California Governor Bans Insider Betting on Prediction Markets by Policymakers

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California Governor Bars Policymakers From Insider Betting on Prediction Markets

California Governor Gavin Newsom issued an order Friday prohibiting his appointed officials from using confidential information to gamble on prediction markets like Polymarket and Kalshi.

California Bans Gubernatorial Appointees From Betting on Prediction Markets With Non-Public Information

The order takes effect immediately. It extends California’s existing conflict-of-interest statutes directly to prediction markets, which allow users to wager real money on outcomes ranging from elections to military strikes to economic decisions.

Officials are not allowed to use private information they learn from their jobs to make money for themselves on these platforms. This also includes helping family, spouses, business contacts, or anyone they’re associated with profit from this information.

“Public service should not be a get-rich-quick scheme,” California Governor Gavin Newsom remarked in the official press release. “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.”

Newsom framed the action as a direct contrast to what his office described as ethical failures at the federal level. Several high-value trades on prediction markets have drawn scrutiny in early 2026, including six accounts that reportedly made $1.2 million betting on a U.S. strike against Iran, with funds deposited days before the event and bets placed hours prior.

A single trader with a 93% win rate on Iran-Israel events earned close to $1 million since 2024. Another bettor collected a $410,000 payout after placing tens of thousands of dollars on the U.S. capture of Venezuelan President Nicolás Maduro shortly before it occurred.

Prediction markets expanded quickly after the Commodity Futures Trading Commission (CFTC) broadened its regulatory stance on the platforms. Polymarket and Kalshi operate as betting exchanges where users buy shares in yes-or-no outcomes, with payouts tied to real-world results.

California already maintains strict ethics rules, but the new order makes the prohibition explicit for prediction markets. The order does not appear to ban officials from participating in these platforms outright — only from trading on non-public information tied to their government roles.

Kalshi moved preemptively. The company posted on X in response to Newsom’s office: “The odds are 100% Governor. Because Kalshi already bans insiders.” Kalshi also announced new technological controls this week to block politicians and athletes from trading in relevant markets. Polymarket updated its market integrity rules earlier in the week but had not issued a direct statement on the California order as of Friday.

Over $10 million has been bet on the 2026 California governor’s race through the prediction markets Polymarket and Kalshi. Since current Governor Newsom can’t run for reelection due to term limits, the race is wide open. There have also been issues with fairness, as at least two former candidates were discovered betting on their own chances of winning, and one of them was penalized by the platform.

The order doesn’t introduce any new ways to enforce its rules, relying instead on California’s current ethics laws. Any issues that arise from it would likely be handled as conflicts of interest or cases where someone improperly uses their public position for personal benefit – laws that are already in place.

At the federal level, Sen. Adam Schiff (D-CA) and Sen. John Curtis (R-UT) have introduced legislation targeting prediction contracts tied to government actions and military events. Rep. Seth Moulton (D-MA) separately banned his own staff from using prediction markets.

The California order adds to a growing list of state and federal actions pressuring the industry. Prediction market platforms argue they are regulated financial instruments, not gambling, and that existing CFTC oversight is sufficient.

Newsom confirmed the signing on X, writing that “while Donald Trump continues to enrich himself in office, California will stand up against corruption.”

FAQ 🔎

  • What did Newsom’s executive order do? It bans California gubernatorial appointees from using non-public information obtained through their official roles to place or assist bets on prediction markets.
  • Which prediction market platforms does the order cover? The order applies broadly to prediction market platforms, including Polymarket and Kalshi, where users wager on real-world outcomes.
  • Does the order ban all officials from using prediction markets? No — it prohibits the use of insider or confidential information only, not participation in prediction markets altogether.
  • What triggered Newsom to sign this order? Several high-value bets tied to suspected insider knowledge of U.S. military actions in 2026 drew national attention and bipartisan calls for regulation.

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2026-03-27 20:27