Kalshi has permanently banned former U.S. Rep. George Santos after finding that he improperly traded contracts tied to his State of the Union attendance. The decision marks the prediction market’s first permanent trading ban and adds fresh scrutiny to insider trading risks. Santos must also pay more than $71,000 under Kalshi’s disciplinary settlement.
State of the Union Bet Triggers Penalty
Kalshi’s compliance team found reasonable cause to discipline Santos over trades connected to his planned attendance. Additionally, the company determined that his public comments influenced contract prices surrounding the event.
Santos previously settled related allegations with the Commodity Futures Trading Commission. Consequently, he agreed to pay $35,000 without admitting or denying the agency’s findings.
However, Santos’ attorney said he cooperated with the CFTC and believed he would attend the address. Santos had also arranged flights and accommodation in Washington.
Prediction Markets Face Insider Trading Risks
The case highlights growing concerns as prediction markets expand into politics, entertainment, and financial events. Moreover, regulators increasingly face questions about traders with privileged access to market-moving information.
Significantly, the CFTC recently fined former White House teleprompter operator Gabriel Perez more than $172,000. Perez used advance knowledge of presidential speeches to trade Kalshi mention markets.
Besides, authorities have pursued similar conduct involving Polymarket. Lawmakers have also proposed bipartisan measures targeting trading based on confidential information.
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