Governor Tony Evers of Wisconsin took a significant step on Thursday by issuing an executive order that prevents executive branch employees from leveraging or sharing confidential information to benefit from prediction markets, amidst increasing scrutiny of this emerging industry from various states.
This directive affects over 30,000 state employees in Wisconsin, explicitly prohibiting them from disclosing insider information to family members or acquaintances who might utilize it for advantageous betting on prediction market platforms.
Potential breaches of this order may lead to termination, referral to the Wisconsin Ethics Commission, or criminal investigation.
Prediction markets, represented by platforms like Kalshi and Polymarket, enable users to trade contracts based on the outcomes of real-world events, including elections, sports, weather phenomena, and government actions.
Evers remarked: “Every day, state employees in Wisconsin demonstrate their dedication to serving the citizens of our state, often exceeding their job descriptions and daily tasks to cater to the needs of Wisconsinites and our communities.
“To preserve public trust and confidence in our state government, transparency, accountability, and integrity are essential. We must adhere to the principle of public service, ensuring that our work is for the greater public good and not driven by personal greed or gain. This is a commitment we hold in high regard, and it is essential that we carry it forward.”
The executive order referenced a recent incident involving a U.S. Army Special Forces soldier who was accused of using classified info to make approximately $410,000 on a prediction market related to the timing of a potential U.S. operation in Venezuela. Federal prosecutors charged this individual under the Commodity Exchange Act.
Wisconsin aligns with states like Illinois, New York, Maryland, and California in instituting rules regarding insider trading on prediction markets. Recently, the U.S. Senate also enacted regulations preventing senators from participating in such trading platforms.
This action comes as Wisconsin is embroiled in legal battles concerning prediction markets and sports event contracts. Last month, the Wisconsin Department of Justice filed a lawsuit against Kalshi, Robinhood, Coinbase, Polymarket, and Crypto.com, alleging these platforms facilitate unlawful sports betting within the state.
In response, the federal government has countersued Wisconsin, claiming the state is improperly obstructing federally regulated financial markets.
Additionally, the Ho-Chunk Nation has filed a lawsuit against Kalshi, alleging the platform promotes illegal sports betting operations in Wisconsin, where sports betting is predominantly confined to tribal casinos governed by state agreements.
Kalshi maintains that its offerings are financial event contracts rather than mere sports bets.
Earlier this week, U.S. District Judge William Conley allowed the Ho-Chunk Nation’s lawsuit to progress, although he denied a request for a temporary injunction that would have suspended Kalshi’s activities on tribal territories.