Hochul, Pritzker ban state employees from prediction-market bets

New York Gov. Kathy Hochul signed an executive order Wednesday and Illinois Gov. J.B. Pritzker issued a similar order Tuesday, prohibiting state employees and officers from placing bets on online prediction markets because of concerns those markets could be used to profit from confidential information.

Hochul’s order says state workers may not use nonpublic information to trade on event-based contracts. The directive warns that violations could lead to dismissal and referral to law enforcement. The order cites specific suspected trades, including one in which a trader placed a low-odds wager that Venezuelan President Nicolás Maduro would be removed just hours before U.S. forces captured a figure, producing an estimated $400,000 profit. It also references unusual activity tied to possible military action involving Iran and a reported death of Supreme Leader Ayatollah Khamenei in late February. The New York measure also bars state employees from helping others profit on confidential information through these markets.

Pritzker’s order says Illinois will reinforce existing state laws to guard against insider trading as online prediction markets expand. He framed the action as a step to strengthen transparent and ethical governance, adding that the state will act to prevent misuse of privileged information.

Monthly trading volumes on prediction platforms have risen for seven consecutive months, reaching $23.6 billion in March. These platforms let users buy and sell contracts tied to outcomes such as elections, sports results, corporate earnings and geopolitical events.

Some private platforms have taken enforcement actions. One exchange reported banning a former candidate for governor of California after the individual placed a $200 bet on his own candidacy last year. Regulators have also moved: the New York State Gaming Commission sent a cease-and-desist letter in October to a prediction market operator for operating without a mobile wagering license, and that operator is engaged in a court dispute with the Nevada Gaming Control Board, which contends the contracts amount to unlicensed gambling.

Legal officials have said those regulatory fights could produce precedent on how prediction contracts are classified. Paul Grewal, chief legal officer at Coinbase, has said litigation over the regulatory status of prediction markets might ultimately reach the U.S. Supreme Court and determine whether the contracts are treated as securities, derivatives or gambling under state law.

State executive orders add to varied regulatory responses as officials weigh consumer protection, gambling rules and the risk that event-based trading could monetize confidential government information. Platform operators say they monitor trades for illicit activity and enforce platform rules; regulators say tighter controls are necessary to prevent abuse by people with privileged access.