States Issue Bans on Insider Trading by Government Employees on Prediction Markets

The order, viewed by WIRED, underscores a commitment to enforcing existing laws against insider trading. Illinois Governor JB Pritzker issued a similar order on April 21, 2026, prohibiting state workers from leveraging confidential government data for bets on these markets, according to a report from @unusual_whales.

California Governor Gavin Newsom signed an analogous executive order last month, banning employees in that state from insider trading on prediction markets. These actions follow a wave of initiatives to address ethical concerns in the industry, which allows wagering on outcomes of events like elections or economic indicators.

The orders clarify how existing regulations, including the Commodity Exchange Act, apply to these platforms.

The White House recently warned executive branch staff against trading on prediction markets, pointing to prohibitions on gambling activities, though it did not clarify if such participation constitutes gambling. Congress has introduced bills to curb market manipulation and corruption, including measures barring elected officials from participating.

Some politicians have discouraged or banned their staff from buying event contracts on these platforms. No known instances of insider trading by state employees prompted the New York order, according to New York State Executive Chamber deputy communications director Sean Butler.

Similarly, enforcement details for the Illinois order were not specified, but it took effect immediately upon signing. The measures address potential corruption akin to insider trading in traditional financial markets.

market platforms Kalshi and Polymarket have faced scrutiny over suspected insider trading on geopolitical events, such as the capture of former Venezuelan leader Nicolas Maduro and strikes in the ongoing Iran war. Kalshi spokesperson Elisabeth Diana stated that insider trading violates their rules and federal law, emphasizing that government employees should be aware of these prohibitions.

In February 2026, Kalshi suspended and fined two individuals for market manipulation, reporting the cases to the Commodity Futures Trading Commission (CFTC). The platform also blocked political candidates from trading on markets related to their campaigns in March 2026.

Polymarket updated its rules in March 2026 to bar trading on stolen confidential information. Polymarket chief legal officer Neal Kumar told WIRED earlier this spring that the company flags suspicious activity to law enforcement, including on its offshore platform, but provided no specific examples.

Polymarket deputy chief legal officer Olivia Chalos noted that their insider trading rules align with CFTC standards and are enforced in both U.S. and offshore markets.

and Criticisms CFTC Chairman Michael

Selig testified before Congress in April 2026, stating the agency has a zero-tolerance policy for insider trading and is investigating hundreds or thousands of related cases, though he declined to provide details to avoid hindering probes. No arrests have been made in the United States connected to insider trading on prediction markets thus far.

Senator Richard Blumenthal criticized Polymarket's efforts as paltry, inadequate, and late in a post on X. The executive orders and platform updates aim to restate and emphasize existing rules amid high-profile suspicions of manipulation. Polymarket did not respond to requests for comment on the matter.

The New York order highlights the state's stance against what it views as an ethical Wild West, though sources agree it primarily reinforces current laws rather than creating new ones. Similar concerns have driven actions in multiple states and at the federal level.

Prediction markets function like financial derivatives, and the Commodity Exchange Act already prohibits insider trading for both public and private sector individuals.