AB 1840
Political Reform Act of 1974: prediction market contracts.
Vote required
Two Thirds
Fiscal committee
No
Appropriation
No
Current location
Elections
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Sign in to take action- Introduced
- Passed Assembly
- Passed Senate
- To Governor
- Became Law
Bill overview
This bill, part of the Political Reform Act of 1974, prohibits certain officials, employees, and lobbyists from engaging in transactions involving prediction market contracts if they possess or reasonably foresee obtaining material nonpublic information related to those contracts in the course of their official duties. Violations are considered misdemeanors and could create a state-mandated local program, though no reimbursement is required for associated costs.
Key provisions
- Prohibits covered persons (public officials, employees, and lobbyists) from engaging in covered transactions involving prediction market contracts.
- Defines ‘covered person’ and ‘covered transaction’ to include specific types of individuals and activities related to prediction markets.
- Defines ‘material nonpublic information’ as information that would be significant to investors but is not publicly available.
- Specifies that prediction market contracts include certain financial instruments and investments.
- Creates a new misdemeanor offense for violations of the law.
- States that no reimbursement is required for local agency or school district costs associated with the new crime.
- Declares that the bill furthers the purposes of the Political Reform Act of 1974.
Who is affected
- Elected and appointed public officials
- Designated employees
- Lobbyists
- Individuals with access to nonpublic information
- Prediction market participants
Arguments in favor
Reasons to support this legislation.
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AB1840:v99#DOCUMENT
Bill Start
CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION
Assembly Bill
No. 1840
| Introduced by Assembly Member Sanchez |
| February 11, 2026 |
An act to amend Section 86205 of, and to add Section 87451 to, the Government Code, relating to the Political Reform Act of 1974.
LEGISLATIVE COUNSEL'S DIGEST
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.
Digest Key
Vote: 2/3 Appropriation: NO Fiscal Committee: YES Local Program: YES
Bill Text
The people of the State of California do enact as follows:
SECTION 1.
Section 86205 of the Government Code is amended to read:
86205.
No A lobbyist or lobbying firm shall: shall not:
(a) Do anything with the purpose of placing any elected state officer, legislative official, agency official, or state candidate under personal obligation to the lobbyist, the lobbying firm, or the lobbyist’s or the firm’s employer.
(b) Deceive or attempt to deceive any elected state officer, legislative official, agency official, or state candidate with regard to any material fact pertinent to any pending or proposed legislative or administrative action.
(c) Cause or influence the introduction of any bill or amendment thereto for the purpose of thereafter being employed to secure its passage or defeat.
(d) Attempt to create a fictitious appearance of public favor or disfavor of any proposed legislative or administrative action or to cause any communication to be sent to any elected state officer, legislative official, agency official, or state candidate in the name of any fictitious person or in the name of any real person, except with the consent of such real person.
(e) Represent falsely, either directly or indirectly, that the lobbyist or the lobbying firm can control the official action of any elected state officer, legislative official, or agency official.
(f) Accept or agree to accept any payment in any way contingent upon the defeat, enactment, or outcome of any proposed legislative or administrative action.
(g) Violate Section 87451.
SEC. 2.
Section 87451 is added to the Government Code, to read:
87451.
(a) A covered person shall not knowingly engage in a covered transaction if, before or at the time of the covered transaction, the covered person possesses, or it is reasonably foreseeable the covered person may obtain in the course of their official duties, material nonpublic information relating to the covered transaction.
(b) For purposes of this section, the following terms have the following meanings:
(1) “Covered person” means an elected or appointed public official at any level of state or local government, an individual specified in Section 87200, a designated employee as defined in Section 82019, or a lobbyist as defined in Section 82039.
(2) “Covered transaction” means the purchase, sale, or exchange of a prediction market contract that bets or speculates on the outcome, occurrence, or nonoccurrence of any of the following:
(A) An administrative action, as defined in Section 82002.
(B) An election, as defined in Section 82002.
(C) A governmental decision made in the course of a covered person’s official duties.
(D) Any action or decision before the Legislature, as described in paragraph (1) of subdivision (b) of Section 87102.5.
(3) “Material nonpublic information” means information that a reasonable investor would consider significant in making an investment decision and that is not publicly available.
(4) “Prediction market contract” means a contract, derivative, financial instrument, or investment that is both of the following:
(A) Issued, listed on, or offered by a business entity.
(B) Related to the outcome, occurrence, or nonoccurrence of a future event or events.
SEC. 3.
No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.
SEC. 4.
The Legislature finds and declares that this bill furthers the purposes of the Political Reform Act of 1974 within the meaning of subdivision (a) of Section 81012 of the Government Code.