New York and Illinois Ban State Employees From Prediction Markets Over Insider Trading Concerns

New York Governor Kathy Hochul has signed an executive order banning state employees from participating in prediction markets, following a similar order issued by Illinois Governor JB Pritzker earlier this week. Hochul stated that using insider knowledge to profit from prediction markets amounts to corruption, emphasizing that public officials must prioritize public service over personal financial gain.

Hochul also criticized the Trump administration and congressional Republicans for failing to introduce meaningful ethical safeguards, describing the sector as an “ethical Wild West.” The order warns that violations could result in dismissal and potential law enforcement action, and also prohibits state employees from helping others profit using confidential information.

Rapid Growth in Prediction Markets Raises Oversight Concerns

Prediction markets have grown rapidly, with monthly trading volumes increasing for seven consecutive months and reaching a record $23.6 billion in March. These platforms cover events ranging from elections and sports outcomes to geopolitical and financial developments, raising concerns about insider trading and market manipulation.

Hochul’s order referenced several suspicious trades, including a bet placed on Venezuelan President Nicolás Maduro being ousted shortly before his capture, reportedly generating around $400,000 in profit. Other unusual trades involved predictions related to military actions in Iran and the reported death of Supreme Leader Ayatollah Khamenei.

Ongoing Legal Battles Add Pressure on Prediction Platforms

Regulatory pressure is also intensifying against prediction market operators. The New York State Gaming Commission previously issued a cease-and-desist letter to Kalshi over allegations of operating an unlicensed wagering platform. Kalshi is also engaged in legal disputes with Nevada regulators, with industry observers suggesting the case could eventually reach the U.S. Supreme Court and establish nationwide regulatory precedent.

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