The U.S. Department of Justice and the Commodity Futures Trading Commission have launched an investigation into former Congressman George Santos, following unusual trading activity detected by prediction market platform Kalshi. According to NPR, Santos allegedly placed wagers that he would not attend President Donald Trump’s State of the Union address in February, netting tens of thousands of dollars.
Santos Bet on His Own Absence, Then Appeared at an Airport
NPR reported that Santos wagered on a Kalshi contract tied to his own attendance, despite posting a video on X saying he planned to be present in the gallery. As Trump delivered the speech, Santos posted from an airport, and the market’s odds on his attendance fell sharply. Kalshi froze his account and referred the matter to regulators. People familiar said Kalshi sought an interview with Santos, but he did not participate. When contacted by NPR, Santos replied, “Well, that’s news to me.”
Platform’s Prior Enforcement Actions Against Candidates
In April, Kalshi suspended three federal candidates after an internal review found they had bet on their own races. Enforcement head Robert DeNault stated that candidates able to influence market outcomes violate exchange rules regardless of trade size. Those cases resulted in platform penalties but not DOJ referrals. The Santos case marks a distinct escalation, with Kalshi directly reporting to regulators.
Growing Insider Trading Cases in Prediction Markets
The Santos probe comes amid several high-profile insider trading incidents. In April, a U.S. Army Special Forces soldier was charged with making roughly $409,881 from Polymarket bets tied to the capture of Venezuelan President Nicolás Maduro. In May, Google software engineer Michele Spagnuolo was charged with using confidential search ranking data to place $2.7 million in Polymarket bets, profiting about $1.2 million. CFTC Enforcement Director David Miller said in May that insider trading laws apply to prediction markets, rejecting arguments that event contracts fall outside existing rules.
Congress Steps Up Oversight
House Oversight and Government Reform Committee Chairman James Comer launched an inquiry into insider trading safeguards at Kalshi and Polymarket, seeking details on monitoring systems. Both platforms have responded with enhanced compliance: Kalshi introduced screening tools to block direct participants; Polymarket revised rules, expanded surveillance, and hired blockchain analytics firm Chainalysis to detect insider trading and manipulation.