New York, Illinois Bar Public Officials From Prediction Markets on Insider-Trading Concerns

Suehyeon Lee

Summary

New York and Illinois have tightened regulation by banning public officials from participating in prediction markets.
The move comes as concerns over insider trading and market manipulation grow alongside the rapid expansion of prediction markets.
Prediction market platforms such as Kalshi are also taking anti-insider-trading measures, including suspending accounts used by politicians to bet on their own election outcomes.

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New York and Illinois have barred public officials from participating in prediction markets as scrutiny intensifies over potential insider trading.

Cointelegraph reported on April 22 that New York Governor Kathy Hochul signed an executive order banning state employees from betting on prediction markets. Illinois Governor JB Pritzker had previously taken similar action.

Profiting from nonpublic information is "a clear act of corruption," Hochul said, adding that public officials should serve citizens rather than pursue personal gain. She also faulted politicians for failing to establish clear ethical standards for prediction markets.

The restrictions come as prediction markets grow rapidly and concerns mount over insider trading and market manipulation. These markets have expanded quickly across events ranging from sports and elections to economic data releases.

In some cases, suspicious trading has emerged around military operations or political events, highlighting the need for tighter regulation.

Illinois likewise limited public officials' participation, describing the move as a measure to prevent insider trading in the fast-growing prediction-market landscape.

Prediction-market platforms have also begun taking their own steps. Kalshi, for example, has suspended accounts after identifying cases in which politicians wagered on their own election outcomes as part of its efforts to curb insider trading.