George Santos under DOJ investigation over Kalshi trades tied to Trump speech

Federal investigators have opened a probe into former U.S. Representative George Santos after suspicious prediction market trades allegedly generated tens of thousands of dollars around President Donald Trump’s February State of the Union address.

NPR reported that the Department of Justice and the Commodity Futures Trading Commission are investigating Santos after prediction market platform Kalshi detected unusual trading activity linked to a contract on whether he would attend the speech. According to NPR, Kalshi froze Santos’ account and referred the matter to regulators after reviewing the trades.

Based on NPR’s reporting, Santos allegedly wagered that he would not attend the event despite posting a video on X indicating that he planned to be present in the gallery. As President Trump delivered his address, Santos posted from an airport, after which the market’s odds on his attendance dropped sharply, NPR said.

People familiar with the matter told NPR that Kalshi has sought to interview Santos as part of its internal investigation. The report added that Santos has not participated in those interview requests. 

When contacted by the outlet, Santos responded, “Well, that’s news to me.”

Kalshi’s enforcement efforts face new test

Coming months after Kalshi disciplined political candidates for trading on their own races, the Santos case places renewed attention on how prediction markets police participants who may possess direct knowledge of an event’s outcome.

Back in April, Kalshi suspended three federal candidates after an internal review found they had placed bets on their own election contests. Kalshi’s head of enforcement, Robert DeNault, said at the time that candidates capable of influencing market outcomes violated exchange rules regardless of the size of their trades.

Those earlier cases resulted in exchange penalties but did not lead to referrals to the DOJ or the CFTC. NPR’s reporting suggests the Santos matter followed a different path, with Kalshi freezing the account and escalating the issue to regulators.

Kalshi has recently expanded measures intended to prevent market abuse. The company said it introduced screening tools designed to stop users from trading on events in which they are directly involved.

Prediction markets draw growing insider trading scrutiny

Attention from regulators has increased as several high-profile cases have raised questions about the use of nonpublic information in event-based contracts.

In April, federal prosecutors charged a U.S. Army Special Forces soldier with making roughly $409,881 from Polymarket bets tied to the capture of Venezuelan President Nicolás Maduro. Authorities alleged the trader possessed advance knowledge connected to the operation.

More recently, the DOJ and the CFTC charged Google software engineer Michele Spagnuolo with insider trading tied to prediction markets. Prosecutors alleged that Spagnuolo used confidential Google search ranking data to place $2.7 million in bets on Polymarket, generating approximately $1.2 million in profit before the information became public.

CFTC Enforcement Director David Miller said in May that insider trading laws apply to prediction markets and rejected arguments that event contracts exist outside existing market abuse rules.

Congress has also stepped up oversight. In May, House Oversight and Government Reform Committee Chairman James Comer launched an inquiry into insider trading safeguards at Kalshi and Polymarket, seeking information about monitoring systems and enforcement practices.

As scrutiny has intensified, both Kalshi and Polymarket have introduced additional compliance measures. 

Kalshi has focused on identifying participants with direct involvement in market events, while Polymarket has revised its rules, expanded surveillance programs, and hired blockchain analytics firm Chainalysis to support investigations into insider trading and market manipulation.