California governor signs order banning prediction market insider trading

California Governor Gavin Newsom just dropped an executive order that’s basically a giant “NO” sign for political insiders trying to cash in on prediction markets. Signed Friday, it expands existing rules to block public servants—and anyone close to them—from using confidential intel to profit on markets tied to events they can influence or have inside info on.

The order specifically targets “gubernatorial appointees”—officials appointed by the governor—and bans them from using “confidential or non-public information” from their jobs to make bank on related prediction markets. But it doesn’t stop there: spouses, family members, and even former business partners are also barred from exploiting that insider knowledge.

Newsom’s office called out several real-world examples of suspected insider trading, including six political insiders who allegedly profited from US strikes on Iran, and another trader who netted $410,000 betting on the arrest of former Venezuelan leader Nicolás Maduro hours before it happened.

Prediction markets are getting serious heat from US lawmakers who argue that political insiders are gaming the system—and potentially threatening national security by betting on sensitive events like wars and elections.

Texas Congressman Greg Casar and Connecticut Senator Chris Murphy introduced the “Banning Event Trading on Sensitive Operations and Federal Functions (BETS OFF) Act” in March 2026 in direct response to these insider trading allegations. The bill aims to block government insiders from profiting on prediction platforms tied to war or death.

Meanwhile, US Representative Adrian Smith and Representative Nikki Budzinski rolled out similar legislation called the “Preventing Real-time Exploitation and Deceptive Insider Congressional Trading (PREDICT) Act.” This one explicitly bans the US President, lawmakers, and other top officials from betting on prediction markets altogether.