North Carolina Tightens Ethics Rules as Prediction Markets Expand

Prediction markets have spent years presenting themselves as something different from gambling.

Supporters call them financial tools. Critics call them betting with better branding. Regulators still cannot seem to agree on where they fit.

But one thing is becoming increasingly clear: once real money is attached to future events, concerns about insider information are never far behind.

North Carolina has now stepped directly into that debate.

Governor Josh Stein has expanded the state’s ethics framework to prevent public employees from using non-public information to profit through prediction markets. The move may sound obvious at first glance, but it highlights a much bigger issue facing regulators across America: prediction markets are growing faster than the rules designed to govern them.

For anyone following the future of gambling, trading, and event-based speculation, this is a development worth paying attention to. Because governments are beginning to treat prediction markets less like a novelty and more like a serious integrity risk.

Here’s what North Carolina’s new executive order means—and why it could signal a broader regulatory trend across the United States.

What You Will Learn

• Why North Carolina expanded ethics rules to cover prediction markets
• How state employees could potentially misuse insider information
• What restrictions now apply to public workers
• Why states are becoming increasingly concerned about event-based trading platforms

North Carolina Expands Ethics Rules Into Prediction Markets

The debate over prediction markets has entered a new phase.

Instead of arguing whether these platforms are gambling, financial products, or something in between, regulators are beginning to focus on a more practical concern: what happens when people with privileged information start participating.

That concern sits at the center of a new executive order signed by Josh Stein.

The order extends North Carolina’s Ethics Act to prediction markets, prohibiting state employees from using information obtained through their official duties to profit from event-based contracts.

And frankly, it is difficult to argue with the logic.

Whether someone is trading a stock, placing a sports wager, or participating in a prediction market, using confidential information for personal gain undermines trust in the system.

The governor’s office appears to recognize that prediction markets create new opportunities for exactly that type of conflict.

Under the new rules, state employees cannot use non-public information obtained through their work to participate in prediction markets. They are also prohibited from helping other individuals place trades or bets using privileged information.

The restrictions go even further.

Government employees cannot allow their prediction market activity to influence official duties, nor can they participate in markets directly connected to their agency’s work or responsibilities.

In other words, if your job gives you access to information that could influence the outcome of an event contract, you should not be trading it.

That is a principle most financial regulators have enforced for decades.

Prediction markets are simply becoming the latest arena where it applies.

The executive order also prohibits the use of public resources to participate in prediction markets.

That includes state-owned devices, government networks, office facilities, public funds, work hours, and agency systems.

Again, none of this is particularly controversial.

What is interesting is the fact that governors and legislators are now specifically naming prediction markets inside ethics frameworks that were originally designed for more traditional forms of financial misconduct.

That tells you something about where policymakers believe this industry is heading.

Violations can trigger disciplinary action under employment laws and may also be referred to the North Carolina State Ethics Commission or law enforcement authorities.

The order broadly defines prediction markets as online platforms where users enter agreements or contracts based on the occurrence—or non-occurrence—of future events.

That definition captures much of the modern prediction market ecosystem.

Political outcomes.

Economic indicators.

Sports events.

Weather forecasts.

Corporate developments.

Virtually any future event can become a tradable contract.

And that is precisely why regulators are paying attention.

Governor Stein framed the issue around public trust, stating that when individuals use non-public information gained through government work to obtain an advantage, confidence in public institutions suffers.

That may sound like standard political language.

But it reflects a real concern.

Prediction markets thrive on information asymmetry. Participants are constantly trying to identify knowledge others do not have.

The moment insiders gain access to privileged government information, the integrity of those markets becomes questionable.

States Are Beginning to Take Different Approaches

North Carolina’s action is not an outright ban.

Instead, it focuses narrowly on ethics and conflicts of interest.

Other states are taking a far more aggressive route.

Earlier this month, Minnesota became the first US state to formally prohibit prediction markets through legislation signed by Tim Walz.

The law is scheduled to take effect on August 1, 2026.

Unlike North Carolina’s executive order, Minnesota’s approach targets the operation and promotion of prediction markets themselves.

That distinction matters.

One state is attempting to regulate participation.

Another is attempting to eliminate the market entirely.

Those competing approaches reveal just how unsettled the regulatory landscape remains.

Some policymakers view prediction markets as useful forecasting tools.

Others see them as gambling products operating under a different label.

And many regulators are still trying to figure out where they belong.

Interestingly, Minnesota carved out an exception for weather-related markets after agricultural groups argued that such contracts play an important role in risk management and planning.

That exemption illustrates a challenge prediction market regulators continue to face.

Not every event contract serves the same purpose.

Some are used for speculation.

Others have legitimate commercial applications.

Drawing a clear legal line between the two is proving harder than many lawmakers expected.

Why Prediction Markets Are Facing More Scrutiny

Prediction markets are no longer a niche product used by academics and political analysts.

They have become mainstream.

Billions of dollars now flow through platforms offering contracts on elections, sports, economic data, geopolitical events, and countless other outcomes.

That growth inevitably attracts regulatory attention.

Historically, gambling regulators focused on sportsbooks and casinos.

Financial regulators focused on securities and derivatives.

Prediction markets sit awkwardly between those worlds.

And whenever a product falls between regulatory categories, oversight gaps emerge.

North Carolina’s executive order is a sign that governments are no longer willing to wait for those gaps to resolve themselves.

Instead, they are starting to build rules around the risks they can already identify.

Conflicts of interest.

Insider information.

Public trust.

Market integrity.

Those concerns exist regardless of whether prediction markets are ultimately classified as gambling, finance, or something entirely new.

Conclusion

North Carolina’s executive order will not settle the debate over prediction markets.

What it does reveal is how regulators increasingly view these platforms: not as experimental technology, but as real-money systems capable of creating genuine ethical and integrity concerns.

That shift matters.

Because once governments begin applying insider-information rules, conflict-of-interest standards, and enforcement mechanisms to prediction markets, they are acknowledging their growing influence.

The smartest observers should focus less on whether prediction markets are technically gambling and more on the broader question regulators are asking.

If people can profit from future events, who should be allowed to participate—and under what rules?

That question is only becoming more important as prediction markets continue to expand.

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