California Bans Public Officials from Prediction Market Bets

• Newsom bans state officials from betting on prediction markets using confidential info.
• Insider trading fears rise after bets on Iran strikes spark calls for stricter rules.
• California fines crypto firms Nexo and Coinhub to enforce financial oversight.

California Governor Gavin Newsom has acted to stop public officials from using confidential information for personal gain. On March 27, 2026, he signed Executive Order N-4-26, which bans state appointees from betting on prediction markets using non-public knowledge. 

The order is meant to prevent officials from profiting from inside information about government decisions or global events.

Insider Trading Fears Rise Around Prediction Markets

The order focuses on prediction platforms like Polymarket and Kalshi, where people bet on future events, including military actions and political decisions. Officials cannot use confidential information for themselves or help family, former partners, or associates profit. “It is intended to prevent misuse of insider information and maintain public trust,” the executive order states.

Recent activity on prediction markets has raised serious concerns. The day before President Trump began strikes on Iran, more than 150 accounts on Polymarket correctly predicted the action. 

At least 109 accounts made over $10,000, and 16 earned even more, sparking fears that insider knowledge may have played a role. As a result, state and federal lawmakers are pushing for stricter rules.

Lawmakers Push New Rules for Prediction Market

Senator Elissa Slotkin, Democrat of Michigan, said, “If you’re just hanging out on one of these sites, and suddenly you see a bunch of people placing large bets on military action, that is a tell that we’re about to take military action.” 

Similarly, Senator Todd Young, a Republican of Indiana, warned that regulation could stop officials from changing behavior for personal gain. Federal proposals would require reporting for bets over $250 and impose fines up to double any profits from illegal wagers.

California Expands Oversight of Crypto Platforms

At the same time, California is stepping up oversight of digital finance. In January, the Department of Financial Protection and Innovation fined Nexo Capital $500,000 for breaking licensing and consumer protection rules. 

Last October, Bitcoin ATM operator Coinhub was hit with a $675,000 penalty for overcharging customers. This marked the fourth enforcement action against crypto kiosks under the state’s Digital Financial Assets Law. Commissioner KC Mohseni said, “Crypto kiosk operators in California are on notice that we intend to root out bad actors.”

Related: Brazil Turns Confiscated Crypto Into Law Enforcement Funding Tool