(The Center Square) — New York state workers are now barred from engaging in insider trading on prediction markets, under an executive order signed by Gov. Kathy Hochul on Wednesday.
The directive, which goes into effect immediately, prohibits state officers and employees from using confidential information related to their official duties to “further their personal financial interests” by betting on prediction markets like Kalshi and Polymarket. The new rules also prohibit state workers from passing on confidential information through prediction markets, according to the Hochul administration.
“Getting rich by betting on inside information is corruption, plain and simple,” Hochul, a Democrat, said in a statement. “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,” she added.
Hochul’s order comes amid increasing government scrutiny over the role of prediction markets and the need for federal and state regulations to provide guardrails for the emerging industry.
The prediction markets allow users to trade on real-world events and possible future outcomes, ranging from whether the U.S. will succeed in the military conflict in Iran to whether the New York Mets will win the World Series. The websites, which are federally regulated, facilitate transactions and make money through fees on the trades.
Critics say the companies are siphoning away millions of dollars in revenue from sports-related event contracts, which cuts into taxes state gambling agencies collect from licensed sportsbooks.
Earlier this week, New York Attorney General Letitia James became the latest law enforcement officer to take prediction market companies to court, with a lawsuit filed against Coinbase and Gemini, asking a state judge to bar the companies from operating in the state unless and until they get licenses from the state Gaming Commission.
In the suit, James alleges that the platforms are running illegal sports betting operations in the state through their prediction market offerings.
“Gambling by another name is still gambling, and it is not exempt from regulation under our state laws and Constitution,” James, a Democrat, said in a statement. “Gemini and Coinbase’s so-called prediction markets are just illegal gambling operations, exposing young people to addictive platforms that lack the necessary guardrails.”
Kalshi sued the New York Gaming Commission in October after regulators tried to borrow the company from offering its prediction market in the state. The outcome of that case is still pending.
