California Prohibits Insider Trading in Prediction Markets

(AsiaGameHub) –   On Friday, California introduced a new ethical restriction as prediction markets face increased scrutiny in the United States. Governor Gavin Newsom signed an executive order prohibiting gubernatorial appointees from utilizing nonpublic information for profit on platforms such as Kalshi and Polymarket.

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Key Details

• The directive also prohibits officials from assisting family members, business associates, or others in trading based on insider information.
• California stated that this regulation supplements existing conflict-of-interest laws.
• Kalshi indicated that its existing rules already forbid insider trading.

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California Enhances Prediction Market Regulations

Governor Newsom linked the executive order to reports suggesting that individuals with inside knowledge may have profited from event contracts related to military and political developments. His office highlighted trading activity connected to events involving Venezuela, Iran, and drug cartels.

“Public service should not be a get-rich-quick scheme,” Newsom stated in a press release from his office. “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 example cited by the governor’s office involved six individuals suspected of insider trading who allegedly purchased $1.2 million in contracts related to a U.S. strike against Iran after funding their accounts days earlier and placing trades shortly before settlement.

For Kalshi and Polymarket, this development occurs amidst a broader regulatory debate concerning prediction markets, insider trading, and event contracts. Both platforms have already implemented rules designed to restrict insider participation.