Gavin Newsom jabs Trump on prediction markets by banning California officials from making insider bets

Gavin Newsom is not a betting man.

California’s governor on Friday issued an executive order banning insider profiteering by state officials, blocking political appointees from using confidential government information to place bets on prediction markets like Polymarket and Kalshi, the latter of which recently named Donald Trump Jr. as a strategic advisor.

“Public service should not be a get-rich-quick scheme,” Newsom said in a statement that took direct aim at the president.

The executive order immediately expands existing state ethics rules to cover the online platforms that allow users to wager on real-world events such as military actions, elections and economic decisions.

In one case, traders correctly predicted U.S. military actions tied to Iran and Venezuela with near-perfect timing, generating tens of thousands in profits, according to the governor’s office. A Polymarket user is suspected of using 38 accounts to net $2.14 million by correctly betting on a U.S. strike against Iran. 

“At a time when Trump’s Washington is riddled with ethical failures and insider profiteering,” Newsom said, “California is drawing a bright line: If you serve the public as a political appointee, you serve the public — period.” 

Meanwhile, a separate trader earned about $400,000 by wagering shortly before the capture of Venezuelan leader Nicolás Maduro. Others have posted win rates above 90% on Middle East-related events to amass nearly $1 million in gains.

“We’re not going to tolerate this kind of corruption in California,” said Newsom.

California’s governor is widely expected to run for president in 2028 and currently has a 24% chance of becoming the Democratic nominee on Polymarket, while Kalshi gives Newsom a 27.4% chance.

During a visit to San Francisco on Feb. 19, The Post asked Newsom about his potential run for president and Kalshi pegging the governor as the Democratic frontrunner.

Newsom called the speculation “wildly premature” before pivoting to the issue of prediction markets.

“Kalshi is interesting for different reasons,” Newsom said.

“Apparently, there was some prediction market [on] how many times I was going to say the word ‘Trump’ in a speech, and I knew exactly the answer to that — and I guess legally I could have bet.”

He added, “That’s an issue you all might want to look at.”

Under the new order, all gubernatorial appointees are prohibited from using nonpublic information obtained through their official duties to profit or to help others profit, including spouses, family members or business associates.

The directive also requires appointees to consult with agency ethics officers or the governor’s legal affairs office if they have questions about compliance.

Elisabeth Diana, a spokesperson for Kalshi, told The Post the company’s rules already bars insider trading and “we enforce them when we catch insiders.”

“It’s noteworthy that all the examples cited here happened on an offshore, unregulated prediction market,” Diana said in a statement. “Government employees should be aware that trading on federally regulated markets using material non-public information violates the law.”

Newsom’s order builds on California’s existing conflict-of-interest laws, including rules under the Political Reform Act that bar officials from using their positions for personal financial gain. 

Congress is now looking at multiple proposals seeking to limit insider trading and market manipulation tied to government actions.

In California, concerns have begun to swirl around the governor’s race.

Stephen Cloobeck, an eccentric billionaire who’s spent more than $1 million backing Rep. Eric Swalwell’s campaign, was recently blocked from placing bets on Kalshi, according to Politico.

“What did I do wrong? I’m not a candidate, and I’m not part of any campaign. I’m not getting paid by any campaign,” Cloobeck told the outlet. “Why didn’t they ban me betting against myself?”

Newsom’s order does not create new criminal penalties but reinforces existing prohibitions and makes clear that they apply to this emerging form of betting.

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