California Gov. Gavin Newsom bans state officials from making bets on Polymarket, Kalshi with insider info
California Governor Gavin Newsom issued an executive order on Friday prohibiting state-appointed officials from engaging in insider trading on prediction markets. This move comes in response to recent controversies surrounding large payouts on platforms like Kalshi and Polymarket, which have raised suspicions of unethical trading practices.
Newsom’s ban extends existing ethics rules that prevent state officials from using undisclosed information to benefit themselves or their families. Prediction markets allow users to bet on a variety of topics, from sports to politics, with some traders making millions through remarkably accurate predictions, such as the US-Israeli strikes on Iran and the ousting of Venezuelan dictator Nicolás Maduro.
In a mocking tweet, Newsom’s press office called out Polymarket and Kalshi, questioning the likelihood of the governor implementing a ban on insider trading within 24 hours. Kalshi responded by stating that they already prohibit insider trading on their platform and enforce strict rules against it.
While Kalshi has taken measures to prevent insider trading, Polymarket has yet to respond to inquiries from The Post. Both platforms recently introduced new guidelines to deter unethical trading practices amidst increased scrutiny from lawmakers, including proposed legislation to regulate prediction markets more closely.
Newsom’s announcement of the ban took a swipe at the Trump administration, emphasizing California’s commitment to ethical governance. The move aligns with the governor’s reputation as a potential Democratic presidential candidate in 2028.
The issue of insider trading on prediction markets has drawn criticism from Democrats, particularly regarding the Trump family’s involvement with Kalshi and Polymarket. As lawmakers like Rep. Seth Moulton and Sens. John Curtis and Adam Schiff push for stricter regulations, bipartisan proposals have emerged to restrict members of Congress and the president from participating in political prediction betting.
While Polymarket operates offshore and evades certain US regulations, Kalshi, an American prediction market, has faced legal challenges for failing to pay out bets related to significant events like the ousting of Iranian Supreme Leader Ayatollah Ali Khamenei. The company has taken disciplinary action against suspected inside traders, signaling a crackdown on unethical practices within the industry.
Overall, the ban on insider trading in prediction markets reflects a broader effort to uphold transparency and integrity in government and financial sectors, highlighting the ongoing debate over the regulation of online betting platforms.
