California Governor Gavin Newsom on Friday issued an executive order tightening limits on the use of non-public information in prediction markets by state officials and their close associates. The directive aims to prevent public servants who can access or influence political and economic outcomes from profiting on wagers tied to those events.
Under the order, “gubernatorial appointees” are prohibited from using confidential or non-public information acquired through their official duties to place trades in related prediction markets. The ban also covers spouses, family members and former business partners of appointees, broadening the circle of people barred from exploiting privileged information. “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 cases of insiders benefiting from prediction markets, pointing to reports that six suspected insiders profited from markets linked to U.S. strikes on Iran, and a January incident in which a Polymarket user reportedly netted $410,000 by betting on the arrest of former Venezuelan leader Nicolás Maduro hours before it occurred.
Prediction markets—platforms where users buy and sell positions on the likelihood of specific events—have drawn growing scrutiny from U.S. lawmakers and regulators. Critics argue these platforms can enable political insiders to capitalize on privileged knowledge and that wagering on sensitive matters such as military actions or elections could create national security and ethical risks.
In March 2026, federal lawmakers responded with proposed legislation addressing those concerns. Texas Representative Greg Casar and Connecticut Senator Chris Murphy introduced the Banning Event Trading on Sensitive Operations and Federal Functions (BETS OFF) Act, which would bar government insiders from profiting on markets tied to war or death. Around the same time, Representatives Adrian Smith and Nikki Budzinski put forward the Preventing Real-time Exploitation and Deceptive Insider Congressional Trading (PREDICT) Act, proposing prohibitions on the President, members of Congress and other senior officials from participating in prediction markets.
Newsom’s executive order is part of a broader effort to tighten ethics rules as prediction markets and other rapid-information platforms expand. The move signals state-level intolerance for perceived insider trading in digital betting venues while federal lawmakers weigh parallel statutory constraints.