ToplineCalifornia Governor Gavin Newsom is preparing to sign an executive order on Friday that will ban state officials from betting on online prediction markets, according to an X post made by his office, marking the latest effort by a Democratic leader to crack down on alleged insider trading on platforms like Kalshi and Polymarket. California Governor Gavin Newsom is set to ban state officials from trading on online betting markets using insider information.Anadolu via Getty ImagesKey FactsIn the X post, Newsom’s office jokingly asked Polymarket and Kalshi to share odds on the question of the governor banning state “officials & appointees from betting on predictive markets with insider info in the next 24 hours.”In a follow-up post made a few hours later on Thursday night, the governor’s office wrote: “To all the grifters trying to be the next Don Jr., Witkoff, or Kushner: tomorrow’s not going to be a great day for you.”Citing an advanced copy of the executive order, Politico reported that Newsom plans to sign it on Friday.The report added that the order will go into effect immediately and is meant to build on existing state government rules that ban state officials from enriching themselves or their family members using nonpublic information.Key BackgroundNewsom’s purported executive order comes just days after two members of Congress introduced a bill banning lawmakers and officials in the executive branch, and their family members, from trading on prediction markets related to political events. The bill is cosponsored by Rep. Nikki Budzinski, D-Ill., and Rep. Adrian Smith, R-Neb, and the ban it is proposing covers members of Congress, the president, the vice president and political appointees of the executive branch and direct family members. The bill seeks to ban on trading by these individuals on any event with an outcome tied to a political event. It proposes a fine of 10% of any transaction that breaks this rule and in addition to that, violators would be forced to forfeit any money won to the U.S. Treasury. Prior to that Sen. Chris Murphy, D-Conn., and Rep. Greg Casar, D-Texas pushed an even more extensive bill seeking to ban predictive markets from betting on military operations and other sensitive government actions.Crucial QuoteWhile appearing on the podcast Pablo Torre Finds Out earlier this week, Murphy discussed his bill, saying: “You know, there are lots of prediction markets on events where you don't know the outcome, and sports is right on that list. But the bets these days, the prediction markets that exist these days are on events where the outcome is knowable…There's bets on whether the United States is going to go to war on a Friday or a Saturday. Well, there are people inside the White House who know the answer to that question. So there are just a ton of bets on these prediction markets that are rigged by inside information…So to me that's just corruption and we shouldn't allow for there to be fundamentally rigged prediction markets or betting markets available to ordinary consumers.”How Have Kalshi And Polymarket Responded?The post from Newsom’s Office tagged both Kalshi and Polymarket’s X handles. Polymarket has not commented yet, but Kalshi shot back: “The odds are 100% Governor. Because Kalshi already bans insiders.” Earlier this week Kalshi announced it was expanding its “internal capabilities and policies against insider trading and market manipulation.” The company said this includes new “technological guardrails” that will “preemptively block politicians, athletes, and other relevant people from trading in certain politics and sports markets.”Further ReadingNew Bill Wants Lawmakers Banned From Trading On Prediction Markets (Forbes)