California Governor Gavin Newsom on Friday signed an executive order expanding restrictions to prevent public servants and those close to them from profiting via prediction markets using non-public information tied to political or economic events they can influence or access.
The order bars “gubernatorial appointees” from using confidential or non-public information obtained through their duties to trade on related prediction markets. It also extends the prohibition to spouses, family members and former business partners of appointees. “Public service should not be a get-rich-quick scheme,” Newsom said, adding that California will not tolerate corruption or insider profiteering.
Newsom’s office cited several alleged instances of political insiders benefiting from prediction markets, including six suspected insiders who profited from markets tied to U.S. strikes on Iran and a January case where a Polymarket user reportedly netted $410,000 by betting on the arrest of former Venezuelan leader Nicolás Maduro hours before it occurred.
Prediction markets have drawn increased scrutiny from U.S. lawmakers and regulators, who argue that political insiders may use these platforms to unfairly benefit from privileged information and that wagering on sensitive events like war and elections could pose national security risks.
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” in response to insider trading allegations tied to prediction markets. The bill would prohibit government insiders from profiting on markets related to war or death. In the same month, Representatives Adrian Smith and Nikki Budzinski introduced the “Preventing Real-time Exploitation and Deceptive Insider Congressional Trading (PREDICT) Act,” which would bar the U.S. President, members of Congress and other senior officials from betting on prediction markets.
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