California Governor Cracks Down on Political Insider Trading in Prediction Markets
In a significant move to address ethical concerns surrounding political betting, California Governor Gavin Newsom signed an executive order on Friday. The order explicitly prohibits state political appointees—officials appointed by the governor—from leveraging confidential, non-public information obtained through their duties to profit from prediction markets tied to political or economic events they can influence or are privy to.
The prohibition extends beyond the officials themselves. It also bars their spouses, immediate family members, and former business partners from using such insider information for gain on these platforms. “Public service should not be a get-rich-quick scheme,” Governor Newsom stated, framing the action as a necessary ethical boundary. “At a time when Trump’s Washington is riddled with ethical failures and insider profiteering, California is drawing a bright line: If you serve the public as a political appointee, you serve the public — period. We’re not going to tolerate this kind of corruption in California.”
The Governor’s office provided concrete examples justifying the order. These include six suspected political insiders who allegedly profited from U.S. military strikes on Iran through prediction markets. Another cited case involved a trader on the platform Polymarket who netted approximately $410,000 in January by correctly betting on the U.S. arrest of former Venezuelan leader Nicolás Maduro just hours before the event occurred.
A Growing Federal Legislative Push
Governor Newsom’s executive order aligns with a accelerating wave of legal and legislative actions in Washington, D.C., targeting insider trading on prediction markets. Lawmakers from both parties have voiced concern that political and government insiders are using these platforms to unfairly capitalize on sensitive, non-public information, potentially creating national security risks by wagering on events like military actions or elections.
In March 2026, Texas Congressman Greg Casar and Connecticut Senator Chris Murphy introduced the “Banning Event Trading on Sensitive Operations and Federal Functions (BETS OFF) Act.” This bill specifically aims to prohibit government insiders from profiting from prediction markets linked to war or death. Separately, U.S. Representatives Adrian Smith (R-NE) and Nikki Budzinski (D-IL) introduced the “Preventing Real-time Exploitation and Deceptive Insider Congressional Trading (PREDICT) Act,” which would ban the President, members of Congress, and other high-ranking federal officials from participating in such event contracts.
These legislative efforts reflect a bipartisan consensus forming around the need for clearer rules as prediction markets, which allow users to bet on real-world outcomes, grow in prominence and trading volume.
The executive order is the latest in a wave of legal actions in the US seeking to curb government insider trading on prediction markets.
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