Kalshi issues first permanent ban to former Rep. George Santos over State of the Union trading

Former U.S. Rep. George Santos has been permanently banned from trading on Kalshi, marking the prediction market platform’s first-ever permanent ban.

In a notice of settlement of disciplinary action filed on Monday, Kalshi said Santos violated its rules by trading a bet on whether he would attend the State of the Union. He was then ordered to pay a fine of just over $71,000.

"The Kalshi Compliance Department has established reasonable cause to believe that George Santos engaged in trading activity in certain markets related to his attendance at the State of the Union address," Kalshi said in the notice.

Last month, Santos settled with the Commodity Futures Trading Commission, which says it has jurisdiction over prediction markets, after the agency said he used trades on Kalshi to influence the outcome of his State of the Union bet. The agency said that two weeks before the SOTU, Santos made public statements on whether he would attend, causing the price of the event contract to increase or decrease "significantly."

He was then ordered to pay $35,000 as part of the settlement, and did not admit or deny the agency's findings. At the time, his counsel Joseph W. Murray said Santos cooperated with the CFTC and said the SOTU was the first time Santos had ever placed a bet on a prediction market. Murray said Santos booked hotel and airline reservations to Washington, D.C., because he thought he was attending the SOTU.

Santos was a congressman representing New York from Jan. 2023 to the end of that year after he was expelled following a House Ethics Committee investigation into misconduct involving ethics violations.

Prediction insiders

Insider trading has become a point of contention as prediction markets have skyrocketed in popularity and are now worth billions of dollars. In April, the Justice Department arrested an active-duty U.S. Army soldier for using confidential information to place bets on the prediction market Polymarket ahead of former Venezuelan President Nicolás Maduro’s capture earlier this year.

On Friday, the CFTC ordered Gabriel Perez, a former White House teleprompter operator, to pay more than $172,000 to settle charges that he used his advance access to President Trump's speeches to profit from "mention markets" on Kalshi.

Lawmakers have introduced several bipartisan bills to restrict trades by people with access to non-public information to prevent insider trading. Still, these bills have not yet been passed into law. Meanwhile, large prediction market platforms like Kalshi and Polymark have taken certain steps, such as mandatory employment verification for traders in sensitive markets and other safeguards to deter insider trading.