Kalshi Permanently Bars Former US Representative George Santos in First Such Ban
Summary
- US prediction-market platform Kalshi said it had permanently revoked former US Representative George Santos’s trading privileges and imposed a more than $71,000 fine.
- The action comes as controversy grows over trading on nonpublic information in the prediction-market industry, and the CFTC also reached a $35,000 settlement with Santos in the related case.
- Major platforms including Kalshi and Polymarket said they are strengthening internal measures, including verifying traders’ employment information, to prevent trading in sensitive markets based on inside information.
Forecast Trend Report by Period
Kalshi has permanently barred former US Representative George Santos from trading on its prediction-market platform, marking the first lifetime ban the company has imposed on a user.
The Block reported on Aug. 31 that, according to a disciplinary settlement notice filed by Kalshi, Santos violated platform rules while trading contracts on whether he would attend the State of the Union address. Kalshi also fined him more than $71,000.
Kalshi’s compliance department said it had reasonable grounds to conclude that Santos traded in a market tied to his own attendance at the State of the Union.
Santos reached a separate settlement with the Commodity Futures Trading Commission over the matter last month. The agency said Santos publicly commented about whether he would attend the State of the Union roughly two weeks before the speech, materially affecting prices for the related prediction contracts.
Santos agreed to pay $35,000 to the CFTC and neither admitted nor denied the agency’s findings. His lawyer said he cooperated with the investigation and that the State of the Union contract was the first prediction-market product he had traded.
Santos represented a New York district in the House of Representatives starting in January 2023, but was expelled later that year after a House Ethics Committee investigation into misconduct.
The action comes amid growing controversy over the use of nonpublic information in prediction-market trading. In April, the US Department of Justice arrested an active-duty Army soldier accused of betting on Polymarket with confidential information before the arrest of former Venezuelan President Nicolas Maduro.
The CFTC on Aug. 28 also imposed a settlement of more than $172,000 on Gabriel Perez, a former White House teleprompter operator. Perez was accused of profiting in Kalshi’s so-called mention markets by using advance knowledge of President Donald Trump’s speeches.
In Congress, bipartisan bills have been introduced to restrict prediction-market trading by people with access to nonpublic information, but none has become law. Major platforms including Kalshi and Polymarket are also stepping up internal safeguards, including verifying traders’ employment information for access to sensitive markets, to prevent insider trading.
