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Former Congressman George Santos is in hot water once more, this time for alleged insider trading on Kalshi.
In February, after being released from prison via a pardon by President Trump, Santos announced on his X account that he would be attending the State of the Union Address. Kalshi had already accepted millions of dollars on SOTU attendee contracts, and Santos’ announcement immediately upped the price on a contract that the former lawmaker would be in the gallery.
During the speech, he announced that he was stuck at the airport and did not make the event.
What he didn’t let his followers know was that he had already purchased contracts on Kalshi that he would not be there. NPR reported that three people confirmed Santos placed the wagers knowing that he would not attend, and then juiced the price on Kalshi with his announcement on X, and defrauding other contract holders in the process.
Kalshi has reportedly reached out to Santos regarding the issue and has not received a response. The U.S. Department of Justice is now investigating the matter.
In a subsequent announcement on X, Santos referred to the insider trading allegations as “preposterous,” and said he “Looks forward to supplying any information asked of me to any agency that inquires.”
Prediction market insider trading concerns continue
The George Santos situation further illuminates a continuing concern about prediction market trading: that individuals with advanced knowledge of certain events, or the ability to cause or influence them, will use that knowledge to place fraudulent contracts.
Master Sgt. Gannon Ken Van Dyke netted $400,000 on Polymarket by purchasing a prediction that Venezuelan President Nicolas Maduro would be removed from office, and then participated in the operation that led to his arrest. Van Dyke was arrested in April and is facing charges of using classified information to place bets on prediction markets.
The CFTC, for its part, has opened a public listening session to solicit comment on ways it could best regulate prediction markets and utilize its enforcement authority, but the concerns continue nevertheless.
