Pennsylvania lawmakers introduce bill to ban prediction market insider trading
Pennsylvania lawmakers introduced House Bill 2711 on Wednesday to impose the state's first regulatory structure on prediction markets. The bill, backed by 24 state representatives, would ban insider trading on prediction markets and establish civil penalties with a daily maximum of $1 million per violation. It has been referred to the Committee on Consumer Protection, Technology & Utilities. The legislation follows publicized cases of alleged illicit profits from prediction market trading.
Pennsylvania joins a growing roster of states crafting their own prediction market rules rather than deferring to federal standards. The daily $1 million cap creates a severe financial bite that operators must factor into compliance budgets immediately. For CFTC-registered platforms like Kalshi and Polymarket, this adds Pennsylvania to an already crowded map of state-by-state legal exposure that now spans New York, Washington, Michigan, Illinois, New Mexico, and Wisconsin.
The insider-trading framing signals a legislative trend: states are leading with enforcement mechanisms rather than licensing frameworks, which squeezes platforms faster than registration processes would. The bill does not grandfather existing positions, so traders face uncertainty about whether Pennsylvania accounts will need restricted access or forced liquidation. Each new state layer compounds operational costs and legal complexity, eroding the preemption advantage both platforms had banked on.