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Newsom prohibits state officials from betting in prediction markets using confidential information
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Insider Trading fears increase after bets placed on Iran strikes spark calls to tighten rules
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California fines cryptocurrency firms Nexo and Coinhub for financial oversight.
California Governor Gavin Newsom took action to stop public officials using confidential information for their own personal gain. On March 27, 2026 he signed Executive Order N-4-25, which prohibits state appointees to bet on prediction markets with non-public information.
The order aims to prevent officials from profiting off of inside information about government or global events.
Insider Trading Fears Rise Around Prediction Markets
Insider Trading Fears Rise Around Prediction Markets
The order focuses on prediction sites like Polymarket and Kalshi where people bet on future actions, including military decisions and political decisions. Officials are not allowed to use confidential information in order to benefit themselves, their family, former partners or associates. The executive order states that the purpose is to prevent the misuse of insider knowledge and maintain public confidence.
Recent activity on prediction marketplaces has raised serious questions. More than 150 accounts correctly predicted President Trump’s strike on Iran the day before it happened.
At least 109 of the accounts earned more than $10,000 and 16 even more. This has sparked fears that insider information may have played a part. State and federal lawmakers have pushed for stricter regulations.
Lawmakers Push for New Rules in Prediction Market
Senator Elissa slotkin, Democrat from Michigan, said: “If you are just hanging out at one of these sites and suddenly, you see a lot of people placing big bets on a military action, then that’s a sign that we’re going to take military action.”
Senator Todd Young of Indiana, a Republican, warned that regulations could prevent officials from changing their behavior for personal gain. Federal proposals would require that bets exceeding $250 are reported and that fines of up to twice the amount of any illegal profits could be imposed.
California Expands its Oversight of Crypto Platforms
California Expands its Oversight of Crypto Platforms
California is also stepping up its oversight of digital finance. In January, the Department of Financial Protection and Innovation imposed a fine of $500,000 on Nexo Capital for violating licensing and consumer protection laws.
In October last year, Bitcoin ATM operator Coinhub received a $675,000 fine for overcharging its customers. This was the fourth enforcement action taken against crypto kiosks in California under the Digital Financial Assets Law. Commissioner KC Mohseni stated, “Crypto-kiosk operators in California have been put on notice that we plan to root out bad actors.”
Related: Brazil Turns Confiscated Crypto into Law Enforcement Funding Tool
