CA Governor Bans Insider Trading on Prediction Markets

• Governor Gavin Newsom has signed an executive order banning state-appointed officials and their close associates from trading on prediction markets using non-public information.
• The ban extends to spouses, family members, and former business partners, aiming to prevent public service from becoming a "get-rich-quick scheme."
• This state-level action mirrors proposed federal legislation, including the BETS OFF Act and the PREDICT Act, which target similar insider trading risks.

Strengthening Oversight on Prediction Markets

California Governor Gavin Newsom issued a new directive on Friday to combat insider trading among government officials. The executive order specifically targets gubernatorial appointees, prohibiting them from leveraging confidential or non-public data to gain financial advantages on platforms like Polymarket. Newsom emphasized that public office is not intended for personal enrichment, stating that "Public service should not be a get-rich-quick scheme."

The scope of this order is broad, covering not just the officials themselves but also their spouses, immediate family, and previous business associates. By closing these loopholes, the administration seeks to ensure that those with influence over political or economic outcomes cannot profit from sensitive information before it reaches the public domain.

High-Stakes Trading Examples

The Governor's office highlighted several instances where insiders allegedly exploited their positions for profit. One notable case involved six suspected political insiders who made gains based on information regarding US military strikes in Iran. In another instance from January, a trader on Polymarket secured a profit of $410,000 by wagering on the arrest of former Venezuelan leader Nicolás Maduro just hours before it occurred.

Such activities have raised alarms about national security and the integrity of democratic processes. Lawmakers argue that betting on sensitive events like warfare or elections creates dangerous incentives and undermines public trust.

Federal Legislative Responses

The California order coincides with growing momentum in Washington D.C. to regulate prediction markets. 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 aims to stop government insiders from profiting from markets related to conflict or loss of life.

Additionally, US Representatives Adrian Smith and Nikki Budzinski proposed the Preventing Real-time Exploitation and Deceptive Insider Congressional Trading (PREDICT) Act in March. This legislation specifically targets high-ranking officials, including the US President and members of Congress, to prevent them from engaging in wagering on prediction platforms.