Former congressman George Santos has agreed to pay a $35,000 settlement following a federal investigation into suspicious trading activity at prediction platform Kalshi.
The Department of Justice took up the investigation into whether Santos used the prediction site to engage in insider trading.
Key Takeaways
- Santos did not attend the State of the Union after he made a video saying he would.
- Kalshi inflated Santos’ odds of attending to at least 75%.
- Records show Santos made money by predicting that he wouldn’t attend the event.
The Commodity Futures Trading Commission (CFTC) – the federal body in charge of regulating prediction markets – confirmed the settlement agreement Friday.
Santos will return the $17,569 he made at Kalshi "for engaging in manipulative activity" and will pay a further $17,500 fine. The disgraced politician also promised he wouldn’t commit further infractions of the Commodity Exchange Act or the CFTC’s operational standards.
The fines relate to a situation involving President Donald Trump’s State of the Union address in February.
Santos, whose seven-year prison sentence for wire fraud and identity theft was commuted by Trump after three months, posted on X (Twitter) that he would attend the yearly event just 24 hours before it began.
“I’m gonna be in the gallery … I’m going to be there for the State of the Union in the gallery,” he said in a video posted on Feb. 23.
State of the union update! pic.twitter.com/y9nrYpCyU4
— George Santos (@Georgesantos) February 23, 2026
Kalshi and other prediction operators offered markets that allowed customers to pick who they believed would attend the State of the Union. Santos’ video naturally caused his market probability to inflate, leaving him to buy and sell various positions that related to his own attendance.
Prediction traders were left stunned when, shortly into Trump’s State of the Union address, Santos posted on X that he was stuck in an airport and was having to watch the event on TV.
Watching SOTU from an airport tv was not part of the plan! FML 😡🤬
— George Santos (@Georgesantos) February 24, 2026
Santos’ trading history showed that he invested in if he wasn’t going to make it to the State of the Union, which is how he ultimately pocketed over $17,500.
Enjoying Covers content? Add us as a preferred source on your Google account
Responses and reactions
Santos had a Polymarket partnership at the time the scandal occurred. The company, which is Kalshi’s top rival in the prediction industry, cut ties after reports of the investigation broke.
Santos' actions drew heavy online criticism as well.
“I know you bought some NO shares on Polymarket,” wrote one X user.
“Santos talking to his accountant and telling him to open his Kalshi account and bet all his money on No…after lying about how he was going,” wrote another.
Santos addressed the incident on his podcast in March, downplaying the circumstances.
“I guess people lost money,” he said. “Some people made unexpected money. That’s to show you how fragile these markets are.”
Despite settling, Santos never declared any wrongdoing in the matter. The issue is now resolved in the eyes of investigators and the CFTC.
“He chose a prompt, practical resolution, rather than protracted, costly litigation, and that choice should not be mistaken for admission of any wrongdoing, because it is not one,” Santos’ lawyer, Joseph Murray, said in a statement Santos shared on X.
The statement also said that Santos had a “genuine intention” of making it to the Capitol.
For the reporters here are the only comments you’ll get on this matter. pic.twitter.com/fn5TGNUBKr
— George Santos (@Georgesantos) July 31, 2026
Prediction market scandals
Santos’ alleged nefarious actions came to light after he was reported by Kalshi.
The platform has an in-house integrity monitoring service that is designed to identify incidents of possible abuse or manipulation. Kalshi also forbids insider trading and said it will pursue its own enforcement and attempt to reimburse traders who lost money at Santos’ expense.
Even with prediction market news and scandals such as this, predictions are big business now. A new report showed that Kalshi, Polymarket, and Polymarket U.S. reached a record $50.6 billion in combined notional trading volume during July.
