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Gov. Kathy Hochul signed an executive order April 22 targeting a growing gray area in the prediction market space. The order, now in effect, prohibits state officials and employees from using confidential government information to place wagers.
According to the governor’s office, the order represents the most robust safeguard any state has established against such activity, following a months-long review of suspicious trades that suggested use of nonpublic “insider” information.
The rise and risk of prediction markets
Prediction markets allow participants to wager on real-world outcomes, ranging from consequential events like military actions and elections to trivial matters bordering on absurdity, such as an official’s attire or a person’s weekly social media post count. Popularity for these markets surged following the 2024 US election cycle, with daily trading volumes climbing into the millions of dollars. While this growth attracted significant capital, it raised alarms regarding how easily those with access to government secrets could profit from them.
New York’s new ethical guardrails
The executive order bolsters New York’s existing Code of Ethics, which governs how public servants handle conflicts between their duties and personal finances. Now, any state officer, employee, or governor-appointed member of a public authority is prohibited from using nonpublic information gathered through their official role to place bets or assist others in doing so. Violations carry severe consequences, including dismissal and referral to law enforcement.
Hochul characterized the use of inside information for personal profit as “corruption, plain and simple.” She also criticized federal leadership, arguing the Trump administration and Republican members of Congress have “looked the other way” while the industry operated without meaningful ethical limits, stating that New York would not wait for Washington to catch up.
Case studies: Maduro and Iran trades
The order cites specific examples of the risks inherent in unregulated markets. In January, US Army Master Sgt. Gannon Ken Van Dyke reportedly collected more than $400,000 by betting that Venezuelan President Nicolás Maduro was about to fall from power—a bet placed shortly before Maduro was captured by US forces. On April 23, one day after Hochul signed the order, the Department of Justice unsealed an indictment charging Van Dyke with using classified military information to place those bets.
The governor’s office also noted more than $1 billion in trades linked to military activity involving Iran. The administration described the timing as “too precise to ignore,” with bets on specific strike locations, timeframes, and the operational status of the Strait of Hormuz appearing to move ahead of public knowledge.
State vs. industry: The Kalshi dispute
This action follows previous friction between the state and the industry. In October, the New York State Gaming Commission issued a cease-and-desist letter to Kalshi, alleging it was running a mobile sports wagering operation without a license. That dispute remains unsettled, and New York is now pressing on two separate tracks: monitoring its own employees while holding market operators to account.
New York is not alone; on Tuesday, Gov. JB Pritzker of Illinois signed a nearly identical order. This coordinated movement within 24 hours signals that the issue has moved beyond isolated concern. At the federal level, Rep. Ritchie Torres has introduced legislation to bar federal workers, presidential appointees, and members of Congress from wagering on markets tied to government policy, though the bill has not yet cleared Congress.
Can prediction markets police themselves?
As pressure mounts, some platforms are attempting to self-regulate. On the same day Hochul signed her order, Kalshi announced insider trading cases against three political candidates who wagered on their own races, resulting in fines and suspensions. One candidate, Virginia Democrat Mark Moran, admitted to a $100 bet on himself as a “protest” to expose the platform’s influence on young men.
Despite these internal efforts, the rapid actions in Albany and Springfield last week suggest that state governments have concluded that leaving the industry to police itself is no longer a workable approach.
