New York, Illinois Ban Officials From Prediction Markets

Alvin Lang Apr 23, 2026 03:34

New York and Illinois ban state employees from prediction market betting to curb insider trading amid surging market volumes.

New York Governor Kathy Hochul has issued an executive order prohibiting state employees from participating in prediction markets, citing concerns about insider trading. Illinois Governor JB Pritzker enacted a similar ban earlier this week, signaling a coordinated effort among key states to address ethical concerns in the rapidly growing sector.

Hochul, in a statement released on Wednesday, described the move as a necessary step to ensure public servants prioritize their duties over personal gain. "Getting rich by betting on inside information is corruption, plain and simple," she said. The executive order specifies that violations could lead to dismissal and potential legal action. It also bars officials from aiding others in profiting from confidential information.

Prediction markets, where participants bet on the outcomes of events such as elections, sports, and geopolitical developments, have seen explosive growth. Monthly trading volumes hit a record high of $23.6 billion in March, according to Token Terminal. However, this growth has been accompanied by rising allegations of insider trading and market manipulation.

Insider Trading Allegations

Hochul’s order referenced recent cases of alleged insider trading. One involved a trader on Polymarket who reportedly made $400,000 by betting on the ousting of Venezuela’s Nicolás Maduro just hours before U.S. forces captured him. Another incident included suspicious trades related to military actions in Iran. These examples underscore the increasing concern over the potential misuse of confidential information in prediction markets.

Illinois Governor Pritzker echoed similar concerns, describing the state's ban as a commitment to maintaining transparency and ethical governance. "Illinois is doubling down on its commitment to a transparent and ethical government by bolstering its current state laws to prevent insider trading amid the rapid growth of online prediction markets," he stated on Tuesday.

Ongoing Regulatory Scrutiny

The prediction market sector is already under significant regulatory scrutiny. Kalshi, a major player in the space, has faced legal challenges from both the New York State Gaming Commission and Nevada regulators. In October, New York issued a cease-and-desist order against Kalshi for allegedly operating an unlicensed mobile sports betting platform. Meanwhile, in Nevada, the platform is locked in a court battle over similar accusations of unlicensed gambling. Coinbase Chief Legal Officer Paul Grewal has suggested that the legal outcomes could eventually reach the U.S. Supreme Court, potentially setting a precedent for how prediction markets are regulated.

For platforms like Kalshi and Polymarket, these bans and lawsuits are more than just legal hurdles—they could shape the future viability of prediction markets in the U.S. The sector now faces a balancing act: fostering growth while maintaining compliance with evolving state and federal regulations.

What’s Next?

As states like New York and Illinois take a hard stance against potential misuse, market participants and platforms may need to reconsider their operational and compliance strategies. With trading volumes steadily climbing and interest in prediction markets showing no signs of waning, the regulatory environment will remain a critical factor for both investors and developers in the months ahead.

• prediction markets
• regulation
• insider trading