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- Prohibits executive branch employees from using or disclosing nonpublic information to profit in prediction markets; violations risk dismissal and law enforcement referral.
- Formally designates as confidential any nonpublic information that could reasonably generate profits or avoid losses through prediction market transactions.
- Echoed by other states; New York adopted a similar policy while courts continue reviewing operators like Kalshi.
Arizona Governor Katie Hobbs has signed an executive order prohibiting executive branch employees from using nonpublic government information to profit through prediction markets, creating new ethics rules that also classify certain information as confidential when it could be be used to place wagers.
The order, signed July 9 as Executive Order 2026-02, prohibits state executive branch employees from using or disclosing nonpublic information obtained through their public service to earn money, avoid financial losses, or help another person or organization profit through participation in prediction markets. Employees who violate the policy may face dismissal or other disciplinary action and could also be referred to law enforcement, according to the executive order.
Governor Hobbs announced the order Thursday (July 9), saying it is intended to strengthen ethical standards as prediction markets continue to expand in popularity and scope.
“Arizonans deserve a state government that works for them, not one where insiders exploit public service for their own gain,” said Governor Katie Hobbs in an accompanying statement.
“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 executive order points to existing Arizona law barring public officials and employees from using or disclosing confidential, nonpublic information. It says the proliferation of prediction markets—which allow users to trade contracts tied to the outcomes of elections, government actions, military operations, weather events, wildfires, sports and other real-world events—has created new opportunities for insiders to misuse privileged information for financial gain. According to the order, public confidence is damaged when government employees use information obtained through their positions for personal profit.
Growing prediction market platforms prompt stronger insider trading safeguards in Arizona
The action follows recent media reports and federal indictments alleging that government employees outside Arizona used confidential federal information to win millions of dollars through prediction market wagers tied to government actions, including military operations involving Venezuela and Iran. The executive order states that such conduct could have endangered U.S. service members and underscores the need for clearer safeguards at the state level.
Beyond banning insider trading on prediction markets, the order formally designates as confidential any nonpublic information obtained by Arizona executive branch employees during public service that could reasonably be used to generate profits or avoid losses through prediction market transactions. The governor’s office said the additional designation is intended to reinforce public trust in state government.
Arizona is not alone in addressing the issue. Earlier this year, New York Gov. Kathy Hochul issued a similar policy prohibiting state employees from using confidential government information to trade on prediction markets, reflecting growing concern among state officials that expanding event-based trading platforms create new ethics challenges for public servants.
The Arizona order also comes as prediction markets face continued legal scrutiny. In a recent federal court decision, a judge blocked Arizona regulators from taking enforcement action against prediction market operator Kalshi while litigation over the company’s event contracts continues. The ruling allowed Kalshi to continue offering its federally regulated contracts in Arizona, highlighting the evolving legal landscape surrounding prediction markets even as states adopt stricter ethics policies for government employees.
The new policy applies to employees and officers in the Governor’s Office, executive departments, agencies, offices and most state boards and commissions. Limited exceptions include agencies headed by separately elected officials, the Arizona Corporation Commission and boards or commissions created by ballot measure after the November 1998 general election. The order also encourages other statewide elected officials, independent boards and commissions, as well as the judicial and legislative branches, to adopt similar standards. It took effect immediately upon the governor’s signature and will remain in force until repealed, replaced or rescinded by a future executive order.
Featured image: Gage Skidmore via Flickr / CC BY-SA 2.0
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