California Governor Gavin Newsom has signed an executive order significantly expanding a ban on insider trading related to prediction markets. The order prohibits gubernatorial appointees and their close associates from using confidential government information to profit from political or economic event markets. This move aligns with a broader federal legislative push to curb insider betting by government officials, citing national security and ethical concerns.
California Governor Gavin Newsom signed an executive order on Friday, expanding rules to curb insider trading on prediction markets. The order prohibits gubernatorial appointees from using confidential information gained from their duties to profit from related markets.
The prohibition also extends to spouses, family members, and former business partners of the appointed officials. “Public service should not be a get-rich-quick scheme,” Newsom stated in an announcement.
An announcement from his office listed several instances of suspected insider profiteering on prediction platforms. One case involved six suspected political insiders who profited from U.S. strikes on Iran.
Another cited case occurred in January, where a trader on Polymarket netted $410,000 betting on the arrest of former Venezuelan leader Nicolás Maduro hours before it happened. Prediction markets have drawn scrutiny from U.S. lawmakers who argue they enable unfair advantages.
Lawmakers express concern that wagering on sensitive events like wars and elections threatens national security. This has prompted a recent acceleration of federal legislative efforts to ban such activities.
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.” The bill seeks to prohibit government insiders from profiting on markets tied to war or death.
U.S. Representative Adrian Smith and Representative Nikki Budzinski also introduced similar legislation called the “Preventing Real-time Exploitation and Deceptive Insider Congressional Trading (PREDICT) Act.” That proposal would prohibit the President, lawmakers, and other high-ranking officials from betting on prediction markets.
