Kalshi, the operator of a prediction market platform, reported former U.S. Representative George Santos to the U.S. Department of Justice after the company detected trading activity it considered suspicious, a person familiar with the matter told reporters.
The trades in question involved Santos publicly stating he planned to attend President Donald Trump’s State of the Union address on February 24, and subsequently placing wagers that ran counter to that stated intention - effectively betting against his own attendance, according to the account of the situation.
In addition to notifying the Department of Justice, Kalshi also reported the transactions to the Commodity Futures Trading Commission, the federal regulator that oversees derivatives markets. The CFTC, the DOJ and Kalshi did not immediately respond to requests for comment. Santos could not be immediately reached for comment.
The incident highlights a growing enforcement focus on the prediction market industry as it expands. Regulators and market participants have been paying closer attention to the potential for insider trading and other improper information advantages where traders place wagers on the outcomes of political, economic and other real-world events.
Kalshi's referral of the trades to both a law enforcement agency and a regulator underscores the dual legal and regulatory avenues that can be involved when trading raises red flags. The individual at the center of the trades, Santos, was expelled from the U.S. House of Representatives on grounds of fraud and identity theft. Last year, a prison sentence of more than seven years that had been imposed on him was commuted by U.S. President Donald Trump.
At this stage, publicly available information about the trades and any ensuing inquiries is limited to the reported notifications to the DOJ and the CFTC and the description of Santos' public statements and subsequent wagers. Observers of prediction markets note the sector's rapid growth makes surveillance and enforcement a priority for regulators seeking to preserve market integrity.
The matter remains unresolved publicly. Further details on the trades, any investigation or potential enforcement action have not been disclosed by the authorities, the platform or Santos.