California is joining the crackdown on prediction market insider trading.\u00a0<\/p>\n
Democratic Governor Gavin Newsom signed an executive order, effective immediately, that prohibits public officials and decision-makers in the state from using inside information to profit via prediction markets.\u00a0<\/p>\n
\u201cPublic service should not be a get-rich-quick scheme,\u201d said Newsom in a statement.\u00a0<\/p>\n
\u201cAt a time when Trump\u2019s Washington is riddled with ethical failures and insider profiteering, California is drawing a bright line: If you serve the public as a political appointee, you serve the public\u2014period,\u201d he said, adding that his state wouldn\u2019t \u201ctolerate this kind of corruption.\u201d\u00a0<\/p>\n
The move also prohibits appointees and officials from using inside information to help others\u2014like children, spouses, and business partners\u2014to profit from inside information.\u00a0<\/p>\n
Newsom\u2019s executive order comes amid increasing scrutiny surrounding insider trading and prediction markets, particularly from Democrats. Earlier this month Democratic lawmakers introduced the BETS OFF Act<\/a>, a federal bill that would ban prediction markets focused on war and other specific topics.<\/p>\n Those types of markets, the lawmakers claim, have been profited on by those close to the Trump administration. Newsom, too, highlighted concerns that those in President Trump\u2019s \u201corbit are exploiting confidential information for their own personal gain.\u201d<\/p>\n \u201cWe shouldn’t live in a country where government officials or well-connected people can make money off of secret information that is supposed to be used in the public interest,\u201d Rep. Greg Casar (D-TX) said at the time of the BETS Off Act’s introduction.<\/p>\n Democrats Target Prediction Market Insider Trading, Claim Trump Allies Are Profiting<\/a><\/p>\n Both highlighted the events surrounding the January capture of Venezuelan leader Nicolas Maduro, where the suspicious timing of a user\u2019s trades\u2014just hours before intervention\u2014led to more than $430,000 in profits on Polymarket<\/a> and allegations of insider trading.<\/p>\n Insider trading issues have been apparent elsewhere ,as well. Two Israelis were arrested for making trades on Polymarket using inside information they had about military secrets<\/a>. Plus, a video editor for MrBeast was fined and suspended by Kalshi<\/a>\u2014and later fired from his job<\/a> at Beast Industries\u2014for using inside information to trade markets about what the YouTube personality would say in videos.<\/p>\n