Prediction platform Kalshi bans ex-US Congress member for manipulation
Regulator says George Santos made public statements to boost the value of his own bets on whether he would attend the State of the Union address
Prediction market operator Kalshi said it banned former Congress member George Santos for life after a US regulator accused him of manipulating a contract on whether he would attend the annual State of the Union address.
Santos placed bets in February and made public statements to influence prices, eventually earning close to $18,000 on the wagers, Kalshi said in its disciplinary action on Monday.
Santos received the first-ever ban on the platform “given his lack of co-operation”, said a spokesperson for Kalshi, which also levied a fine of more than $71,000.
Prediction markets such as Kalshi and Polymarket are under pressure to crack down on insider trading after a series of high-profile manipulations on the platforms, which allow users to place bets on outcomes across a wide range of events, including elections, weather and sports.
The platforms have exploded in popularity as retail investors have become a large and dominant force in financial markets. Day traders have flocked to venues where they can make high-octane bets using instruments such as perpetual derivatives and leveraged exchange traded funds.
Kalshi and others have in particular faced criticism and resistance in the US from state officials, who argue that wagers on the platforms amount to gambling that is subject to oversight by local governments.
The platform has argued that its event contracts are similar to derivatives instruments and should be overseen by US financial regulators.
Kalshi had earlier reported suspicious trading by Santos to the US Commodity Futures Trading Commission, who announced civil penalties against the former politician in July. Santos bet “yes” on the contract about his attendance and later posted on social media about the outfit he would wear to it, according to the regulator. Prices on the “yes” position rose, and he exited and booked a profit of $3,448.
He later bought a “no” position while posting on social media that he planned to go. When he then posted that he was stuck at an airport, the “no” position became profitable and he exited, earning $14,391. Santos did not ultimately attend the address.
Santos served as the Congress member for a district in Long Island, New York, before he was expelled for lying about his résumé and background. He later pleaded guilty to wire fraud and aggravated identity theft and was sentenced to more than seven years in prison before President Donald Trump commuted his case.
On Monday, he shot back at the prediction market on X: “Hey @Kalshi thanks for the lifetime ban from your gambling platform. Let’s see how much longer you guys are around for.”
The CFTC has publicly charged several high-profile cases of insider trading on prediction markets, including a complaint against a US soldier who generated more than $400,000 in profits from wagers using classified information about the mission to capture then-Venezuelan president Nicolás Maduro.
In July, regulators accused Trump’s longtime teleprompter operator of placing prediction market bets about the president’s statements in public speeches. The regulator settled charges on Friday, ordering him to pay a total of $172,000 and imposing a three-year trading ban.