Kalshi, a platform that allows users to bet on the outcomes of real-world events, reported former U.S. Representative George Santos to the Department of Justice on Wednesday after identifying trading activity it considered suspicious, according to a person familiar with the situation.
The unusual activity involved bets placed against Santos attending President Donald Trump’s State of the Union address scheduled for February 24. The trades ran counter to Mr. Santos’ repeated public statements that he would be present at the address, the person briefed on the matter said.
In addition to notifying the Justice Department, Kalshi alerted the Commodity Futures Trading Commission, the federal regulator that oversees certain derivatives and event-based contracts, about the same trades.
Those disclosures come amid heightened scrutiny of the rapidly expanding prediction market industry, where participants wager on political, economic and other real-world outcomes. Regulators and market participants have increasingly focused on the potential for insider information to influence market prices and outcomes, a pressure point Kalshi’s report underscores.
Separately, the former congressman whose trading activity is at issue has a public history of legal and ethical controversies. He was expelled from Congress on grounds of fraud and identity theft, and last year his sentence of more than seven years in prison was commuted by President Donald Trump.
Context and implications
- Kalshi identified trades it judged to be at odds with public statements by the subject of those markets.
- The platform took the matter to both the Justice Department and the Commodity Futures Trading Commission for further review.
- The incident highlights regulatory pressure on prediction markets to address risks tied to insider trading and event integrity.
The available information about the episode is limited to the details Kalshi reported and the description provided by a person familiar with the matter. No additional outcomes, enforcement actions, or findings have been reported in the material provided.