TLDR New York and Illinois governors signed executive orders banning state employees from using non-public information to trade on prediction markets California had already expanded ethics rules in late March to cover prediction market trading by government workers Tennessee is moving to make prediction market participation a felony, while Kentucky banned state-licensed gaming operators from the sector Multiple federal bills have been introduced targeting insider trading on prediction markets, including the PREDICT Act and STOP Corrupt Bets Act The CFTC faces growing pressure from Congress over its handling of geopolitical event contracts and possible insider trading
The governors of New York and Illinois took action this week to ban insider betting on prediction markets by state employees. The executive orders target the use of non-public government information for profit on event-based contracts.
New York Gov. Kathy Hochul signed the order on the heels of a similar move by Illinois Gov. J.B. Pritzker. Hochul called the practice “corruption, plain and simple.”
Pritzker warned that prediction markets have grown into a space where people can bet on real-world events “without any oversight.” He pointed out that some of those events can be directly influenced by the people placing bets.
Both governors referenced the Trump administration’s support for prediction markets. They also raised concerns about suspicious trading activity tied to real-world geopolitical events.
Those events include the arrest of former Venezuelan leader Nicolas Maduro and U.S. military action in Iran. Questions have swirled around whether individuals with inside knowledge profited from these events on platforms like Polymarket.
California Set the Template for State Action
California moved first. In late March, Gov. Gavin Newsom expanded existing state ethics rules to explicitly cover prediction markets.
Newsom’s order went further than the others in one respect. It also bars state employees from helping