CFTC and Justice Department Investigating George Santos Over Alleged Insider Trading on Prediction Market Kalshi

Federal regulators and the Justice Department are investigating former U.S. Rep. George Santos over allegations that he placed bets on the prediction market platform Kalshi that contradicted his own public statements about attending President Trump’s State of the Union address in February, multiple sources familiar with the matter told ABC News and NPR. Kalshi flagged the suspicious trades, froze Santos’ account, and referred the matter to both the Commodity Futures Trading Commission and the Justice Department.

According to sources, Santos placed wagers on Kalshi promo code predicting he would not attend the 2026 State of the Union address while simultaneously posting on social media that he planned to be in the gallery for the speech. He ultimately did not attend, causing the odds on those markets to shift in his favor. The CFTC’s enforcement division is now examining whether Santos profited by deceiving the public and manipulating the odds — the same type of conduct that resulted in criminal charges against at least two individuals in New York federal court in separate Polymarket promo code-related insider trading cases.

Santos’ Response and Prior Legal History

When NPR asked Santos about the investigation, he said, “Well, that’s news to me,” and declined to confirm or deny having a Kalshi account, saying only, “I’m not saying yes, I’m not saying no.” Santos has an extensive prior legal history: he was expelled from Congress in December 2023 after a House Ethics Committee investigation found credible evidence of a range of financial crimes, and he subsequently faced federal criminal charges related to fraud and identity theft before pleading guilty in late 2024 to multiple counts.

The Kalshi case represents a new front in Santos’ ongoing legal exposure. Unlike the prior charges, which stemmed from conduct during his congressional campaign and term, the prediction market allegations involve conduct on a federally regulated platform after his departure from Congress. The CFTC has jurisdiction over Kalshi because the platform operates under a federal license as a designated contract market, making its users subject to federal commodity law rather than state gambling statutes.

What This Means for Prediction Markets

The Santos investigation adds to a series of high-profile incidents that have raised questions about insider trading and market manipulation risks on prediction market platforms. Two previous federal prosecutions in New York targeted individuals who allegedly used non-public information to trade on Polymarket review, Kalshi’s primary competitor. Those cases were the first criminal prosecutions in the United States arising from prediction market trading activity.

For the prediction market industry broadly, the Santos probe highlights both the strength and vulnerability of platforms like Kalshi: the platform’s decision to flag suspicious activity and self-report to regulators demonstrates a compliance-first posture, but the incident also illustrates how easily public figures with information asymmetries can potentially exploit these markets. Whether the CFTC pursues formal enforcement action will likely depend on whether investigators can establish that Santos knowingly placed trades based on information he controlled and withheld from the public. Understanding how prediction markets are regulated in the US is increasingly relevant for all participants.