In short
- California government officials are prohibited from using insider information to make money in the prediction markets.
- The ban extends to government officials and elected officials who use the information to help others for their own benefit, too.
- The order follows recent scrutiny from Democratic lawmakers who say Trump’s insiders are benefiting from close proximity.
California joins the crackdown on stock market predictions.
Democratic Governor Gavin Newsom signed the Executive Order, employees at the same time, which prevents government officials and government decision makers from using insider information for profit through prediction markets.
“Public service should not be a get-rich-quick scheme,” Newsom said in a statement.
“At a time when Trump’s Washington is full of moral and ethical failures, California is a good example: If you serve the people as a political candidate, you serve the people in time,” he said, adding that his country “will not tolerate this kind of corruption.”
The move also prohibits officials and executives from using insider information to help others — such as children, spouses, and business associates — benefit from insider information.
Newsom’s executive order comes amid increased scrutiny surrounding insider trading and the prediction markets, particularly from Democrats. Earlier this month Democratic lawmakers initiated the BTS OFF ActA federal bill that would ban prediction markets focuses on war and other specific topics.
These types of markets, which make the rules, have benefited from those close to the Trump administration. Newsom, in turn, highlighted concerns that those within President Trump’s path are using privacy to their advantage.
“We don’t want to live in a country where government officials or private individuals can make money from private information that should be used to serve the public,” said Rep. Greg Casar (D-TX) during the introduction of the BETS Off Act.
Both highlighted the events surrounding the January arrest of Venezuelan leader Nicolas Maduro, where the dubious timing of the user’s campaign – just hours before he intervened – generated a lot of attention. $430,000 profit on Polymarket and insider trading claims.
Insider trading has been seen elsewhere as well. Two Israelis were arrested for trading at Polymarket using the inside information he had about military secrets. A lot, it has the video editor MrBeast was fined and suspended by Kalshi-and so dismissal at Beast Industries—using insider information to market what YouTubers can say in videos.
Platforms know what’s needed, especially as regulations and large-scale regulations begin to pile up. This week, two big starts took steps to address issues related to insider tradingand Polymarket is improving market integrity rules while Kalshi has set up checks to ensure that politicians cannot trade on related markets.
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