A new legislative initiative aimed at banning insider trading in Pennsylvania's prediction markets has garnered the support of two dozen state representatives. House Bill 2711 was introduced in the Pennsylvania Assembly on Wednesday and has been referred to the Committee on Consumer Protection, Technology & Utilities, where further evaluation will take place. The proposed law outlines civil penalties for insider trading, imposing fines that escalate from $10,000 for initial violations to an eye-watering $1 million per day for operators who persist in defying court orders.
According to a memo accompanying the bill, "Currently, new online platforms allow individuals to bet on real-world events, including elections and economic trends. However, those with access to inside information can exploit the system for profit, disadvantaging others. This scenario constitutes a corrupt and unfair market."
Representative Tarik Khan, a Democrat from Philadelphia, serves as the primary sponsor of the bill. Supported by a bipartisan coalition, which comprises nearly 12% of the Assembly, the legislation may find a receptive audience in a Democratic-controlled House and a Republican-held Senate. Pennsylvania’s legislative session is set to conclude on November 30.
In addition to addressing insider trading, House Bill 2711 introduces broader regulations for the prediction market sector in Pennsylvania. Key provisions include:
– An age requirement of at least 21 years to open an account.
– A ban on markets related to health status, death, or sports events below the collegiate level.
– A mandate for operators to employ "commercially reasonable and technically feasible" methods to prevent fraud or manipulation.
Furthermore, the bill places restrictions on market making when the prediction market involves individuals or entities engaged in gaming activity within or outside Pennsylvania.
The legislative push follows several notorious cases of insider trading echoing in both state and federal discussions. Notable incidents from 2026 include:
– A U.S. Army soldier reportedly earning over $400,000 on Polymarket by utilizing classified information about operations involving Venezuelan President Nicolas Maduro.
– A teleprompter operator for former President Donald Trump profiting over $100,000 on Kalshi by betting on the words he would say in his speeches.
– A Google employee allegedly making over $1 million on Polymarket by leveraging non-public search data.
– Former U.S. Representative George Santos reportedly under investigation by the Department of Justice for dubious trading on Kalshi coinciding with his attendance at this year’s State of the Union address.
– Reports of bots manipulating markets related to Spotify streaming, resulting in millions in prediction market profits.
In response to rising concerns about insider trading, legislation similar to Pennsylvania’s is part of a growing movement among elected officials. In April, U.S. Senators voted to prohibit themselves and their staff from engaging in prediction markets. Congress is currently considering multiple bills that aim to regulate or ban these markets altogether. Additionally, governors from seven states—Arizona, California, Illinois, Maryland, New York, North Carolina, and Wisconsin—have taken steps to prevent state employees from using insider information or participating in prediction markets.
