New York Follows Illinois, Banning Pubic Sector Employees from Using Prediction Markets
New York and Illinois each introduced restrictions on prediction market activity this week, with Gov. Kathy Hochul and Gov. JB Pritzker issuing executive orders that bar state employees from participating in event-based wagering. The measures come as trading volumes reached $23.6 billion in March and concerns around insider trading and market manipulation continued to grow.
Gov. Hochul's executive order prohibited New York state employees and officials from betting on prediction market apps or using confidential government information to profit from such platforms. The order also extended to situations in which employees assist others in placing wagers based on nonpublic knowledge.
The governor termed the act a violation of public service and noted that the repercussions would be termination and possibly legal actions. He also faulted the federal government's policymakers for not formulating any form of control measures.
The order references specific incidents that raised concern about insider trading risks. One involves a trader placing a low-odds bet on Venezuelan President Nicolás Maduro being removed shortly before his capture, generating about $400,000 in profit.
Additional suspicious activity cited includes trades linked to military conflict scenarios earlier in the year. The directive positioned these examples as evidence of how access to sensitive information could be exploited in unregulated markets.
Illinois took action with a separate but aligned executive order issued by Gov. Pritzker, reinforcing existing state laws around the use of insider information. The order bans state employees from betting on prediction markets.
Gov. Pritzker said the action was intended to support transparency in government and prevent individuals from using privileged information for personal gain.
Both states' actions come as prediction markets reported sustained growth, with trading volumes increasing for seven consecutive months. Platforms have also taken internal enforcement steps. Kalshi previously banned a former California gubernatorial candidate after he placed a bet on his own campaign.
It also just suspended three congressional candidates for five years after they wagered on their election outcomes.
Legal challenge targets Coinbase and Gemini
Alongside the state's executive order, New York Attorney General Letitia James is suing Coinbase Financial Markets and Gemini Titan, accusing both of violating New York sports betting and gambling laws through their prediction-market offerings.
The complaints stated that both companies failed to obtain licenses from the New York State Gaming Commission before offering contracts tied to real-world outcomes such as sports and elections. James argued that these products qualify as gambling under state law because outcomes are outside user control or resemble games of chance.
The filings also raised age-compliance issues, alleging that the platforms allowed users aged 18 to 20 to place bets despite the state's minimum age of 21 for mobile sports betting.
James is seeking to recover alleged illegal profits, impose civil penalties of three times those amounts and secure restitution for customers. The lawsuits also aim to block underage users from accessing the platforms and prevent marketing efforts targeting college campuses.
