Arizona Gov. Katie Hobbs issues order targeting insider trading on prediction markets

Arizona Gov. Katie Hobbs issued an executive order Thursday prohibiting state executive branch employees from insider trading on prediction markets such as Kalshi and Polymarket.

“Arizonans deserve a state government that works for them, not one where insiders exploit public service for their own gain,” said Hobbs in a press release. “I’m proud to set clear, commonsense ethical standards on prediction markets to hold our government accountable. Public service is a privilege, and we will not tolerate anybody abusing that privilege to line their own pockets.”

The order covers employees and officers of the Governor’s Office and all executive departments, agencies and offices, as well as all state boards and commissions, with several exceptions.

It designates any information as confidential if it is obtained through public service, isn’t publicly available and could be used for wagers.

Violators could be fired, face additional sanctions and be referred to law enforcement.

Hobbs is encouraging statewide officials and other branches, agencies and boards to adopt similar policies.

The order is a response to recent cases involving government employees outside of Arizona who allegedly used nonpublic information to profit through prediction market trades.

Specifically, the order cites the case of a U.S. Army soldier accused of using classified information about the plans to capture Venezuelan President Nicolás Maduro to make more than $400,000 on Polymarket.

Prediction markets are under legal scrutiny in Arizona

Prediction markets allow participants to buy and sell contracts tied to the probable outcome of an event. Customers can wager on everything from the weather to war through an online app. Sporting events make up much of the action.

Arizona, where sports betting is legal but regulated, is one of several states taking action to ban prediction markets.

In March, the Arizona Attorney General’s Office filed misdemeanor criminal charges against the companies behind the Kalshi prediction markets platform.

A 20-count indictment accuses Kalshi of illegally accepting bets and attempting to circumvent state law by calling the operation a prediction market.

However, a federal judge temporarily barred Arizona from enforcing its gambling laws against prediction market operators and put the brakes on the Kalshi criminal case.

The Associated Press contributed to this report.

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