California Governor Gavin Newsom has enacted an executive order aimed at preventing insider trading within political prediction markets. The new rules, signed on Friday, specifically target “gubernatorial appointees,” prohibiting them from leveraging confidential information obtained through their official roles for financial gain in prediction markets related to political or economic events.
The order extends to include the spouses, family members, and former business associates of these officials, ensuring that they too cannot exploit non-public information for profit. Newsom emphasized the importance of maintaining integrity in public service, stating that it should not become a means for personal enrichment.
Recent scrutiny around prediction markets has been fueled by several cases, including incidents where political insiders allegedly profited from significant events, such as military actions and high-profile arrests. For instance, a trader reportedly made $410,000 on a bet regarding the arrest of former Venezuelan leader Nicolás Maduro just hours before it occurred.
In response to growing concerns regarding the ethical implications of these markets, federal lawmakers are pushing for stricter regulations, including the proposed BETS OFF Act, introduced by Texas Congressman Greg Casar and Connecticut Senator Chris Murphy in March 2026, which aims to further restrict insider trading practices related to sensitive governmental operations.