California Governor Gavin Newsom signed an executive order on Friday, expanding rules to curb public servants and those close to them from benefiting from insider trading on prediction markets tied to political or economic events they can influence or are privy to.
The order prohibits “gubernatorial appointees,” public officials appointed to office by the governor of the state, from using “confidential or non-public information” gleaned from performing their duties to profit from related prediction markets.
Newsom’s executive order also extends the prohibition to include spouses, family members or former business partners of the appointed officials from using non-public information to profit. “Public service should not be a get-rich-quick scheme,” Newsom said. He added:
“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.”
An announcement from Newsom’s office listed several instances of political insiders using non-public information to profit from prediction markets, including six suspected political insiders who profited from US strikes on Iran.
Newsom’s office also cited another case of suspected insider trading, which occurred in January, after one Polymarket trader netted $410,000 betting that the US would arrest former Venezuelan leader Nicolás Maduro hours before his capture.
Prediction markets have come under scrutiny from US lawmakers, who argue that political insiders are using the platforms to unfairly benefit from their positions and are potentially threatening national security by wagering on sensitive events like war and elections.
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US lawmakers accelerate prediction market crackdown after insider allegations surface
Texas Congressman Greg Casar and Connecticut Senator Chris Murphy introduced the “Banning Event Trading on Sensitive Operations and Federal Functions (BETS OFF) Act” in March 2026 in response to the prediction market insider trading allegations.
The bill seeks to prohibit government insiders from using prediction platforms to profit from markets tied to war or death.
US Representative Adrian Smith and Representative Nikki Budzinski also introduced similar legislation in March, titled the “Preventing Real-time Exploitation and Deceptive Insider Congressional Trading (PREDICT) Act.”
The legislative proposal prohibits the US President, lawmakers and other high-ranking government officials from betting on prediction markets.
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