Arizona Governor Katie Hobbs has taken decisive action by issuing an executive order aimed at preventing insider trading among government employees on prediction markets. Announced on Thursday, this order prohibits executive branch employees from using or disclosing any nonpublic government information for personal gain on prediction markets. Furthermore, it classifies all such nonpublic information, acquired during their public service, as confidential.
Those who violate this order may face termination and potential referral to law enforcement.
"Arizonans deserve a state government that works for them, not one where insiders exploit public service for their own gain," Hobbs stated in a press release. "I’m proud to set clear, commonsense ethical standards on prediction markets to hold our government accountable. Public service is a privilege, and we will not tolerate anybody abusing that privilege to line their own pockets."
The governor also urged other elected officials within Arizona’s government, as well as judicial and legislative leaders, to adopt similar measures.
Concerns over insider trading have been heightened by recent media reports and federal indictments indicating that some government employees in other states have profited significantly by wagering on government actions, even involving international military operations. The order highlights specific incidents, including U.S. Army member Gannon Ken Van Dyke, who allegedly earned over $400,000 on Polymarket trades regarding Venezuelan President Nicolas Maduro’s tenure based on classified information.
Hobbs is not alone in addressing this issue; California Governor Gavin Newsom implemented a similar ban in March, extending existing prohibitions against insider trading for government officials to include prediction markets. Newsom's ban further restricts appointees from aiding others—such as family members or business partners—in profiting from insider information.
In a separate legal matter, other Arizona officials are battling Kalshi, a platform offering sports markets, in a federal court. Kalshi filed a lawsuit against Arizona Attorney General Kristin Mayes and the Arizona Department of Gaming’s Director Jackie Johnson in March, claiming that previous actions by Johnson created a significant risk of enforcement against them. Shortly after, Mayes followed through with a criminal lawsuit against Kalshi, alleging it provided unauthorized bets across various domains, including sports and elections. However, a federal district court judge granted Kalshi a temporary injunction in May, suggesting that the company is likely to win the case.
