Abstract: This study constructed an evolutionary game model between local government and coal mining enterprises by combining prospect theory and evolutionary game to study the behavioral strategies of coal mining enterprises facing different regulatory measures under the dynamic penalty mechanism. We discussed the evolutionary stabilization strategies of the system under the static and dynamic penalty mechanism. Numerical simulation was conducted to analyze the effects of different parameter variations on the evolutionary trajectories of the two sides of the game. Results show that the dynamic penalty mechanism can inhibit the volatility of the strategy choices of both sides of the game in the static penalty mechanism. Under the dynamic penalty mechanism, over-increasing the upper limit of the regulatory frequency and penalty amount increases the time of the game between the two sides—not conducive to improving regulatory efficiency. A reasonable range of values is influenced by the loss cost of accidents, the rectification cost of hidden dangers, the perceived benefits of government and enterprises, and the regulatory cost of government regulators.