20250AB__184099INT INTRODUCED 2026-02-11 2025 AB INT Introduced by Assembly Member Sanchez LEAD_AUTHOR ASSEMBLY Sanchez

An act to amend

Section of, and to add

Section to, the Government Code, relating to the Political Reform Act of 1974. the Political Reform Act of Political Reform Act of 1974: prediction market contracts. The Political Reform Act of 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 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 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.

TWO_THIRDS NO YES YES NO NO NO NO NO NO NO The people of the State of California do enact as follows:

SECTION 1.

Section of the Government Code is amended to read: 86205. A lobbyist or lobbying firm 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 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 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 of the Government Code, or changes the definition of a crime within the meaning of

Section 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 within the meaning of subdivision (

a) of

Section of the Government Code.