Arizona governments target prediction market insider trading by employees
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Several government entities in Arizona have taken steps recently to bar employees from using nonpublic information to wager on online prediction markets like Kalshi and Polymarket. Photo: Martin Lelievre/AFP via Getty Images
As high-profile incidents increase public scrutiny of online prediction markets, several government entities in Arizona have enacted policies to bar employees from cashing in based on inside information.
Why it matters: When government employees profit from information that isn't available to others, it can erode trust in public institutions.
How it works: Online prediction markets like Kalshi and Polymarket allow people to wager on sporting events, politics, pop culture, economic issues and a wide range of other issues.
- They currently offer myriad wagers on Arizona events, mostly involving sports and elections, as well as things like whether Robotaxis will be offered in Arizona this year and whether the state will experience "exceptional drought."
State of play: Gov. Katie Hobbs issued an executive order last month barring executive branch employees from using nonpublic information to wager on prediction markets.
- Maricopa County enacted a similar policy the following week, as did Secretary of State Adrian Fontes last Thursday.
- Maricopa County Attorney Rachel Mitchell is working on a policy as well, spokesperson Erin Pellett told Axios.
Employees who violate the policies can be fired and referred to law enforcement. Hobbs' order says they can also be subject to other "appropriate sanctions."
Yes, but: It's unclear whether any state laws prohibit such wagering or what other sanctions violators could face.
- And it could be difficult to determine whether employees have actually made such bets, Hobbs spokesperson Christian Slater acknowledged to Axios.
- He described the governor's order as a first step to lay out ethical guidelines and show state employees that Hobbs considers the behavior unacceptable.
- "The question of enforcement is something that we are working on," he told Axios, and the administration will "keep building best practices and regulations."
Zoom in: The Arizona Attorney General's Office is still analyzing the governor's order and hasn't determined whether violators could face legal consequences, Richie Taylor, a spokesperson for AG Kris Mayes, told Axios.
- Slater said there are some instances in which wagers could be legally prohibited, such as with people who have access to classified information.
- The Maricopa County Attorney's Office believes that some cases could merit federal insider trading charges, depending on circumstances, per Pellett.
- The Hobbs administration is unaware of any state employees who've made now-prohibited bets, per Slater.
Catch up quick: President Trump's longtime teleprompter operator is believed to have won over $100,000 betting on his speeches, ABC News reported this week.
- In April, a U.S. special forces soldier involved in the raid that captured former Venezuelan President Nicolás Maduro was charged with using classified information about the operation to win $409,000 making bets on it.
- Nine connected Polymarket accounts made $2.4 million mostly betting on U.S. military action against Iran.
Between the lines: Mayes brought criminal charges against Kalshi in March, saying online prediction markets are illegal in Arizona.
- But a federal judge halted the case, ruling that the federal Commodity Futures Trading Commission has exclusive authority over prediction markets.
What we're watching: Hobbs urged "other statewide elected officials, independent boards and commissions, and the judicial and legislative branches to adopt comparable policies."
- Arizona Supreme Court Chief Justice Ann Scott Timmer said in a press statement that the judicial branch doesn't need such a policy because its codes of conduct already bar employees from using nonpublic information for personal gain.