‘I’m signing an executive order’: Gavin Newsom just pulled a president-worthy move, and Donald Trump won’t recover anytime soon
Ethical failures and insider profiteering.
California Governor Gavin Newsom is signing an executive order today that bans state officials with insider information from betting on prediction markets. This move directly expands existing ethics rules, prohibiting state appointees from using non-public information to enrich themselves or their family members through these fast-growing platforms. The order takes effect immediately once signed.
According to Politico, Newsom framed his decision as a direct counter to the current administration, accusing President Donald Trump’s Washington of being “riddled with ethical failures and insider profiteering.” He made it clear that California isn’t going to tolerate that kind of corruption.
Prediction markets like Kalshi and Polymarket let people bet on all sorts of outcomes, from sports and pop culture to, yes, even state politics. They’ve really taken off, but with that growth comes a lot of scrutiny. Concerns about rampant insider trading have been bubbling up, and this order is Newsom’s way of drawing a “bright line” against it. His press office even teased the announcement late Thursday on X, jokingly asking Kalshi and Polymarket to “get odds for this.”
This isn’t the first time prediction markets have faced criticism
There was an unusual instance where someone correctly predicted events related to the U.S.’s military intervention in Venezuela and a strike on Iran. Those wagers sparked accusations of insider knowledge and have led to new legislation in Congress aimed at banning bets on terrorism, war, and other sensitive events.
Newsom and other Democrats have also pointed out the Trump family’s ties to these platforms, noting that Donald Trump Jr. serves as an adviser to both Kalshi and Polymarket. This connection has only amplified the calls for greater regulation.
It’s not just California acting on this, either. Lawmakers across the country, from both parties, have been demanding more regulatory scrutiny. They’re worried about insider trading and also about the potential for these platforms to get kids hooked on gambling.
Some governors, like Utah’s Spencer Cox, even argue that prediction platforms should be treated just like sports gambling, which is regulated by individual states and banned in several, including California. Cox and others have gone further than Newsom, directly challenging the platforms’ legal standing and issuing cease-and-desist orders.
The prediction platforms argue they’re sufficiently regulated as financial exchanges by the federal government. Kalshi hit back saying that “the odds are 100%” given the platform “bans insiders.” Kalshi spokesperson Elisabeth Diana said the policy made sense and the company had been enforcing it, reminding everyone that “Government employees should be aware that trading on federally regulated markets using material non-public information violates the law.”
In response to the growing congressional scrutiny, Polymarket updated its insider trading guidelines this week. Kalshi also announced new technological safeguards designed to preemptively block political candidates from betting on their own campaigns, along with similar restrictions for sports. Some say these restrictions aren’t enough, and new legislation is needed to give states, not just federal regulators, control over prediction market contracts for sports.
It’s easy to see why people would be worried by all of this
In Congress, there’s a bipartisan proposal in the House that would prohibit members of Congress, Trump, and other Washington officials from participating in prediction markets related to political events or policy decisions. A similar bill was also introduced in the Senate. Representative Seth Moulton (D-Mass.) even banned his own staff from using prediction markets earlier this week.
In California, the crowded 2026 governor’s race has become a hotbed of trading activity, with users betting over $10 million combined on Kalshi and Polymarket. There have even been at least two instances of gubernatorial candidates placing Kalshi bets while still in the race, despite Kalshi’s rules. Kalshi did crack down in one case, imposing a five-year ban and a $2,000 fine on Kyle Langford, who has dropped out of the governor’s race and is now running for Congress.
State Assemblymember Kate Sanchez, a Republican, introduced her own bill earlier this year that’s pretty similar to Newsom’s order. It would ban state officials, appointees, government employees, and lobbyists in California from placing bets if they have insider information.
The Trump administration, however, maintains that the federal Commodity Futures Trading Commission has sole authority over prediction markets and has vowed to fight state regulators in court. California hasn’t been as aggressive as other states on the legal front, though Attorney General Rob Bonta has supported states that have sued prediction market companies, even as he’s resisted pressure to file his own lawsuit.
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