Arizona Bars State Employees From Using Insider Information on Prediction Markets

Arizona Bans State Employees From Using Non-Public Information on Prediction Markets – Executive Order Targets Insider Trading Risks

Key Takeaways

• Arizona Governor Katie Hobbs has signed an executive order banning executive branch employees from profiting on prediction markets using non-public information.
• The order applies to platforms such as Kalshi and Polymarket.
• Violations may lead to dismissal, sanctions, and referral to law enforcement.
• All non-public information that could be used for wagers is formally designated as confidential.
• The governor has urged other branches and state bodies to adopt comparable policies.

Executive Order Prohibits Insider Trading on Prediction Markets

Arizona Governor Katie Hobbs has signed an executive order that prohibits state executive branch employees from using non-public government information to profit on prediction markets. The measure specifically addresses the risk that insiders could exploit confidential information for financial gain on platforms that allow users to place wagers on political or governmental outcomes.

The order forbids executive branch employees from disclosing or using any non-public information to profit, avoid financial loss, or assist others in profiting from prediction markets. This includes information obtained during the course of public service that has not been made available to the public.

Prediction markets such as Kalshi and Polymarket allow participants to trade contracts tied to the outcome of future events, including political decisions and policy developments. Because prices on these platforms move in response to new information, access to confidential government data could provide a financial advantage.

Confidential Information Officially Defined and Protected

To reinforce the prohibition, the executive order formally designates all non-public information obtained during public service that could be used for wagers as confidential. By explicitly classifying such information, the order establishes a clear compliance standard for employees within the executive branch.

The prohibition extends beyond direct personal profit. Employees are also barred from assisting others in profiting or avoiding losses based on insider knowledge. This includes sharing information with third parties who could use it to trade or place wagers on prediction markets.

Any violation of the order may result in dismissal from employment, additional sanctions, and referral to law enforcement authorities. The inclusion of potential law enforcement referral underscores that breaches could carry consequences beyond internal disciplinary measures.

Response to Media Reports and Federal Indictments

The executive order follows recent media reports and federal indictments involving government employees outside of Arizona. According to the information referenced in the order, those cases involved individuals who used non-public information to win millions of dollars wagering on government actions.

The reported conduct included wagers related to international military operations and other government decisions. These developments appear to have highlighted the potential for misuse of sensitive information in markets where participants can trade on anticipated policy or operational outcomes.

By issuing the order, the Arizona governor has moved to establish clear ethical standards for state executive branch employees in light of those incidents.

Call for Broader Adoption Across State Government

In addition to applying the policy to the executive branch, Governor Hobbs has encouraged other statewide elected officials, independent boards and commissions, and the judicial and legislative branches to adopt comparable policies for their employees.

The executive order itself does not automatically extend to those bodies. However, the public call for similar measures signals an intention to create consistent standards across state government entities. Each branch or body would need to implement its own rules to align with the approach set out in the executive order.

Governor Hobbs stated that public service is a privilege and that exploiting insider knowledge for personal financial gain is unacceptable. The order frames the restrictions as part of broader efforts to uphold accountability and prevent conflicts of interest within state government.

Relevance for Prediction Market Platforms and Users

For users of prediction markets, including those active on platforms such as Kalshi or Polymarket, the order clarifies that Arizona executive branch employees are subject to strict limits when trading on government-related outcomes. While the measure is directed at public officials rather than at the platforms themselves, it addresses concerns about the integrity of markets where government decisions can materially influence pricing.

The order does not impose new requirements on prediction market operators. Instead, it focuses on the conduct of state employees and their access to confidential information. By defining non-public government information as confidential and restricting its use for wagers, the state seeks to reduce the risk that insiders could distort market outcomes or benefit unfairly from privileged knowledge.

For comparison platform users evaluating prediction markets or other event-based trading products, the development highlights how regulatory and ethical standards can intersect with market participation, particularly when government actions form the basis of tradable contracts.

Our Assessment

Arizona’s executive order establishes a formal prohibition on executive branch employees using non-public information to trade on prediction markets. It defines relevant information as confidential, sets out disciplinary and potential legal consequences, and responds to reported cases of insider wagering in other jurisdictions. The measure focuses on internal government conduct rather than platform regulation and signals a broader push for consistent ethical standards across state institutions.