Modern York has banned government employees from using confidential information to trade in forecast markets. In an executive order signed today and viewed by WIRED, Gov. Kathy Hochul prohibited state government employees from using “any nonpublic information obtained in the course of their official duties” to participate in forecast marketplace platforms or assist others profit from these services.
“Getting rich by betting on insider information is corruption, plain and simple,” Hochul said in a statement provided to WIRED. “Our actions will ensure that public officials work for the people they represent, not for their own enrichment. While Donald Trump and D.C. Republicans turn a blind eye to the ethical Wild West they have created, New York is working to lead by example and eliminate insider trading.”
This order was not prompted by any specific insider trading incidents involving Modern York State employees. “There are no known incidents of this behavior to date,” says Modern York State Executive Chamber Deputy Communications Director Sean Butler.
It’s the latest in a wave of initiatives aimed at curbing insider trading on prediction markets such as Kalshi and Polymarket, two of the most popular of these platforms in the United States. California Governor Gavin Newsom released issued a similar executive order last month prohibiting Golden State employees from trading inside information in the forecasting market. Yesterday Illinois Governor JB Pritzker followed suit.
In addition to these regulations, Congress has also introduced several laws aimed at curbing market manipulation and corruption in the industry, including laws prohibiting elected officials from participating in prediction markets. Some individual politicians discourage or total ban prevent their employees from purchasing event contracts on these platforms. According to CNN, the White House recently warned executive branch employees are prohibited from trading on forecast markets. When WIRED asked the White House earlier this year about its policy regarding these markets, it pointed to existing laws prohibiting gambling activities, but did not respond to requests to clarify whether it considered participation in the forecasting market to be gambling.
The Commodity Exchange Act, which covers derivatives markets, already prohibits insider trading in insider trading, which means that both government officials and those in the private sector are breaking the law by introducing insider trading in event contracts. Rather than establishing modern rules, Modern York’s executive order serves primarily to emphasize the state’s commitment to enforcing existing laws and to clarify how those laws and the Employee Code of Ethics apply to prediction markets.
However, with so many high-profile examples of suspected insider trading on Polymarket centering on geopolitical events, ranging from the interception former Venezuelan leader Nicolas Maduro to strikes during the ongoing war in Iran, many observers – including prominent lawmakers – see it as such a pressing problem. They race to write laws and regulations that recall and emphasize existing rules.
“It makes sense and we’re already doing it. At Kalshi, insider trading violates our policies and we enforce them when we catch insiders,” says Kalshi spokeswoman Elisabeth Diana. “Government employees should be aware that trading in federally regulated markets using material nonpublic information violates the law.” (Polymarket did not immediately respond to a request for comment.)
Amid backlash, Polymarket and Kalshi recently announced modern initiatives to combat insider trading.
In February, Kalshi announced its decision to suspend and fine two people for violating market manipulation rules; the company also confirmed that it had reported the incidents to the Commodity Futures Trading Commission, the federal agency that oversees forecast markets. In March, it introduced a strengthened market surveillance module, preemptively blocking political candidates from trading on markets related to their campaigns.