California Gov. Gavin Newsom on Friday signed an executive order expanding rules aimed at restricting government officials and their loved ones from profiting from insider trading in prediction markets tied to political or economic events that they may influence or be privy to.
The order prohibits “governorial appointees,” public officials appointed to office by a state’s governor, from using “confidential or nonpublic information” obtained in the course of their duties to profit from related forecasting markets.
Newsom’s executive order also extends the prohibition on using nonpublic information for profit to include spouses, family members or former business partners of appointed officials. “Public services should not be a get-rich-quick scheme” – Newsom he said. Added:
“At a time when Trump’s Washington is riddled with ethical failures and insider speculation, California draws a clear line: If you serve the public as a political appointee, you serve the public – period. We will not tolerate this type of corruption in California.”
A statement issued by Newsom’s office cited several instances of political insiders using non-public information to profit from prediction markets, including six suspected political insiders who profited from U.S. attacks on Iran.
Newsom’s office also cited another case of suspected insider trading that occurred in January after a Polymarket trader placed a $410,000 bet that the United States would arrest former Venezuelan leader Nicolás Maduro hours before his capture.
Prediction markets have come under scrutiny from U.S. lawmakers who say political insiders are using the platforms to unfairly profit from their positions and potentially threaten national security by betting on sensitive events such as war and elections.
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Texas Congressman Greg Casar and Connecticut Senator Chris Murphy introduced the “Benhibiting Event Trading on Sensitive Federal Operations and Functions (BETS OFF) Act” in March 2026 in response to allegations of insider trading based on forecasts.
The bill seeks to prohibit government insiders from using prediction platforms to profit from markets linked to war or death.
U.S. Reps. Adrian Smith and Rep. Nikki Budzinski also introduced similar legislation in March titled the “Preventing Real-Time Insider Trading and Fraudulent Trading in Congressional Insider Trading (PREDICT) Act.”
The legislative proposal prohibits the U.S. president, lawmakers and other high-level government officials from placing bets on prediction markets.
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