DOJ Examines George Santos’ Kalshi Trades After State of the Union Bet Sparks Insider Trading Questions

A social media post about attending President Donald Trump’s State of the Union address may have done more than attract attention. According to people familiar with the matter, it also helped move a prediction market that former congressman George Santos had allegedly wagered against.

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In the days before Trump’s February address, Santos publicly indicated he would be present in the gallery. Traders on Kalshi, a federally regulated prediction market platform, were already betting heavily on whether he would attend. His online comments appeared to strengthen expectations that he would show up, pushing the market in that direction.

He never arrived.

As the speech unfolded, Santos posted online that travel problems had left him watching from an airport television instead. The market quickly swung the other way.

What was not disclosed publicly, according to three people with direct knowledge of the activity, was that Santos had already taken positions on Kalshi predicting he would not attend. Those trades allegedly generated profits worth tens of thousands of dollars once the market reversed.

Kalshi Flags Activity and Refers Case to Authorities

The trading activity attracted attention inside Kalshi, according to people familiar with the company’s internal review.

Those sources say the platform froze Santos’ account and referred the matter to both the Department of Justice and the Commodity Futures Trading Commission. Each agency subsequently opened investigations into the trades, the sources said.

Neither agency publicly commented on the alleged inquiries. Kalshi also declined to discuss the matter.

When contacted about the reported investigation, Santos indicated he had not been aware of it. Asked whether he maintained a Kalshi account, he declined to provide a direct answer.

During the exchange, Santos suggested he knew Kalshi co-founder Luana Lopes Lara personally and intended to contact her regarding the matter. A person familiar with the company’s investigation disputed that claim, saying Santos does not know Lara.

The same source said Kalshi had attempted to interview Santos during its review but had been unable to secure his cooperation.

A Political Career Built on Fabrications

The allegations arrive against the backdrop of one of the most extraordinary collapses in recent American political history.

Santos rose to national prominence after winning a congressional seat representing parts of New York. Soon afterward, reporting and investigations revealed that many elements of the biography he presented to voters were false.

Claims regarding his academic achievements, family history and personal background unraveled in rapid succession. Assertions that his mother had been present at the World Trade Center during the September 11 attacks proved inaccurate. Statements about his educational record also failed to withstand scrutiny. Other personal claims, including aspects of his religious and family history, were similarly discredited.

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Legal troubles followed.

Federal prosecutors charged Santos in 2023 with offenses including wire fraud, money laundering and theft involving political donors. He was expelled from Congress later that year and eventually received a prison sentence exceeding seven years.

That sentence did not run its full course. Last October, Trump commuted Santos’ punishment after he had served roughly four months.

Prediction Markets Face Growing Regulatory Pressure

The reported Santos investigation lands at a moment when prediction markets are drawing increasing attention from regulators and lawmakers.

Platforms such as Kalshi and the overseas-based Polymarket have expanded rapidly by allowing users to wager on real-world events ranging from politics and economics to international conflicts and cultural trends.

The central concern for regulators is whether participants with privileged information can exploit those markets before the broader public becomes aware of key developments.

Recent criminal cases have amplified those fears. Federal prosecutors recently charged a U.S. Army Special Forces soldier accused of using nonpublic information to profit from wagers tied to efforts involving Venezuelan leader Nicolás Maduro. In a separate case, a Google employee was charged after allegedly earning more than $1 million through bets connected to confidential search-trend data.

Both cases involved Polymarket.

The Santos matter differs in one important respect: the information at issue allegedly concerned his own actions and whereabouts.

Traders Saw the Irony Before Investigators Did

Long before details of any federal inquiry emerged, some market participants appeared suspicious.

Discussion boards and Discord channels devoted to prediction markets filled with complaints from traders who lost money betting Santos would attend the State of the Union. Several users openly speculated that they had been misled.

For many, the idea that George Santos might once again be connected to a controversy involving deception seemed almost predictable.

Even with his account reportedly frozen, his name continues to generate betting interest. Last month, traders placed nearly $90,000 in wagers on whether Santos would use specific words during a Newsmax interview.

He reportedly said one of the anticipated terms. Another never came up.

The bets settled, the market moved on, and Santos remained part of the game. This time, though, federal investigators are reportedly watching as well.

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Source: npr.org