Minnesota Bars State Employees From Insider Trading on Prediction Markets

Minnesota Governor Signs Executive Order Banning Insider Trading on Prediction Markets – State Employees Face Disciplinary Action

Key Takeaways

• Minnesota Governor Tim Walz has signed an executive order prohibiting state employees from using non-public information to trade on prediction markets.
• The ban applies regardless of whether a profit is made.
• Violations can result in disciplinary measures, including dismissal.
• The order follows a federal judge’s preliminary injunction blocking Minnesota’s broader ban on prediction markets.
• The blocked legislation had bipartisan support and was scheduled to take effect on August 1.

Executive Order Targets Insider Trading on Prediction Markets

Minnesota Governor Tim Walz has issued an executive order that bars employees of state agencies from using non-public or confidential information obtained through their employment to participate in prediction markets. The measure applies specifically to insider trading activity linked to such platforms.

According to the order, the prohibition stands regardless of whether an employee ultimately realizes a profit. In other words, the act of using confidential government information to place trades on prediction markets is itself forbidden, independent of financial outcome.

The executive order authorizes disciplinary measures for violations. Sanctions may include formal discipline and extend up to and including termination of employment.

Governor Walz stated that public officials should not benefit financially from insider information. He framed the order as a step to reinforce ethical standards within Minnesota’s state government.

Federal Court Blocks Broader State Ban on Prediction Markets

The executive action comes after a federal judge issued a preliminary injunction preventing Minnesota from enforcing a broader law that would have banned prediction markets in the state.

The blocked legislation had passed with bipartisan support in both the Minnesota House and Senate. It was scheduled to come into force on August 1 and would have made Minnesota the first US state to implement a full ban on prediction market platforms.

Because of the preliminary injunction, the state cannot currently enforce that broader statutory ban. The governor’s executive order instead focuses specifically on the conduct of state employees, addressing ethical concerns within the public sector rather than regulating platform access for the general public.

Scope and Enforcement of the Executive Order

The order applies to employees of Minnesota state agencies. It covers any use of non-public or confidential information obtained through employment. This includes information that is not available to the general public and that could potentially influence trading activity on prediction markets.

Importantly, the order does not hinge on proof of financial gain. Even if a state employee places a trade based on insider knowledge and does not profit, the action would still constitute a violation.

Enforcement is administrative rather than criminal under the terms described. Employees who breach the order may face internal disciplinary procedures. The potential consequences range from lesser disciplinary actions to discharge from employment.

Political Context and Reference to Market Operators

In announcing the executive order, Governor Walz criticized what he described as a lack of sufficient safeguards at the federal level. He referenced the Trump administration and companies such as Kalshi in his remarks, arguing that public trust and safety require stronger ethical boundaries.

The comments reflect ongoing tensions between state-level regulatory efforts and federal judicial decisions affecting prediction markets. While the federal injunction has paused Minnesota’s attempt to impose a statewide ban, the governor has chosen to act within the scope of executive authority over state employees.

Implications for Prediction Market Participants

For users of prediction markets in Minnesota, the executive order does not create a general prohibition on participation. Instead, it establishes clear restrictions for a defined group: state agency employees with access to non-public information.

This distinction is relevant for market participants evaluating regulatory risk. The broader legislative ban remains subject to federal court proceedings, while the executive order is limited to internal government ethics rules.

The development also highlights how prediction markets are increasingly intersecting with public sector compliance frameworks. Where government employees may have access to sensitive information, states may introduce specific rules to prevent conflicts of interest or misuse of insider knowledge.

Our Assessment

Minnesota’s executive order establishes a targeted prohibition on insider trading in prediction markets by state employees, with disciplinary consequences for violations. It follows a federal court decision that temporarily blocks the state’s broader legislative ban on such platforms. The action separates internal ethics enforcement from the wider regulatory debate over prediction market legality, creating immediate compliance obligations for public employees while the broader legal dispute remains unresolved.