On March 27, 2026, California Governor Gavin Newsom signed an executive order prohibiting state officials and gubernatorial appointees from using non-public information obtained through their roles to bet on or assist others in profiting from prediction market platforms. The order takes effect immediately and explicitly includes family members and business partners, per The Block.
Newsom stated on X: “Public service should not be a get-rich-quick scheme. While Donald Trump continues to enrich himself in office, California will stand up against corruption.”
At the federal level, bipartisan lawmakers introduced the PREDICT Act earlier this week. The bill would ban members of Congress, federal officials, and their immediate families from trading event contracts tied to political events, policy decisions, or government actions.
Violators would be required to forfeit all profits to the U.S. Treasury and pay a 10% fine on top of the disgorged amount. The legislation comes amid growing scrutiny over suspiciously timed high-value bets on platforms like Polymarket and Kalshi, particularly around U.S. military actions and economic decisions.
Prediction market platforms are responding to the pressure. Polymarket and Kalshi this week introduced stricter trading restrictions and enhanced surveillance tools, including limits on participants with direct influence over event outcomes and expanded rules against insider trading and market manipulation.
The platforms have seen explosive growth, with Kalshi and Polymarket combined surpassing $20 billion in monthly trading volume for the first time this month — marking the seventh consecutive record high.
Lawmakers at both state and federal levels are increasingly treating prediction markets like traditional financial markets when it comes to non-public information. The moves aim to protect market integrity and prevent public officials from profiting from information not available to ordinary citizens.
This regulatory tightening reflects broader concerns that prediction markets, while innovative, must maintain high standards of fairness and transparency as they scale.
The situation continues to evolve rapidly as both regulators and platforms work to address insider trading risks in this fast-growing sector.
Let me know if you’d like a deeper breakdown of the PREDICT Act, platform responses, or potential market impact on prediction market tokens.
