New York Bans State Workers from Prediction Market Betting

Government workers in New York now have explicit rules preventing them from cashing in on insider knowledge through prediction markets, thanks to a new executive order signed by Governor Kathy Hochul.

The order forbids state employees from using any nonpublic information gained through their jobs to trade on platforms like Kalshi and Polymarket. It also bars them from helping others profit using insider tips.

"Getting rich by betting on inside information is corruption, plain and simple," Hochul said. The move comes as prediction markets have exploded in popularity, allowing people to bet on everything from election outcomes to geopolitical events.

New York joins California and Illinois in taking this step. While no New York state employees have been caught trading on insider information yet, leaders want to get ahead of potential problems before they start.

The platforms themselves have been working to clean up their act. Kalshi recently suspended and fined two people for market manipulation and now blocks political candidates from betting on their own races. Polymarket updated its rules in March to explicitly ban trading on stolen confidential information.

The Ripple Effect

This executive order does more than just restate existing federal laws against insider trading. It sends a clear message that states are watching prediction markets closely and will enforce ethical standards as these platforms grow.

The Commodity Futures Trading Commission is already investigating hundreds or potentially thousands of cases related to prediction markets. Chairman Michael Selig told Congress in April that the agency has zero tolerance for insider trading, though no arrests have been made yet.

High-profile cases of suspected insider trading on platforms like Polymarket have raised eyebrows across Washington. People appeared to profit from advance knowledge of everything from the capture of Venezuela's former leader to military strikes in ongoing conflicts.

Congress has introduced several bills to curb corruption in the industry, including proposed legislation that would bar elected officials from participating in prediction markets entirely. The White House recently warned its own staff against trading on these platforms.

New York's executive order clarifies how existing ethics codes apply to this new technology. By leading the charge alongside California and Illinois, these states are proving that protecting public trust doesn't require waiting for scandals to happen first.