Political Reform Act of 1974: prediction market contracts.

Plain English Breakdown

Checked against official source text during the last sync.

Political Reform Act: Prediction Market Contracts

The bill updates the Political Reform Act to prohibit certain officials, employees, and lobbyists from trading in prediction market contracts if they have access to important inside information.

What This Bill Does

• Adds rules to stop specific government workers and people who try to influence laws (lobbyists) from buying or selling prediction market contracts when they know secret information that could affect the contract's value.
• Defines 'prediction market contracts' as agreements where someone bets on future events, like election outcomes.
• Outlines what counts as 'material nonpublic information,' which is important details not available to everyone and could affect financial decisions.
• Makes breaking these new rules a crime punishable by law.

Who It Names or Affects

• Government officials and employees at the state or local level in California.
• Lobbyists who try to influence government decisions.

Terms To Know

Prediction market contracts

Agreements where people bet on future events, like election results.

Material nonpublic information

Important details that are not available to the public and could affect financial decisions.

Limits and Unknowns

• The bill does not specify what happens if someone breaks these new rules.
• It is unclear how this will be enforced or monitored in practice.

Official Summary Text

AB 1840, as introduced, Sanchez.
Political Reform Act of 1974: prediction market contracts.
The Political Reform Act of 1974 provides for the comprehensive regulation of political campaigns, lobbying, and other matters relating to governmental ethics and elections. The act prohibits a lobbyist or lobbying firm from, among other things, accepting or agreeing to accept a payment that is in any way contingent upon the defeat, enactment, or outcome of any proposed legislative or administrative action. The act also prohibits a public official at any level of state or local government from making, participating in making, or in any way attempting to use the public official’s official position to influence a governmental decision in which the official knows or has reason to know the official has a financial interest, as defined.
This bill would prohibit specified officials, employees, and lobbyists from engaging in transactions involving
prediction market contracts, as defined, if before or at the time of the transaction, the specified individual possesses, or it is reasonably foreseeable the specified individual may obtain in the course of their official duties, material nonpublic information, as defined, relating to the transaction.
A violation of the Political Reform Act of 1974 is punishable as a misdemeanor. By creating a new crime, this bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
The Political Reform Act of 1974, an
initiative measure, provides that the Legislature may amend the act to further the act’s purposes upon a
2
/
3
vote of each house of the Legislature and compliance with specified procedural requirements.
This bill would declare that it furthers the purposes of the act.

Current Bill Text

Download Bill PDF