Prediction market operator Kalshi has issued a lifetime ban to former U.S. Congressman George Santos, alleging insider trading. The company's compliance team concluded that Santos placed bets on his own attendance at President Donald Trump's State of the Union address in February, using information that could influence contract prices.
Kalshi stated that Santos made a series of substantial bets between February 2 and February 25 on whether he would attend the event, an outcome he could directly affect. The platform found that his comments about his plans led to fluctuations in contract prices, and he ultimately profited $17,839.57 from these trades. Kalshi imposed a penalty of $71,356 on Santos for the activity. The company reported the suspicious behavior to federal authorities earlier this summer.
Santos, who was expelled from Congress in December 2023 following multiple fraud and identity theft charges, has denied wrongdoing in various matters but admitted to stealing identities. He was sentenced to a seven-year prison term for wire fraud and aggravated identity theft, serving three months before his sentence was commuted by President Trump. In July, Santos agreed to pay $35,000 to settle a federal investigation by the Commodity Futures Trading Commission concerning his State of the Union trades.
Santos responded to the ban on X, formerly Twitter, thanking Kalshi and stating, "Let's see how much longer you guys are around for." The BBC has contacted Santos for comment.
The incident highlights the increasing scrutiny on prediction markets, which allow users to wager on future events. Platforms like Kalshi and its rival Polymarket have reported an increase in unusual trading patterns, prompting them to enhance monitoring systems and respond more assertively to potential misconduct. As these markets mature and attract more users, regulators are signaling expectations for higher compliance standards, particularly concerning events with political or economic significance.