California Bans Gubernatorial Appointees From Betting on Prediction Markets With Non-Public Information
The order takes effect immediately. It extends California’s existing conflict-of-interest statutes directly to prediction markets, which allow users to wager real money on outcomes ranging from elections to military strikes to economic decisions.
Appointees are prohibited from using confidential or non-public information obtained through their official duties to profit personally on these platforms. The ban also covers helping family members, spouses, business partners, or associates place profitable bets using such information.
“Public service should not be a get-rich-quick scheme,” California Governor Gavin Newsom remarked in the official press release. “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.”
Newsom framed the action as a direct contrast to what his office described as ethical failures at the federal level. Several high-value trades on prediction markets have drawn scrutiny in early 2026, including six accounts that reportedly made $1.2 million betting on a U.S. strike against Iran, with funds deposited days before the event and bets placed hours prior.
A single trader with a 93% win rate on Iran-Israel events earned close to $1 million since 2024. Another bettor collected a $410,000 payout after placing tens of thousands of dollars on the U.S. capture of Venezuelan President Nicolás Maduro shortly before it occurred.
Prediction markets expanded quickly after the Commodity Futures Trading Commission (CFTC) broadened its regulatory stance on the platforms. Polymarket and Kalshi operate as betting exchanges where users buy shares in yes-or-no outcomes, with payouts tied to real-world results.
California already maintains strict ethics rules, but the new order makes the prohibition explicit for prediction markets. The order does not appear to ban officials from participating in these platforms outright — only from trading on non-public information tied to their government roles.
Kalshi moved preemptively. The company posted on X in response to Newsom’s office: “The odds are 100% Governor. Because Kalshi already bans insiders.” Kalshi also announced new technological controls this week to block politicians and athletes from trading in relevant markets. Polymarket updated its market integrity rules earlier in the week but had not issued a direct statement on the California order as of Friday.
More than $10 million has been wagered on the 2026 California gubernatorial race across Polymarket and Kalshi combined. Newsom is term-limited and cannot run. At least two former candidates were caught betting on their own odds, and one faced platform penalties as a result.
No specific enforcement mechanisms are outlined in the order beyond California’s existing ethics statutes. Violations would likely fall under conflict-of-interest and public-office-for-private-gain laws already on the books.
At the federal level, Sen. Adam Schiff (D-CA) and Sen. John Curtis (R-UT) have introduced legislation targeting prediction contracts tied to government actions and military events. Rep. Seth Moulton (D-MA) separately banned his own staff from using prediction markets.
The California order adds to a growing list of state and federal actions pressuring the industry. Prediction market platforms argue they are regulated financial instruments, not gambling, and that existing CFTC oversight is sufficient.
Newsom confirmed the signing on X, writing that “while Donald Trump continues to enrich himself in office, California will stand up against corruption.”
FAQ 🔎
- What did Newsom’s executive order do? It bans California gubernatorial appointees from using non-public information obtained through their official roles to place or assist bets on prediction markets.
- Which prediction market platforms does the order cover? The order applies broadly to prediction market platforms, including Polymarket and Kalshi, where users wager on real-world outcomes.
- Does the order ban all officials from using prediction markets? No — it prohibits the use of insider or confidential information only, not participation in prediction markets altogether.
- What triggered Newsom to sign this order? Several high-value bets tied to suspected insider knowledge of U.S. military actions in 2026 drew national attention and bipartisan calls for regulation.
