Former Rep. George Santos (R-N.Y.) has agreed to pay $35,000 and accept a three-year trading ban to settle a federal investigation into wagers he placed on the prediction market Kalshi about whether he would attend President Donald Trump’s State of the Union address in February.
The Commodity Futures Trading Commission said Santos engaged in “manipulative activity” on a Kalshi market that asked users to predict “Who will attend the State of the Union?” According to the CFTC, Santos posted on social media that he would be “there… in the gallery,” then took positions betting he would not attend. The agency said his posts included “a series of material misrepresentations and omissions” and that contract prices moved in a direction favorable to his positions, allowing him to make more than $17,500.
Kalshi’s head of enforcement, Robert Denault, welcomed the outcome on X. “Kalshi caught George Santos. Now he’s paying an expensive price,” he wrote, adding: “Pro tip for catching fraudsters: it’s often the usual suspects.”
The settlement is the latest legal setback for Santos, a convicted fraudster who was expelled from Congress in late 2023 and later served time in a New Jersey prison. His lawyer, Joseph Murray, said the one-time lawmaker had never wagered on a prediction market before and had every intention of attending the speech, but was thwarted by weather-related travel delays and “logically adopted a no position.”
“Mr. Santos concealed neither his intention to attend, nor his change of plans to not attend the SOTU, from anyone,” Murray said in a statement. “There was absolutely no intent to deceive any person, nor intent to manipulate any market.” He stressed that the settlement, which the former congressman agreed to “to put this matter behind him,” should not be mistaken for an admission of wrongdoing.
The case highlights the regulatory scrutiny building around political prediction markets, which have boomed since Kalshi won court approval to list contracts on congressional control and other political events. Federal watchdogs have warned that traders with inside information or the ability to influence events could distort prices, and the CFTC’s action shows how social media activity can be used as evidence in such probes.
For Santos, the penalty adds to a long list of financial and legal troubles, while for the broader prediction market industry it signals that regulators are watching high-profile participants closely. The CFTC’s settlement order will stand as a public record of how the agency treats alleged manipulation in markets tied to American politics.
Sources: New York Post, Associated Press, The Hill