Prediction market platform Kalshi has issued a lifetime ban and a $71,356 fine against former U.S. Rep. George Santos for allegedly engaging in insider trading. The company’s compliance department concluded there was reasonable cause to believe Santos violated its rules by trading on non-public information related to his attendance at the 2024 State of the Union address in February. Kalshi referred Santos to the U.S. Department of Justice in June after detecting unusual trading activity on its platform, according to a source cited by Reuters.
Santos, who represented New York’s 3rd congressional district until his expulsion from Congress in late 2023, allegedly profited $17,839 by betting that he would not attend the event. In the weeks leading up to the speech, he made multiple public statements about his attendance, including a post on X (formerly Twitter) stating he would be present in the Capitol gallery. However, on the day of the address, Santos posted that he was watching the speech from an airport TV, attributing the change to an unexpected delay. Kalshi’s compliance team determined these actions violated its prohibition on trading based on non-public information, as Santos could influence the outcome of the prediction market.
The company’s disciplinary filing stated that Santos made large bets between February 2 and February 25 on whether he would attend the State of the Union, then issued public statements to influence the market price of those bets. Kalshi noted that some of these statements were false or misleading. Santos has not responded to requests for comment, according to multiple reports.
Kalshi’s decision follows a $35,000 fine and three-year trading ban imposed by the Commodity Futures Trading Commission (CFTC) in July. The CFTC alleged Santos traded on a contract titled “Who will attend the State of the Union?” while possessing material non-public information about his own attendance. Santos settled the CFTC case without admitting guilt, according to his legal team’s statement at the time.
The lifetime ban marks the first such penalty issued by Kalshi, which cited Santos’s lack of cooperation with its investigation as a factor in the decision. A Kalshi spokesperson confirmed this was the platform’s first permanent ban. Santos responded to the ban on X, writing: “Hey @Kalshi thanks for the lifetime ban from your gambling platform. Let’s see how much longer you guys are around for.” He included a kiss emoji at the end of the post.
Prediction markets like Kalshi and Polymarket have faced increased scrutiny in recent months as regulators and law enforcement agencies ramp up oversight of the industry. Kalshi’s compliance team noted in its filing that the platform has seen a surge in questionable transactions, prompting fresh compliance challenges. The company referred Santos to federal investigators after detecting suspicious activity in his account.
Santos’s legal and political history adds context to the enforcement action. He was expelled from Congress in 2023 following charges of wire fraud and identity theft, for which he served 84 days of a 87-month prison sentence before receiving a presidential commutation from Donald Trump in October 2023. Santos has previously dismissed criticism of his State of the Union attendance, stating on his podcast in March that some people lost money while others made unexpected gains.
Kalshi’s enforcement action underscores the growing regulatory scrutiny of prediction markets, which operate in a legal gray area compared to traditional financial markets. The platform’s decision to ban Santos and impose a significant fine reflects its efforts to maintain compliance standards amid expanding oversight from federal agencies.