Illinois Governor JB Pritzker signed an executive order prohibiting state employees from using nonpublic information to profit on prediction markets. The order aims to strengthen protections against insider trading amid concerns about a rollback in federal oversight. The executive order was signed in response to the growth of unregulated prediction markets and examples of profitable bets placed before announcements of U.S. military actions.
Illinois Governor JB Pritzker signed an executive order on Tuesday barring state employees from using insider information to place bets on prediction markets like Polymarket and Kalshi. These platforms allow users to bet on real-world events. The governor's office stated that the order strengthens existing protections against using confidential information for personal gain, addressing the risks from prediction markets due to reduced federal oversight.
Pritzker's statement highlighted the growth of prediction markets and the potential for individuals to profit from influencing events. The statement referenced instances of profitable bets made before announcements of U.S. military actions, suggesting the use of insider information. These included bets placed before U.S.-Israel strikes on Iran and a wager favoring the removal of then-Venezuelan President Nicolás Maduro.
The order, effective immediately, prohibits state employees from sharing insider information to help others bet on prediction markets. It applies to all employees, officers, appointees, and board members of state agencies. Since April of last year, the Illinois Gaming Board has issued cease and desist letters to over a dozen online gaming operators, including Polymarket, Kalshi, Robinhood, and Crypto.com, alleging illegal gambling.
The federal Commodities Futures Trading Commission (CFTC) has sued Illinois, seeking to block its attempt to regulate the markets. The CFTC argues that prediction markets are commodities markets, not gambling. Key takeaways:
- Executive order prohibits state employees from using insider information on prediction markets.
- Order strengthens existing protections due to concerns about reduced federal oversight.
- Illinois Gaming Board has issued cease and desist letters to online gaming operators.
- CFTC is challenging Illinois' attempt to regulate prediction markets.