George Santos Referred to DOJ, CFTC Over Kalshi State of the Union Trades
In brief
- Santos bet against State of the Union attendance on Kalshi while publicly tweeting he'd attend
- CFTC and DOJ examining activity after Kalshi suspended his account and referred the case
- Legal experts say case fits market manipulation law rather than traditional insider trading
- Kalshi previously suspended users for betting on outcomes they could directly influence
The Bet and the Contradiction
The day before the State of the Union, Santos tweeted that he planned to attend. "I'm going to be there for the State of Union in the gallery, guys," he wrote. Meanwhile, he was betting the opposite on Kalshi — wagering that he wouldn't show up. During the speech, he flipped again, tweeting from an airport television: "Watching SOTU from an airport tv was not part of the plan! FML."
The discrepancy netted Santos tens of thousands of dollars by deceiving bettors about his plans. When asked about the probe, Santos told NPR he was unaware of it. He also declined to confirm or deny having a Kalshi account.
A Gray Zone in Prediction Markets
Legal experts are split on how to classify the conduct. Yuriy Brisov, a partner at Digital & Analogue Partners, argued that Santos's case may not fit traditional insider trading law. "Trading on your own conduct is a category that the inherited rulebook never anticipated," Brisov said. Instead, the case appears closer to market manipulation, where someone misrepresents facts to move prices in their favor.
Kalshi has already shown it takes such activity seriously. In February, the platform fined and suspended a MrBeast employee and a California political candidate for betting on outcomes they could influence.
Broader Scrutiny on Prediction Markets
The Santos case is part of a wider reckoning with prediction markets. A New York Times review flagged more than 80 suspicious Polymarket trades, and House Oversight Chair James Comer opened an insider trading investigation into both Kalshi and Polymarket. Federal prosecutors have also charged a Google engineer with commodities fraud and wire fraud over Polymarket bets that netted about $1.2 million. An Army Master Sergeant pleaded not guilty to charges he used classified intelligence to win Polymarket bets.
The scrutiny underscores the challenge regulators face: prediction markets operate in a space where the line between legitimate trading and manipulation remains blurry.
