Illinois Bars Insider Bets on Prediction Markets

Illinois Gov. JB Pritzker has signed an executive order that bars state employees from using nonpublic government information to place wagers on prediction market platforms such as Kalshi and Polymarket. The move took effect immediately and adds new restrictions as states and federal regulators continue to dispute how these products should be classified and supervised.

Prediction markets allow users to trade contracts tied to real-world outcomes. Those outcomes can include elections, policy decisions, economic data, military events and sports-related topics. Users on some platforms have also wagered on niche outcomes, including what words public officials might use in speeches or whether major franchises could relocate.

Illinois officials said the order is designed to respond to rapid growth in event-based betting products and concerns that some markets can be influenced by people with access to confidential information.

“This opens the door to insider trading and abuse of confidential information,” Pritzker said in one statement, as the Chicago Sun Times reports. In another release accompanying the order, he added: “Prediction markets have rapidly grown into a space where people can bet on real-world events without any oversight, including events people can influence.”

New Rules for Illinois State Employees

Under the executive order, state employees, officers, appointees and board members of state agencies cannot use nonpublic information obtained through their positions to participate in prediction markets or similar contracts. They are also prohibited from sharing such information with others to assist wagering activity, regardless of whether a profit is made.

Illinois already had ethics laws that restrict current and former officials from using confidential information for personal gain. The governor’s office said the latest action strengthens those protections in response to what it described as emerging risks.

The administration pointed to recent public reports involving well-timed wagers placed before geopolitical announcements and other headline events. Those examples included betting activity tied to developments involving Iran, the reported removal of Venezuelan President Nicolás Maduro, and corporate technology launches.

Officials argued that unchecked use of these products could weaken public trust if government insiders or connected individuals were able to profit from privileged knowledge.

Ongoing Fight Over Regulation

The executive order arrives during a broader legal conflict over whether states can regulate prediction market platforms. Since last year, the Illinois Gaming Board has issued cease-and-desist letters to more than a dozen operators, including Polymarket, Kalshi, Robinhood and Crypto.com, alleging they were offering illegal gambling products under state law.

Earlier this month, the federal Commodities Futures Trading Commission (CFTC) filed suit against Illinois, seeking to block the state’s efforts. According to the complaint, prediction markets should be treated as commodities markets rather than gambling operations, placing them under federal jurisdiction through the Commodity Exchange Act.

Illinois disagrees with that view. The governor’s office said limiting state involvement would reduce the ability of states to enforce consumer safeguards and ethical standards.

“Such efforts would limit states’ ability to enforce consumer protections, establish guardrails and prevent individuals from profiting off insider information in an industry that currently operates with little to no comprehensive regulation,” the office said.

Illinois is among several states that have recently taken action related to prediction markets. California, Nevada, Connecticut, Arizona, Utah and Tennessee have also pursued measures aimed at restricting or reviewing the sector.

At the federal level, lawmakers have proposed legislation that would prevent members of Congress, senior staff, executive branch officials, and family members from trading contracts tied to political events or policy decisions.

Critics of prediction markets argue they can blur the line between financial trading and gambling while creating new risks around insider access. Supporters contend they function as information markets that can help forecast future events.

For now, Illinois has focused its latest response on public sector ethics. State workers remain barred from using inside knowledge gained through official duties to profit from these markets as the wider debate over regulation continues.