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Key Takeaways
- Kalshi banned George Santos for life and fined him over $70,000 for allegedly manipulating trades on his own attendance.
- The CFTC separately fined former White House aide Gabriel Perez over $170,000 and imposed a three-year trading ban.
- Polymarket says it has referred more than 100 suspicious-activity cases to authorities ahead of the U.S. midterms.
Prediction market platform Kalshi has issued its first-ever lifetime trading ban, targeting former U.S. Representative George Santos over trades tied to his own attendance at President Trump’s most recent State of the Union address.
Kalshi says Santos earned about $18,000 from the allegedly manipulative trades before fining him more than $70,000 and permanently barring him from the platform.
Santos Bet Big on His Own Attendance, Then Misled the Market
According to a disciplinary notice Kalshi posted on its website, Santos placed a series of large trades in a market where the outcome depended on whether he would attend Trump’s State of the Union speech earlier this year.
The notice states that Santos then made public statements about his plans to attend, some of which Kalshi described as false or misleading, in what it says was an attempt to influence the price of the contracts tied to the outcome.
Santos ultimately did not attend the event, the outcome he had bet on. Kalshi’s notice states the trades were made “in an attempt to influence the price of Yes and No contracts.”
Kalshi Fines Santos and Imposes a Lifetime Trading Ban
Kalshi disclosed the Santos case as one of five new enforcement actions the company announced. The other four individuals involved received temporary bans after cooperating with Kalshi’s investigations, according to the company. Santos did not cooperate, which Kalshi cited as a factor in the severity of his penalty.
A Kalshi spokesperson said in a statement that Santos “will be banned permanently from trading on Kalshi given his lack of cooperation.” Federal authorities have reportedly also examined the matter separately from Kalshi’s own disciplinary process.
Santos was expelled from Congress in 2023 amid criminal investigations into his conduct and was later sentenced to prison on fraud charges. President Trump commuted his sentence last year.
Federal Regulator Separately Penalizes Former White House Aide
The Commodity Futures Trading Commission, the federal agency that regulates prediction markets, announced its own enforcement action last week against Gabriel Perez, a former White House teleprompter operator.
The CFTC ordered Perez to pay more than $170,000 and imposed a three-year trading ban, according to the agency’s press release, which noted his penalty was reduced in light of what it called his exemplary cooperation.
Perez had placed bets on Kalshi’s “mention” contracts, which pay out based on whether specific words are spoken by prominent figures during public remarks, using knowledge from his position operating the teleprompter for Trump’s addresses.
Polymarket Says It Is Also Watching for Election-Related Manipulation
Rival prediction market Polymarket says it has its own systems in place to catch suspicious trading as the industry faces heightened scrutiny ahead of the U.S. midterm elections.
Shana Bautista, the company’s global head of investigations and intelligence, said Polymarket uses machine learning, blockchain analytics, trade surveillance and open-source research to flag unusual activity.
Polymarket has referred more than 100 cases to authorities, according to Bautista, including a case involving a U.S. soldier accused of using classified information to bet on the capture of Venezuelan leader Nicolas Maduro, and a separate case involving suspected insider trading ahead of U.S. military action in Iran.
Polymarket also said its systems block the large majority of U.S. users from accessing its international platform, a restriction required under a 2022 settlement with the CFTC.
