- New York Governor Hochul signed an order banning state employees from prediction markets.
- The rule blocks officials from profiting directly on non-public state information.
- New York cited $400K Maduro bets and over $1B in Iran-linked wagers as warning signs.
New York Governor Kathy Hochul signed an executive order barring state employees from using insider information to trade on prediction markets.
The move targets growing concerns that public officials could use non-public government information to profit from bets tied to wars, elections, policy moves, and other real-world events.
“Getting rich by betting on inside information is corruption, plain and simple,” Hochul said in a statement. The order took effect immediately.
What the Order Bans
Under the directive, covered state officers and employees cannot use confidential information gained through official duties to seek profit or avoid losses on prediction markets or similar services.
They are also banned from helping others use inside information for trading gains.
The rule applies to state agency officers or employees serving at the pleasure of the governor or their appointing authority, along with members of public authorities appointed by the governor.
New York said the order builds on the state’s Code of Ethics and creates the strongest state protections against insider trading on prediction markets.
Why Prediction Markets Are Under Pressure
Prediction markets such as Kalshi and Polymarket have expanded quickly since the 2024 election cycle. Users can trade contracts tied to sports, elections, military actions, government decisions, and other events.
Their growth has brought fresh scrutiny. New York cited an anonymous trader who reportedly made more than $400,000 in January by betting that Venezuelan President Nicolás Maduro would soon be out of office.
State officials also pointed to more than $1 billion in “perfectly-timed” bets linked to the Iran conflict, including wagers tied to strike timing, strike locations, and the Strait of Hormuz.
Lawmakers in Washington have also raised concerns that these markets could reward people with advanced access to government or military information.
Related: Bitcoin Has a 40% Shot at $100K by End of 2026, Prediction Markets Say
States Push Back as Federal Fight Grows
However, as per reports, New York is not alone. Illinois Governor JB Pritzker signed a similar order this week. California Governor Gavin Newsom has also taken comparable action.
At the same time, the Commodity Futures Trading Commission has argued it has exclusive authority over federally regulated prediction markets.
The agency has challenged state efforts in Arizona, Illinois, and Connecticut after moves aimed at shutting down certain contracts. States, however, argue some platforms may violate local gambling laws, especially around sports-style wagering.
On the other hand, New York regulators have already taken action against Kalshi. In October, the New York Gaming Commission sent the platform a cease-and-desist letter, alleging it was operating an unlicensed mobile sports wagering platform in the state.
Kalshi has defended its model and says it bans insider trading, does not allow anonymous users, and operates under US law.
The company recently said it suspended three political candidates for betting on their own races and issued fines ranging from $539 to $6,229, along with five-year bans.
Related: Coinbase Moves New York AG Lawsuit to Federal Court Over Prediction Markets
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