Federal investigators from the Department of Justice (DOJ) and the Commodity Futures Trading Commission (CFTC) have launched a probe into former U.S. Representative George Santos after prediction market platform Kalshi detected unusual trading activity linked to a contract on whether he would attend President Donald Trump’s February State of the Union address. According to NPR, Kalshi froze Santos’ account and referred the matter to regulators after reviewing trades that allegedly netted him tens of thousands of dollars.
The day before the speech, Santos posted on X that he planned to be present in the gallery, boosting market odds on his attendance. However, during Trump’s address, Santos posted from an airport, saying, “Watching SOTU from an airport tv was not part of the plan! FML,” which caused the contract’s odds to plummet. Three people with direct knowledge told NPR that Santos had placed wagers against his own appearance, effectively profiting from a misleading public signal. When asked about the investigation, Santos responded, “Well, that’s news to me,” and declined to confirm or deny having a Kalshi account.
The case adds to a growing list of prediction market insider trading investigations. In April, federal prosecutors charged a U.S. Army Special Forces soldier with making nearly $410,000 from Polymarket bets tied to the capture of Venezuelan President Nicolás Maduro, alleging use of classified intel. More recently, the DOJ and CFTC charged Google engineer Michele Spagnuolo with commodities fraud, wire fraud, and money laundering after he allegedly used confidential “Year in Search” data to place $2.75 million in Polymarket bets, netting $1.2 million in profit. CFTC Enforcement Director David Miller stated in May that insider trading laws apply to prediction markets, rejecting arguments that event‑based contracts exist outside existing market abuse rules.
Congress has also stepped in. House Oversight Chair James Comer launched an inquiry in May into insider trading safeguards at Kalshi and Polymarket, seeking details on monitoring systems. Both platforms have since tightened compliance: Kalshi introduced screening tools to block users from trading on events they can influence, and Polymarket expanded its surveillance programs and hired blockchain analytics firm Chainalysis for support.
Yuriy Brisov, partner at Digital & Analogue Partners, told Decrypt that Santos’ alleged conduct may not fit traditional insider trading definitions because “he misappropriated nothing.” Instead, it appears “closer to manipulation: move a price with a false signal, then trade against it.” Brisov added that the case shows platforms are “the fastest regulators in the room,” noting that Kalshi’s new safeguards are precisely why Santos was caught.
