Newsom Takes Action Against Corruption in California

Gavin Newsom seems to have sensed a shift in political winds, leaning towards a significant effort to tackle corruption.

On Friday, he announced an executive order preventing state officials from utilizing insider information to bet on prediction market platforms like Polymarket and Karshi. Even though these platforms can resemble gambling, they operate differently than typical betting sites like DraftKings and FanDuel. Users don’t bet against the house; instead, they trade “contracts” on potential future events, such as the likelihood of U.S. military involvement in Iran. In essence, it’s more of a market than traditional betting.

In his statement, Newsom contrasted California’s stance on ethics with what he described as the ethical shortcomings in Washington. “We will not tolerate this type of corruption in California,” he affirmed.

There have been accusations regarding insider trading tied to a big oil deal that coincided with President Trump’s announcement about ongoing discussions with Iran. This information stirred concerns, as it came just before a report that could influence oil prices; the transaction was valued at around $580 million.

The governor also shared a light-hearted tweet questioning whether anyone could place bets on the timing of his executive order, highlighting the unique nature of prediction markets.

As these markets are relatively new, state regulators are still catching up, leaving room for insider trading to thrive. Nonetheless, both Polymarket and Karshi are taking steps to tighten their rules against such practices.

Interestingly, the movement against corruption seems to resonate across party lines. A recent survey showed that nearly no Americans, except those benefiting from corrupt practices, support Congress members trading stocks while in office. It’s likely that many citizens share similar views about restricting government officials’ access to prediction markets.

In alignment with Newsom’s actions, a bipartisan group of senators has also begun addressing the issue. Democratic Senators Elissa Slotkin and Adam Schiff, alongside Republican Senators Todd Young and John Curtis, introduced the Public Integrity in Financial Markets Act of 2026. This proposed legislation would extend to the president, vice president, Congress members and their teams, as well as political appointees and employees from various agencies. Insider information is specified as data that a reasonable investor would find significant before making trading decisions.

Senator Young articulated concerns about recent activities in prediction markets, emphasizing that those with access to sensitive information might exploit that for personal gain. He called the legislative move a “prudent step to protect taxpayers and promote government integrity.”