Banning State Employees from Insider Trading

Governor Kathy Hochul today issued an executive order prohibiting state employees from engaging in insider trading on prediction markets. These markets allow individuals to place bets on the outcomes of real world events, including both major events such as outcomes of military activity, election results, or the severity of natural disasters, as well as obscure and manipulable events such as betting on the attire of public officials at appearances, when the President of the United States would next publicly insult a person, or the volume of social media posts made by an individual.

“Getting rich by betting on inside information is corruption, plain and simple,” Governor Hochul said. “Our actions will ensure that public servants work for the people they represent, not their own personal enrichment. While Donald Trump and DC Republicans turn a blind eye to the ethical Wild West they’ve created, New York is stepping up to lead by example and stamp out insider trading.”

This executive order builds on New York State’s Code of Ethics and creates the strongest protections against insider trading and public corruption on prediction markets in the nation. Under this executive order, covered state officers and employees will be forbidden from using confidential information acquired in the course of their official duties to further their personal financial interests through these markets. These officers and employees will also be barred from assisting others in profiting on confidential information through prediction markets.

This order comes at a time of increasing public scrutiny over the role of prediction markets and the need for further regulations of this emerging industry. Recently, massive profits have been made following bets placed on actions taken by the federal government, raising concerns around safeguards against corruption and self-dealing. In January, an anonymous trader made more than $400,000 on a bet that Nicolas Maduro would soon be out of office. Reporting has also documented more than $1 billion in “perfectly-timed” bets surrounding the ongoing war in Iran, including the location and timing of military strikes and the status of the Strait of Hormuz.

New York State is also taking action to protect New Yorkers from predictive market platforms that engage in unlicensed and unlawful gambling operations. In October, the Gaming Commission sent Kalshi a cease and desist letter for illegally operating an unlicensed mobile sports wagering platform in New York State.

The provisions of this executive order take effect immediately.