New York, Illinois Governors Move to Restrict Insider Betting on Prediction Markets

This week, the governors of New York and Illinois issued executive actions to restrict state employees’ insider betting on prediction markets. These moves add to a widening, multi-level effort across the U.S. to address integrity risks tied to prediction markets.

Both actions highlight concerns that government officials could use non-public information to profit from event-based contracts.

New York, Illinois Target Insider Betting by State Employees

In New York, Gov. Kathy Hochul signed an executive order prohibiting state employees from using non-public information to trade on prediction markets.

Announcing the measure, Hochul said:

Getting rich by betting on inside information is corruption, plain and simple.”

The order builds on New York State’s Code of Ethics. It bars state employees from using confidential information to profit from event-based contracts.

Hochul’s order arrived a day after Illinois Gov.J. B. Pritzker issued a similar order.

Prediction markets have rapidly grown into a space where people can bet on real-world events without any oversight, including events people can influence,” Pritzker said.

Both orders highlight the Trump administration’s support for prediction markets. They also highlighted recent questions regarding possible insider information on real-world geopolitical events. These include former Venezuelan leader Nicolas Maduro’s arrest and U.S. military action in Iran.

The Two States Follow California’s Approach

The latest developments build on earlier action in California. In late March, Gov. Gavin Newsom expanded existing ethics rules to explicitly cover prediction markets.

Announcing the move, Newsom said:

Public service should not be a get-rich-quick scheme.”

The order also prohibits state employees from using non-public information to help others, such as spouses, children, other family members, or business partners, to profit from prediction markets.

As in New York and Illinois, the press release on Newsom’s order mentions possible insider trading by individuals tied to the Trump administration and examples of questionable trades related to geopolitical events.

State Legislatures Also Target Sector

The executive actions add to the growing pressure on the sector. Lawmakers in several states have introduced legislation to address insider trading and the broader prediction market sector.

In Kentucky, lawmakers recently passed a wide-ranging gambling bill that included provisions barring state-licensed gaming operators from engaging in prediction markets.

Meanwhile, Tennessee’s SB1992 has passed both the Senate and House. If enacted, the measure would explicitly prohibit individuals from participating in prediction markets, making participation a felony-level offense.

Other states discussing similar measures include Minnesota, Iowa, and New York.

Federal Lawmakers Add Pressure

At the federal level, lawmakers have also begun to increase scrutiny of prediction markets regarding insider trading and market integrity.

Congressman Seth Moulton (MA-06) was among the first lawmakers to implement a policy prohibiting his staff from participating in prediction markets.

Moulton, along with several other members of Congress, has repeatedly questioned the Commodity Futures Trading Commission (CFTC) on why the agency has failed to take action against geopolitical event contracts and possible insider trading on prediction markets.

Sen. Richard Blumenthal (D-CT) also sent a letter to Polymarket over its handling of event-based contracts tied to geopolitical developments.

Federal lawmakers have also introduced several bills addressing prediction markets. These include:

• Preventing Real-time Exploitation and Deceptive Insider Congressional Trading Act (PREDICT Act), introduced by Congressman Adrian Smith (R-NE-03) and Congresswoman Nikki Budzinski (D-IL-13)
• STOP Corrupt Bets Act, introduced by Rep. Jamie Raskin (MD-08) and Senator Jeff Merkley (D-OR)
• Public Integrity in Financial Predictions Markets Act of 2026, introduced by Senators Elissa Slotkin (D-MI), Todd Young (R-IN), Adam Schiff (D-CA), and John Curtis (R-UT)
• Prediction Markets Are Gambling Act, introduced by U.S. Senators John Curtis (R-UT) and Adam Schiff (D-CA)

In addition, the White House Management Office sent a staff-wide email in March. It reminded employees of rules prohibiting the use of government information for personal financial gain.

Why It Matters

The growing number of actions and bills suggests that insider trading on prediction markets is emerging as a key regulatory subject across the U.S.

While courts are currently hearing multiple cases on whether the sector falls under federal derivatives law or state gambling statutes, lawmakers are moving to regulate behavior around it.

Together, these developments suggest regulators are beginning to treat prediction markets more like financial markets in practice, even as their legal classification remains unresolved.