Pennsylvania state lawmaker Tarik Khan (D-194th District) has announced plans to introduce a bill that would make insider trading on prediction market apps illegal within the Keystone State’s borders. The proposal, which has received bipartisan support, comes less than one week after federal authorities arrested a US Army special forces soldier for allegedly using classified intel to profit over $409,000 on the Polymarket exchange.
“We can’t have rigged systems,” State Representative Khan told FOX43 reporter Matt Klinedinst Wednesday. Those who possess insider information are “causing people who are busting their ass trying to build a living for them and their family – and they’re losing money to people who have insider information – that’s not right,” Khan added.
State Representative Jeremy Shaffer (R-26th district) echoed his colleague’s concerns in a separate interview with FOX43 Harrisburg. “It’s the wild west out there, and unfortunately, you have some good actors but you also have some very bad actors,” stated the Carnegie Mellon University doctoral alumnus.
The bill, which currently has the support of seven state legislators, would explicitly make the action of trading on insider information illegal. It also addresses market manipulation and outright prohibits those with privileged information from participating on prediction market apps like Kalshi and Polymarket.
Following is an outline of the proposed legislation – published by ABC27 Harrisburg. The main points were relayed through a memo from Representative Khan, a Ph.D graduate from the University of Pennsylvania.
Noticeably absent from the memo is any mention of formally sanctioning prediction markets within the state. According to the US Department of Justice, federal authorities have exclusive jurisdiction over how market swaps and forecasting products are regulated.
In PA, retail and online casino and sports betting activities are governed by the Pennsylvania Gaming Control Board, which contracts with the Pennsylvania State Police to monitor potential crimes that take place inside land-based facilities. However, the PGCB does not currently possess any regulatory mechanism related to prediction market apps and crypto exchanges such as Polymarket, Kalshi, Coinbase, and Robinhood.
Once the bill to address prediction market insider trading in PA is introduced, it will need to be passed by both state chambers before it can be signed or vetoed by Governor Josh Shapiro. Before that occurs, the legislative effort may be amended or altered by any Pennsylvania state lawmaker.
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