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- Pennsylvania lawmakers proposed bills to regulate prediction markets by adding taxes, oversight, and insider trading bans.
- Officials are raising ethics concerns regarding public employees using nonpublic information to profit on political prediction markets.
Pennsylvania lawmakers are weighing new rules for prediction markets as election-related betting on platforms such as Kalshi and Polymarket draws fresh scrutiny over ethics, taxation, and who has the power to regulate the products.
The debate matters because Pennsylvania officials say the state could be missing out on tax revenue and consumer protections, while ethics experts and public officials are raising concerns about insider use of information tied to elections, speeches, and state policy decisions.
Competing bills target oversight, taxes, and insider misuse
Two Democratic state representatives have introduced proposals that would bring prediction markets under clearer state oversight.
State Rep. Danilo Burgos introduced legislation that would give the Pennsylvania Gaming Control Board authority over prediction markets, impose a 34% state tax and 2% local share assessment, add consumer protections, and give the attorney general prosecutorial authority.
State Rep. Tarik Khan is backing separate bipartisan legislation to ban insider trading and market manipulation, limit betting on deaths and youth sporting events, require suspicious-activity reporting, and allow the attorney general to prosecute violations.
State Sen. Lindsey Williams is also considering a state-level proposal after previously urging Congress to ban insider trading in stocks and prediction markets for federal public employees. “It’s just a whole new area that we haven’t dealt with before,” Williams said.
The proposals come as a bipartisan coalition of 44 state attorneys general, including Pennsylvania’s, argues states can regulate prediction markets. Federal officials, by contrast, have argued states do not have that authority.
Ethics concerns grow around political and government-linked markets
The Spotlight PA report highlighted markets not just on election results, but also on what Gov. Josh Shapiro might say in public appearances. One January Kalshi market about a Fox News interview involving Shapiro drew $300,000 in trade volume, and another February market tied to his State of the State address drew $185,000.
The Anti-Corruption Data Collective found more than $16,000 had already been bet this year on whether Shapiro will win a second term, while Kalshi and Polymarket gave Shapiro, or a Democrat generally, better than 95% odds in the governor’s race.
Pennsylvania does not have a specific ban preventing public employees from using insider information in prediction markets. The State Ethics Commission has said existing ethics law would apply, but that position has not yet been tested in a ruling or advisory opinion.
“If we were to receive a complaint that alleges a public official or public employee violated the Ethics Act, including through participation in a prediction market, we would review and investigate the complaint through our usual processes,” Executive Director Mary Fox said.
Election workers in Pennsylvania are already barred from betting on election outcomes through their oaths of office. Delaware County’s board of elections separately banned its poll workers from betting on elections using prediction markets earlier in 2026.
What Pennsylvania is watching next
The legal fight over whether prediction markets fall under state gambling authority or federal event-contract oversight remains unresolved, and the article notes the U.S. Supreme Court could eventually be asked to weigh in.
For Pennsylvania, the immediate questions are whether lawmakers can pass a state framework and whether ethics rules will be clarified for public employees and campaigns. State Senate Majority Leader Joe Pittman said Washington should act quickly to set a uniform standard.
“Clear boundaries are certainly warranted, and we would be well served to not allow the issue to spiral as we have seen with other gaming issues in the past and currently still before us,” Pittman said
Source: As reported by Jaxon White, Spotlight PA.
