New York Bans Government Employees from Insider Trading on Prediction Markets
New York has prohibited state employees from using inside information to trade in prediction markets. In an executive order signed today and viewed by WIRED, Governor Kathy Hochul prohibited state officials from using “any non-public information obtained in the course of their official duties” to participate in prediction market platforms or to help others profit from the use of these services.
“Getting rich by betting on inside information is corruption, pure and simple,” Hochul said in a statement provided to WIRED. “Our actions will ensure that public officials work for the people they represent, not for their own personal enrichment. While Donald Trump and the Republicans in Washington DC turn a blind eye to the ethical Wild West they have created, New York is working to lead by example and stamp out insider trading.”
The order was not prompted by specific incidents of insider trading involving New York State employees. “There are no known instances of this behavior to date,” said Sean Butler, deputy director of communications for the New York State Executive Chamber.
It is the latest in a wave of initiatives aimed at curbing insider trading in prediction markets. California Gov. Gavin Newsom issued a similar executive order last month, banning Golden State employees from predicting insider trading in the market. Yesterday, Illinois Governor JB Pritzker followed suit.
In addition to these executive orders, Congress has also introduced several bills intended to combat market manipulation and corruption in the industry, including legislation banning elected officials from participating in prediction markets. Some politicians discourage or outright ban their staff from purchasing event contracts on these platforms. According to CNN, the White House recently warned executive branch staff not to trade in prediction markets. When WIRED asked the White House about its policies in these markets earlier this year, it pointed to existing regulations prohibiting gambling activities, but did not respond to requests for clarification on whether it considered participation in the prediction market to be gambling.
The Commodity Exchange Act, which covers derivatives markets, already prohibits insider trading, meaning that government officials and individuals in the private sector are breaking the law if they enter into insider trading on event contracts. Rather than establishing new rules, New York’s executive order primarily serves to emphasize the state’s commitment to enforcing existing laws and clarifying how those laws and its code of ethics for employees apply to forecast markets.
However, with so many high-profile examples of alleged insider trading on Polymarket focused on geopolitical events, from the capture of former Venezuelan leader Nicolas Maduro to strikes in the ongoing war in Iran, many observers – including prominent lawmakers – see it as a hot-button issue. They rush to write laws and ordinances reaffirming and emphasizing existing rules.
Facing backlash, the two most popular prediction market platforms in the United States, Polymarket and Kalshi, recently announced new initiatives to combat insider trading. (Polymarket and Kalshi did not immediately respond to requests for comment on this executive order.)
In February, Kalshi made public its decision to suspend and fine two individuals for violating its market manipulation policies; The company also confirmed that it had reported the cases to the Commodity Futures Trading Commission, the federal agency overseeing prediction markets. In March, it deployed enhanced market surveillance, preemptively preventing political candidates from trading in markets linked to their campaigns.
Polymarket, meanwhile, updated its rules in March to explicitly prohibit trading in “stolen confidential” information. (Not everyone was impressed: Senator Richard Blumenthal called Polymarket’s efforts “paltry, inadequate and overdue” in an article on X.)
