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A Pennsylvania lawmaker is planning legislation to regulate prediction markets and bring the growing industry under the oversight of the Pennsylvania Gaming Control Board (PGCB).
Rep. Danilo Burgos (D-Philadelphia) circulated a co-sponsorship memo this week outlining his plan to introduce the Event Market Regulatory Act, which would establish licensing, taxation and consumer protection rules for prediction market operators in the commonwealth.
Prediction markets allow users to trade contracts based on the outcome of future events. Platforms often offer markets tied to economic indicators, elections, and other real-world developments. Their sports offerings are very similar to markets on Pennsylvania sportsbooks, which is triggering Burgos’ bill.
Bill targets ‘regulatory arbitrage’
In his memo, Burgos said many prediction market platforms currently avoid state gaming oversight by classifying their products as financial instruments. He wrote:
“Currently, Pennsylvania residents are participating in digital ‘event markets’ – platforms that allow users to trade on the outcome of everything from economic shifts to political elections.”
Because these markets often claim to offer financial derivatives rather than gambling products, they can bypass existing state gaming safeguards, Burgos said.
“This ‘regulatory arbitrage’ leaves our constituents vulnerable and deprives the commonwealth of significant tax revenue.”
Markets would be under PGCB oversight
Burgos said his legislation would place prediction market operators under the authority of the PGCB.
“Soon, I plan to introduce legislation that brings the burgeoning ‘prediction market’ industry out of the shadows and under the gold-standard oversight of the PGCB.”
The proposed legislation mirrors the framework created by Act 42 of 2017, which legalized sports wagering in Pennsylvania.
Under the proposal, the PGCB would have exclusive jurisdiction to license and audit operators offering event markets in the state. The PGCB recently warned Pennsylvania’s congressional delegation over the risks of unregulated prediction markets.
Legislation establishes consumer protections
According to the memo, the bill would establish several regulatory requirements similar to those imposed on regulated sports operators.
The legislation would implement a 34% state tax and 2% local share assessment on gross revenue, matching the tax structure applied to sports wagering. Burgos said the measure would ensure prediction market platforms contribute to state and local revenues.
Additional provisions would require operators follow anti-money laundering and know-your-customer rules, integrate with Pennsylvania’s self-exclusion list, and provide tools allowing users to set deposit and loss limits.
The proposal would also give the Pennsylvania Attorney General authority to prosecute unlicensed operators, Burgos said.
“We cannot allow ‘the Wild West’ of unregulated digital trading to continue operating in a legal gray area. By passing this bill, we ensure that if these activities occur in Pennsylvania, they happen in a safe, transparent, and taxed environment.”
Burgos is currently seeking House co-sponsors ahead of formally introducing the legislation.
Regulating skill games
Burgos has also introduced skill games bills to regulate the machines.
So far this year, he’s brought two skill games bills to the table. HB 2213, introduced last month, would impose a $500 monthly fee per terminal and cap the total number of machines statewide at 50,000.
He introduced another bill in November that would create fees for the machines and cut taxes for Category 4 mini-casinos.
