The DOJ and CFTC are investigating former U.S. Representative George Santos for potential insider trading on the prediction market platform Kalshi. Santos allegedly traded contracts related to his attendance at the State of the Union address, using non-public information.
The investigation into George Santos highlights growing regulatory scrutiny of prediction markets and the potential for insider trading, impacting the integrity of these platforms and the broader financial landscape.
The Department of Justice (DOJ) and the Commodity Futures Trading Commission (CFTC) are reportedly examining former U.S. Representative George Santos for potential insider trading related to his activity on the prediction market platform Kalshi. According to NPR, Kalshi detected suspicious trading activity from an account linked to Santos concerning his expected attendance at President Donald Trump's State of the Union address in February. Kalshi reportedly froze the account and referred the matter to federal authorities. Investigators are assessing whether Santos used non-public information about his own plans to profit. NPR reported that Santos allegedly made tens of thousands of dollars by betting against his attendance after publicly suggesting he would be present. He later posted from an airport during the speech, and market odds on his attendance subsequently fell.
Santos told NPR that the investigation was "news to him" and did not confirm or deny having a Kalshi account. He also criticized the reporting on X. This situation brings increased scrutiny to prediction markets like Kalshi and its rival Polymarket, which face questions from regulators and lawmakers about their controls against insider trading and market abuse. Kalshi has implemented tools to screen participants from trading on events they are directly involved in, while Polymarket has updated market rules and surveillance standards. In April, a U.S. Army soldier was charged over Polymarket bets tied to political events.