New York and Illinois have moved to close an ethics gap created by the rapid growth of prediction markets, issuing executive orders that prohibit public employees from using nonpublic government information to trade on event contracts or help others profit from them. Gov. Kathy Hochul signed New York’s order on April 22, while Gov. J.B. Pritzker issued Illinois’ order on April 21.
States target information asymmetry
The orders do not ban state workers from all prediction-market activity. They target the misuse of confidential information acquired through official duties, including information tied to government actions, elections, emergencies or other events that can move market prices. Hochul described insider betting as “corruption, plain and simple,” while Illinois said its order strengthens existing ethics rules against personal gain from confidential information.
Illinois’ order took effect immediately and applies to state employees and officials. New York’s order similarly covers state officers and employees, barring both direct trading on confidential information and assisting others in profiting from it.
Federal-state conflict is widening
The measures arrive as prediction-market oversight becomes a direct jurisdictional fight between states and federal regulators. The CFTC sued Illinois, Arizona and Connecticut on April 2, arguing that CFTC-registered designated contract markets fall under exclusive federal jurisdiction and should not face a patchwork of state restrictions.
That conflict leaves platforms operating under simultaneous compliance pressure from ethics rules, gambling-law enforcement and commodities regulation. Illinois has also sent cease-and-desist letters to operators, while platforms such as Kalshi are already under scrutiny after suspending three political candidates for betting on their own races.
Prediction-market controls now need insider-information screening, employment certification and stronger escalation procedures. Until courts resolve the CFTC preemption question, operators should expect continued state-level action alongside federal supervision.