markets are sports wagering offered in violation of state law, and said they had not adequately addressed underage gambling.

Kevin F. O’Toole, the board’s executive director, wrote that allowing designated contract markets to masquerade as unregulated sportsbooks had abandoned the CFTC’s historical mandate and endangered young adults. The board also said the CFTC’s regulations, enacted nearly 15 years ago, prohibit certain prediction markets.

In a 2025 document to the CFTC, O’Toole said sports prediction markets present a novel challenge for regulatory frameworks across the United States, including Pennsylvania. He said operators typically argue their products are financial derivatives or swaps rather than gambling, but that allowing them outside Pennsylvania’s gaming structure would sidestep licensing, taxation, responsible-gaming rules and consumer protections.

The broader fight over whether prediction markets fall under state gambling authority or federal event-contract oversight remains unresolved. For now, the immediate question in Harrisburg is whether lawmakers can pass a state framework and clarify ethics rules for public employees and campaigns.