Hochul bars state workers from betting on prediction markets

New York Governor Kathy Hochul signed an executive order on Wednesday prohibiting certain state officers and employees from using nonpublic information obtained in the course of their duties to place bets on prediction markets. The order covers officials who serve at the pleasure of the governor or their appointing authority and members of public authorities appointed by the governor.

The order states that no covered officer or employee may use nonpublic information from official duties to seek profit or avoid loss through participation in a prediction market or similar service, or assist anyone else in doing so. The prohibition applies to markets that allow wagers on outcomes such as elections, sports contests and military events.

Hochul’s action follows a similar directive issued Tuesday by Illinois Governor J.B. Pritzker, which also blocks state employees from trading on prediction markets using nonpublic information. Several states have issued orders or taken steps to limit public servants’ access to these platforms after their user bases grew following the 2024 election season.

The expansion of prediction markets has prompted a legal and regulatory dispute. Commodity Futures Trading Commission Chair Michael Selig has argued the CFTC has exclusive jurisdiction over such markets and this month filed lawsuits against Illinois, Arizona and Connecticut over state efforts to restrict platforms the agency classifies as designated contract markets. State officials have maintained that some activity on these platforms falls under local gambling laws, particularly for sports-related betting.

New York Attorney General Letitia James filed a separate lawsuit this week against cryptocurrency exchanges Coinbase and Gemini, alleging the companies illegally allowed customers to bet on sports and elections and calling the platforms unlawful gambling operations.

Concerns about insider trading have drawn scrutiny from lawmakers and regulators. In January, a Polymarket account placed a high-value wager that Venezuelan President Nicolás Maduro would be “out” by the end of the month, a trade that netted about $400,000 and prompted questions about access to confidential information. Democratic Representative Ritchie Torres introduced legislation to prohibit federal elected officials, political appointees and executive-branch employees from betting on prediction markets tied to government policy, action or political outcomes.

Operators of prediction markets have taken steps to police trading. Kalshi announced it opened three insider-trading cases involving political candidates and imposed fines and suspensions on the accounts, naming Minnesota state Senator Matt Klein and Ezekiel Enriquez as among those penalized. Kalshi wrote that political candidates who can influence a market by remaining in or leaving a race violate the platform’s rules and that any trade found to breach exchange rules will be punished. A candidate in the Virginia Democratic primary, Mark Moran, posted on X that he placed a $100 bet on his own race and that he “wanted to get caught” to draw attention to the issue.

State orders, federal lawsuits and proposed legislation are unfolding concurrently as officials at multiple levels of government address the use of nonpublic information on prediction markets.