Pennsylvania Moves to Tax Prediction Markets Under New Legislation

Pennsylvania has joined the growing list of states weighing how to handle prediction markets, as lawmakers move a bill that would put the fast-expanding sector under state gambling oversight. 

House Bill 2497 would amend Title 4 of the Pennsylvania Consolidated Statutes and give the Pennsylvania Gaming Control Board authority over prediction market activity in the state.  

Beyond oversight, the bill calls for a tax on prediction market activity along with a local share assessment, putting these platforms in roughly the same regulatory category as traditional sportsbooks already operating in the state. 

The financial stakes are considerable. Prediction markets reportedly handled around $44 billion in trading volume during 2025 alone. For context, Pennsylvania pulled in $186 million in tax revenue from legal sports betting that same year. A similar tax framework applied to prediction markets could represent a meaningful new revenue stream for the state. 

Pennsylvania's proposal includes a $1 million licensing fee per operator, which stands in notable contrast to Iowa's pending legislation, which would require operators to pay $20 million just to enter the market. Ohio has also introduced a bill targeting prediction markets with a tax structure similar to that of comparable markets. 

As it stands, HB 2497 has been referred to the Gaming Oversight Committee but has not yet been put to a vote. 

CFTC Targets States as Legal Battles Over Prediction Markets Intensify 

Pennsylvania's push to regulate prediction markets at the state level comes at a particularly complicated moment, as the federal government is actively fighting to block states from doing exactly that. 

The Commodity Futures Trading Commission (CFTC) has sued five states over efforts to restrict prediction markets. Chair Mike Selig frames the dispute as a federal jurisdiction issue, arguing that these products are event contracts, not state-regulated gambling, and thus fall under the CFTC's exclusive authority rather than individual state gaming laws. 

That argument received a boost from a district court ruling that prevented Arizona from taking legal action against Kalshi, a major prediction market platform. A federal appeals court separately sided with Kalshi in a dispute with New Jersey last month. 

Those back-to-back rulings have energized the prediction market industry and raised expectations that the Supreme Court could eventually weigh in, particularly if different federal circuits reach conflicting conclusions. The Ninth Circuit, which is currently handling a Nevada-related case, has so far shown more skepticism toward the federal preemption argument than the Third Circuit did. 

Minnesota is now being closely watched by the CFTC as another potential flashpoint, with its legislature advancing its own legislation.  

On the congressional side, a bipartisan Senate bill would update the CFTC's statutory authority over prediction markets rather than restrict them. A separate proposal from Sens. Adam Schiff and John Curtis would ban prediction markets from taking wagers on sporting events.