New York Gov. Kathy Hochul issued an executive order that will prohibit state employees from using their inside information to make bets on prediction markets.
Prediction markets such as Kalshi and Polymarket, allow users to place bets on the outcome of real-world events like sporting events, military actions, election results, or who will attend Taylor Swift and Travis Kelce’s wedding. Leaders across the country are calling for regulations in the emerging industry at the same time the industry is coming under increased public scrutiny.
The prediction markets have seen large bets on actions by the federal government that have made massive profits. In January, an anonymous trader made more than $400,000 on a bet that Nicolas Maduro would soon be out of office. Other reporting found someone made more than $1 billion in “perfectly timed” bets surrounding the ongoing war in Iran, including the location and timing of military strikes and the status of the Strait of Hormuz.
“Getting rich by betting on inside information is corruption, plain and simple,” Hochul said. “Our actions will ensure that public servants work for the people they represent, not their own personal enrichment. While Donald Trump and DC Republicans turn a blind eye to the ethical Wild West they’ve created, New York is stepping up to lead by example and stamp out insider trading.”
Hochul’s office said the executive order builds on the state’s Code of Ethics and protects against insider trading and public corruption. Under the executive order, it will be forbidden for covered state officers and employees to use confidential information acquired in the course of their official duties to further their personal financial interests through the use of prediction markets. The officers and employees will also be prohibited from assisting others in using confidential information on prediction markets. The provisions of the executive order take effect immediately.
The state has also taken action to protect New Yorkers from predictive market platforms that engage in unlicensed and unlawful gambling operations. In October, the New York State Gambling Commission sent Kalshi a “cease and desist” letter for illegally operating an unlicensed mobile sports wagering platform in New York.