California Governor Gavin Newsom has issued an executive order prohibiting state officials from leveraging insider knowledge to place bets on prediction markets like Polymarket and Kalshi. The order was signed on Friday and aims to prevent the misuse of confidential information for personal profit within these markets.
The move is a response to growing concerns that government officials could exploit non-public information to gain financial advantages. These concerns were amplified after an unidentified trader reportedly earned over $400,000 by betting on the ousting of Venezuelan President Nicolas Maduro, prior to a U.S. mission targeting the leader. The new order seeks to safeguard against such activities within California.
Newsom’s executive order explicitly bans all gubernatorial appointees from utilising any non-public information to profit personally or assist others, including family members or former business associates, in profiting from predictive markets. Kalshi, a prediction market platform, stated on X that insider trading violates its rules and is enforced when detected, further noting that government employees should be aware that trading on federally regulated markets using material non-public information violates the law. Kalshi is a regulated prediction market where users can trade on the outcome of future events. Polymarket is another prediction market platform, but did not immediately respond to requests for comment.
This action by California reflects a broader effort to ensure fairness and integrity in financial markets, particularly those involving speculative investments based on future events. The order underscores the state’s commitment to preventing government officials from exploiting their positions for personal financial gain.
