Newsom Issues Executive Directive Prohibiting Government Officials from Insider Trading on Prediction Platforms
This executive directive represents another step in an expanding series of regulatory measures throughout the United States aimed at preventing insider trading by government personnel on prediction platforms.
On Friday, California's chief executive Gavin Newsom put his signature on an executive directive that broadens restrictions preventing government employees and their associates from exploiting insider knowledge to gain financial advantages on prediction platforms connected to political or economic matters over which they hold influence or possess privileged access.
The directive bars individuals classified as "gubernatorial appointees," meaning public servants whom the state's governor has appointed to their positions, from leveraging "confidential or non-public information" obtained through their official responsibilities to generate profits from corresponding prediction platforms.
The executive directive issued by Newsom further expands these restrictions to encompass spouses, relatives, and previous business associates of these appointed government officials, preventing them from utilizing privileged information for financial gain. "Public service should not be a get-rich-quick scheme," Newsom said. He added:
"At a time when Trump's 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 — period. We're not going to tolerate this kind of corruption in California."
A statement released by Newsom's administration highlighted multiple examples of individuals with political connections exploiting privileged information to generate profits from prediction platforms, including a group of six individuals suspected of being political insiders who made money from predicting US strikes on Iran.
The announcement from Newsom's administration also referenced an additional suspected case of insider trading that took place in January, when a single Polymarket user earned $410,000 by placing bets that the US would apprehend former Venezuelan leader Nicolás Maduro just hours prior to his actual capture.
These prediction platforms have attracted critical attention from legislators in the United States, with many contending that individuals with insider political knowledge are exploiting these services to gain unjust advantages from their governmental roles and may be jeopardizing national security through wagering on critical matters such as military conflicts and electoral contests.
Federal legislators intensify regulatory efforts targeting prediction platforms following insider trading accusations
In March 2026, Texas Representative Greg Casar alongside Connecticut's Senator Chris Murphy put forward the "Banning Event Trading on Sensitive Operations and Federal Functions (BETS OFF) Act" as a direct response to the emerging allegations of insider trading activity on prediction platforms.
This proposed legislation aims to bar government insiders from leveraging prediction services to generate profits from betting markets related to military conflicts or fatalities.
During the same month of March, US Representative Adrian Smith joined forces with Representative Nikki Budzinski to present comparable legislation called the "Preventing Real-time Exploitation and Deceptive Insider Congressional Trading (PREDICT) Act."
This legislative initiative seeks to bar the US President, members of Congress, and additional senior-level government officials from participating in wagering activities on prediction platforms.