California Cracks Down on Insider Trading

The state of California has taken a firm stance against insider trading in politics, introducing new rules that prohibit public officials from using confidential information to profit on prediction markets.

Governor Gavin Newsom signed an executive order aimed at limiting the misuse of non-public information by government officials. The move comes amid growing concerns in the United States about potential abuses tied to betting on political and economic events.

Under the new regulations, individuals appointed by the governor are banned from using insider knowledge gained through their roles to generate profits on such platforms. The restriction also extends to people close to them, including spouses, family members, and former business partners.

Newsom emphasized that public service should not be treated as a shortcut to wealth. In his view, the new rules clearly separate official duties from private financial gain.

The decision follows several controversial cases involving suspected misuse of confidential information. In one instance, individuals allegedly profited from predicting U.S. military actions toward Iran. In another, a user on the platform Polymarket reportedly earned $410,000 by betting on the arrest of Nicolás Maduro shortly before it actually happened.

Prediction markets are now under increasing scrutiny from U.S. lawmakers, who warn that access to sensitive information may create unfair advantages and even pose risks to national security—especially when bets involve wars or elections.

In response, new legislative proposals have emerged at the federal level. One example is the “BETS OFF Act,” introduced by Greg Casar and Chris Murphy, which seeks to ban officials from profiting on events related to war or death. A similar proposal, the “PREDICT Act,” aims to restrict high-ranking politicians from participating in such betting markets altogether.