Prediction market platform Kalshi has permanently banned George Santos, a former US representative and Republican congressman, alleging that the politician has engaged in what the company described as insider trading.
Santos Eats the Prediction Market Ban Hammer
Santos is accused of profiting from the platform by trading on whether he himself would attend the State of the Union address, an event that he could clearly predict and manipulate. He turned a profit of $17,839, which has now earned him a permanent ban from the platform.
When his actions came to light, Santos argued that he was simply proving how flawed the prediction market model was. “I guess people lost money. Some people made unexpected money. That’s to show you how fragile these markets are,” the former lawmaker noted.
A Kalshi spokesperson has commented on the decision and said that this was the first permanent ban from the platform.
Since Friday, August 28, Santos has not been able to access the website and place trades. He will also have to pay a $71,356 penalty.
This is not the first time Santos has landed himself in a legal pickle. He was previously granted clemency by President Donald Trump in an unrelated fraud case, which nevertheless saw him removed from the US House.
Some People Make Money – Others Lose It
Santos, however, was not impressed by Kalshi’s decision, calling it an “unserious company” on social media on X. He even “thanked” the platform for the lifetime ban, testily adding: “let’s see how much longer you guys are around for.”
Kalshi’s Compliance Department argued that Santos has provided misleading statements to the investigators.
Separately, Santos has settled with the Commodity Futures Trading Commission (CFTC), which has shown marked leniency towards instances of insider trading on prediction markets, issuing only financial penalties instead of seeking harsher terms.
Santos, for example, has been ordered to pay $35,000 by the CFTC.
The latest news about insider trading come against a backdrop of multiple legal developments in the sector. At the same time, Donald Trump Jr. has just announced a fresh $300-million investment into Kalshi’s main rival, Polymarket.
The Trump family have been staunch supproters of the prediction market model, even though courts in Connecticut and Nevada have so far dealt setbacks to these companies. Regardless, Kalshi and Polymarket have doubled down and are here to stay, they argue.
As state-by-state fight over the status of these companies continues, the issue is bound to reach the Supreme Court of the United States.