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New York has banned state employees from using insider information to trade on prediction markets. In an executive order signed today and viewed by WIRED, Governor Kathy Hochul forbade the state’s government workforce from using “any nonpublic information obtained in the course of their official duties” to participate on prediction market platforms, or to help others profit using those services.
“Getting rich by betting on inside information is corruption, plain and simple,” Hochul said in a statement provided to WIRED. “Our actions will ensure that public servants work for the people they represent, not their own personal enrichment. While Donald Trump and DC Republicans turn a blind eye to the ethical Wild West they’ve created, New York is stepping up to lead by example and stamp out insider trading.”
The order was not spurred by any specific insider trading incidents involving New York state employees. “There are no known instances of this behavior to date,” says New York State Executive Chamber deputy communications director Sean Butler.
This is the latest in a wave of initiatives meant to curb insider trading on prediction markets like Kalshi and Polymarket, the two most popular of these platforms in the United States. California Governor Gavin Newsom issued a similar executive order last month, banning Golden State employees from prediction market insider trading. Yesterday, Illinois Governor JB Pritzker followed suit.
In addition to these executive orders, Congress has also introduced several bills intended to curb market manipulation and corruption in the industry, including legislation barring elected officials from participating in prediction markets. Some individual politicians are discouraging or outright barring their staff from buying event contracts on those platforms. According to CNN, the White House recently warned executive branch staff not to trade on prediction markets. When WIRED asked the White House about its policies on these markets earlier this year, it pointed to existing regulations prohibiting gambling activity but did not respond to requests for clarification on whether it considered prediction market participation to be gambling.
The Commodity Exchange Act, which covers derivative markets, does already prohibit insider trading, which means that both public servants and people in the private sector are breaking the law if they enact insider trades on event contracts. Rather than establishing new rules, the New York executive order serves primarily to underline the state’s commitment to enforcing existing laws and to clarify how these laws and its Code of Ethics for employees apply to prediction markets.
However, with so many high-profile examples of suspected insider trading on Polymarket focused on geopolitical events, from the capture of former Venezuelan leader Nicolas Maduro to strikes in the ongoing Iran war, many onlookers—including prominent lawmakers—see this as such a combustible issue. They’re racing to write laws and orders restating and emphasizing existing rules.
“This makes sense, and we already do this. At Kalshi, insider trading violates our rules, and we enforce them when we catch insiders,” Kalshi spokesperson Elisabeth Diana says. “Government employees should be aware that trading on federally regulated markets using material nonpublic information violates the law.” (Polymarket did not immediately respond to a request for comment.)
Facing backlash, Polymarket and Kalshi have recently announced new initiatives to combat insider trading.
In February, Kalshi publicized its decision to suspend and fine two individuals for violating its market manipulation policies; the company also confirmed that it had flagged the cases to the Commodity Futures Trading Commission, the federal agency overseeing prediction markets. In March, it rolled out a beef up market surveillance arm, preemptively blocking political candidates from trading on markets related to their campaigns.
Polymarket, meanwhile, updated its rules in March to explicitly bar trading on “stolen confidential” information. (Not everyone was impressed: Senator Richard Blumenthal called Polymarket’s efforts “paltry, inadequate, and late” in a post on X.)
Earlier this spring, Polymarket chief legal officer Neal Kumar told WIRED that the company flags activity to law enforcement when it deems it appropriate—including activity on its offshore platform—but did not provide details or examples of cases flagged and declined to comment on whether they have seen suspicious activity on Iran war markets. After Blumenthal’s remarks, Polymarket deputy chief legal officer Olivia Chalos posted a response noting that Polymarket’s insider trading rules “are the exact lines that the CFTC and courts draw for derivatives markets” and that they are enforced both in its US market and its offshore market.
During testimony before Congress in April, CFTC Chairman Michael Selig said that the agency has a “zero tolerance” policy towards insider trading and suggested that the agency is actively investigating “hundreds or thousands” of cases related to prediction markets. He, too, declined to offer any specifics, telling lawmakers that doing so would hinder investigations. Thus far, there have not been any arrests made in the United States connected to insider trading on prediction markets.
