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Prediction markets are facing renewed attention after trading activity linked to former Republican congressman George Santos was referred to federal authorities over bets tied to President Donald Trump’s State of the Union address.
Kalshi, a prediction market platform regulated as a commodity futures market, identified suspicious activity in a market on whether Santos would attend the speech, according to sources familiar with the matter.
The platform determined that the account belonged to Santos, froze it, and referred the case to the Justice Department and the Commodity Futures Trading Commission, according to reports by NPR and CNN.
The CFTC, which regulates prediction markets, is investigating the matter, a separate source confirmed to CNN. NPR reported that the Justice Department also opened an investigation.
The case centers on a Kalshi market in which traders placed millions of dollars in bets on who would attend Trump’s address. The list included Santos, Barron Trump, USA Hockey player Jack Hughes, and Nick Shirley, a MAGA journalist whose Minnesota fraud story went viral.
Santos, who was expelled from Congress and later imprisoned on federal fraud charges, had been serving a seven-year sentence for aggravated identity theft and wire fraud related to his 2022 midterm campaign when Trump commuted his sentence last year. He spent less than three months in prison.
According to three people with direct knowledge of his trades who spoke to NPR, Santos had already placed bets that he would not attend the address. They alleged that he misled the public and made tens of thousands of dollars from the trades.
One day before the speech, Santos posted a video on X saying: “I’m going to be there for the State of the Union in the gallery, guys.” The statement pushed up Kalshi odds on his attendance. But while Trump was speaking, Santos posted: “Watching SOTU from an airport TV was not part of the plan! FML.” The market then moved sharply lower.
Asked by NPR about an insider trading investigation into his Kalshi activity, Santos said, “Well, that’s news to me.” Asked whether he had a Kalshi account, he said, “I’m not saying yes, I’m not saying no.”
Santos also told NPR that Kalshi co-founder Luana Lopes Lara is “a fellow Brazilian” whom he personally knows, and said he would call her to determine whether an investigation had been launched.
Prediction markets such as Kalshi and Polymarket have expanded rapidly over the past year, offering contracts on outcomes ranging from sports and elections to entertainment events, including who will win season 50 of “Survivor.” Lawmakers and state officials have said existing rules have not kept pace with the industry’s growth.