DOJ, CFTC Investigate George Santos Over Kalshi Bets

The Justice Department and the Commodity Futures Trading Commission are investigating trades flagged by prediction market Kalshi tied to former Rep. George Santos' attendance at President Trump's February State of the Union. Kalshi froze the account and referred the matter to authorities.

Kalshi identified a pattern of bets that shifted sharply after Santos posted a video on X saying he would be in the gallery and later posted from an airport while the speech was under way. Market odds on his attendance fell when the posts suggested he was not present. Kalshi requested to interview Santos as part of its review; a person familiar with the matter told investigators Santos has avoided those interview requests.

People familiar with the trades say Santos made tens of thousands of dollars betting that he would not attend after initially signaling he would. Asked about the probe, Santos replied, “Well, that's news to me.”

Federal prosecutors and the CFTC are examining whether the trades involved nonpublic information or market manipulation. Investigators are expected to review trading records, platform surveillance logs and communications to determine whether trades were placed on the basis of information not available to the market or by individuals who had a direct role in the events they bet on.

Regulators have increased scrutiny of prediction markets after earlier cases in which participants were accused of trading on nonpublic information. Federal charges in prior matters have involved roughly $409,881 in alleged gains on a prediction market tied to an alleged capture of a foreign leader, and more than $1 million in alleged gains in another case linked to search trends.

Congressional oversight has also risen. In May, the chairman of the House Oversight and Reform Committee requested documents from major prediction market platforms about their enforcement and monitoring systems.

Platform operators have strengthened controls. Kalshi introduced screening tools aimed at preventing participants from trading on events in which they are directly involved. Another major operator expanded rules and enforcement standards and contracted a blockchain analytics firm to help detect insider trading and manipulation.

Kalshi handled about $16.8 billion in volume in May, compared with roughly $7 billion for its largest competitor. Kalshi declined to provide additional comment beyond confirming the account freeze and referral. The Justice Department and the CFTC do not comment on open investigations. Santos has not provided further details beyond his initial response.