Prediction market Kalshi has permanently banned former U.S. Rep. George Santos and fined him $71,356 over trades tied to his own attendance at the State of the Union address.
Key Points:
- Kalshi issued the first lifetime trading ban in its history, naming Santos and imposing a $71,356 penalty.
- The exchange said Santos held large positions while making public claims about his plans that moved contract prices.
- A separate federal settlement in July already cost him about $35,000 and a three-year trading ban.
Kalshi Issues First Lifetime Ban
Kalshi published the disciplinary notice on Monday, though the permanent ban took effect Aug. 28. Its compliance department found reasonable cause to believe Santos traded contracts that hinged on whether he would attend President Donald Trump's address in February, a market whose outcome he personally controlled. A spokesperson confirmed the ban stemmed from his lack of cooperation.
The notice says Santos bought and sold large positions, then made a run of public statements about his plans that pushed contract prices toward the side he was holding at the time. Some of those statements were false or misleading, according to the record posted on the company's site, which put his profit from the trades at $17,839.57, a fraction of the fine he now owes.
He skipped the speech, the outcome he had ultimately backed.
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CFTC Fines Deepen Santos Penalties
The Commodity Futures Trading Commission ordered Santos in July to hand over $17,569.98 in trading profits and pay a civil penalty of $17,500, closing a separate federal case built on the same bets. The roughly $35,000 settlement carried a three-year trading ban. He neither admitted nor denied the agency's findings.
Federal enforcement widened on Friday, when the agency penalized Gabriel Perez, a former White House teleprompter operator who wagered on words Trump was preparing to say in speeches he saw first. Perez cleared more than $100,000 on those mention contracts and was told to pay upward of $172,000, though regulators trimmed the figure after citing his cooperation.
Polymarket Faces Midterm Election Scrutiny
Rival Polymarket says its controls are ready for the U.S. midterm elections, the next serious test of whether prediction venues can police themselves without waiting for regulators to intervene.
Shana Bautista, its global head of investigations and intelligence, said the surveillance systems already flag unusual trading.
The company has referred more than 100 cases to law enforcement, including bets linked to a soldier accused of using classified information to wager on the capture of Venezuela's Nicolas Maduro.
The House expelled Santos in 2023 after an ethics inquiry into fraud and campaign finance violations, and a judge later sentenced him to 87 months in prison. Trump commuted that sentence once he had served 84 days, and the disputed State of the Union trades followed a few months after his release from custody.
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