California Bans Executive Appointees from Prediction Markets Over Corruption Concerns

Governor Newsom signs order to prevent insider trading and profiteering on political information

Mar. 28, 2026 at 10:45am

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California Governor Gavin Newsom has signed an executive order barring state executive appointees from using non-public information to profit from online prediction markets. The order follows reports of well-timed wagers by individuals with apparent access to sensitive government information, earning tens or hundreds of thousands of dollars. The move comes amid growing federal scrutiny of insider trading on platforms like Polymarket and Kalshi.

Why it matters

This order aims to uphold ethical standards in public service and prevent political appointees from exploiting their positions for personal gain. It extends California's existing framework for regulating conflicts of interest, as concerns mount over the potential for widespread insider trading and corruption on unregulated prediction market platforms.

The details

The executive order prohibits gubernatorial appointees from using non-public information to profit from prediction markets, as well as from sharing such information to benefit third parties. The action follows reports of suspicious trading activity, including an individual reportedly predicting multiple U.S. military actions and earning tens of thousands, and six suspected insiders making $1.2 million by betting on an Iran strike just days before it occurred.

  • The order took effect immediately on March 27, 2026 when Governor Newsom signed it.
  • The order comes amid a flurry of federal legislative activity targeting prediction market platforms, including bills introduced this week to bar the CFTC from authorizing certain prediction contracts and to prohibit elected officials from using such markets.

The players

Gavin Newsom

The Governor of California who signed the executive order barring state appointees from profiting off prediction markets.

Kalshi

An online prediction market platform that pushed back on the order, claiming it already bans insider trading.

Polymarket

Another prediction market platform that updated its insider trading guidelines days before the order was signed.

Donald Trump Jr.

The eldest son of former U.S. President Donald Trump, who holds investments in Polymarket and serves as a strategic advisor to Kalshi.

U.S. Commodity Futures Trading Commission (CFTC)

The primary federal regulator for prediction markets, which has publicly signaled support for Kalshi in legal disputes with states seeking to restrict platform operations.

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What they’re saying

“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.”

— Gavin Newsom, Governor of California

“the odds are 100 percent that the platform already bans insiders”

— Kalshi

What’s next

The CFTC, as the primary federal regulator for prediction markets, is expected to face increased scrutiny and pressure to strengthen oversight and enforcement around insider trading on these platforms.

The takeaway

This order underscores growing concerns over the potential for widespread corruption and abuse of power through the use of prediction markets, particularly by those with access to sensitive government information. It represents California's effort to uphold ethical standards in public service and prevent political appointees from exploiting their positions for personal gain.