New York Governor Kathy Hochul has signed an executive order banning state employees from betting on prediction markets, following a similar move by Illinois earlier this week.
“Getting rich by betting on inside information is corruption, plain and simple,” Hochul said on Wednesday, adding: “Our actions will ensure that public servants work for the people they represent, not their own personal enrichment.”
Hochul also slammed the Trump administration and congressional Republicans for allowing an “ethical Wild West” to take hold around prediction markets without implementing any “meaningful ethical standards” to protect against insider trading.
Adoption in prediction markets is rapidly accelerating, with monthly trading volumes rising over the last seven consecutive months to an all-time high of $23.6 billion in March, with markets covering everything from sports and elections to financial results and cultural outcomes.
However, the rise has been accompanied by increasing concerns about insider trading and market manipulation.
Illinois Governor JB Pritzker also signed an EO banning state employees from betting on prediction markets on Tuesday, stating:
“Illinois is doubling down on its commitment to a transparent and ethical government by bolstering its current state laws to prevent insider trading amid the rapid growth of online prediction markets and event-based gambling contracts.”
Insider trading accusations in prediction markets
Hochul’s EO made reference to several suspected insider trading instances involving US military action.
One of them was a Polymarket trader who placed a low-odds bet that Nicolás Maduro would be ousted as Venezuelan president just hours before he was captured by US forces, profiting around $400,000.
Another related to suspicious trades placed on the invasion of Iran and the death of its Supreme Leader, Ayatollah Khamenei, in late February.
Hochul’s EO stated that any violation may result in dismissal and law enforcement action, and also noted that New York state employees and officers cannot assist others in profiting on confidential information through prediction markets.
Prediction markets, meanwhile, have been fighting potential insider traders their own way.
In February, Kalshi said it banned a former contender for governor of California after he had bet $200 on his own candidacy last year.
Kalshi did not name the politician. However, details in the enforcement summary align with public posts by Kyle Langford, a former Republican turned Democrat now running for the US House.
Related: Charles Schwab, Citadel Securities are eying prediction markets
Kalshi faces regulators in Nevada and New York
The latest EO adds to a wave of action from US states to attempt to police prediction markets.
The New York State Gaming Commission sent Kalshi a cease-and-desist letter in October for illegally operating an unlicensed mobile sports wagering platform.
Kalshi is also in a court battle with the Nevada Gaming Control Board after a lower court blocked its operations. Coinbase chief legal officer Paul Grewal has predicted the case could reach the US Supreme Court.
Magazine: How to fix suspected insider trading on Polymarket and Kalshi
New York Governor Kathy Hochul has signed an executive order banning state employees from betting on prediction markets, following Illinois’ similar action. The order aims to prevent insider trading, citing specific suspicious trades on platforms like Polymarket. This move is part of a broader regulatory push as monthly trading volumes in prediction markets hit a record $23.6 billion in March, raising concerns about market integrity.
New York Governor Kathy Hochul has signed an executive order prohibiting state employees from trading on prediction markets. “Getting rich by betting on inside information is corruption, plain and simple,” Hochul said, adding that the action ensures public servants work for the people, not personal enrichment.
The order referenced suspected insider trading, including a Polymarket trader who profited roughly $400,000 on a bet about Venezuelan President Nicolás Maduro hours before his capture. It also mentioned suspicious activity around trades on military action in Iran in late February.
Illinois Governor JB Pritzker signed a similar order on Tuesday. “Illinois is doubling down on its commitment to a transparent and ethical government by bolstering its current state laws to prevent insider trading amid the rapid growth of online prediction markets,” Pritzker stated.
Monthly trading volumes for prediction markets have risen for seven consecutive months, reaching an all-time high of $23.6 billion in March. However, this growth has been accompanied by increasing concerns about insider trading and market manipulation.
Platforms like Kalshi have taken their own enforcement actions against potential insider traders. In February, Kalshi banned a former California gubernatorial contender who bet $200 on his own candidacy.
The New York State Gaming Commission sent Kalshi a cease-and-desist letter in October for operating an unlicensed wagering platform. Kalshi is also engaged in a court battle with the Nevada Gaming Control Board.
