Jun 3, 2026
President Donald Trump showed mercy to disgraced former congressman George Santos once before, helping him get out of federal prison less than three months into a seven-year sentence for wire fraud and money laundering.
Now, Santos is in trouble again — under investigation for insider trading involving Kalshi, an online prediction market for which Donald Trump Jr. is listed as a strategic advisor.
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Kalshi allows users to bet on real-life outcomes in sports, entertainment, politics, the economy and more. Unlike offshore betting sites, it’s federally regulated, making insider trading a criminal offence.
In this case, the outcome people were betting on involved Santos himself — and whether he’d show up in person at Trump’s State of the Union address in February. This seemingly innocuous speculation pulled in millions of dollars in bets.
As NPR reports, Santos made a very public announcement about his attendance on X one day before Trump’s address: “I’m going to be there for the State of Union in the gallery, guys.”
Not surprisingly, bets on his attendance began to spike on Kalshi. But Santos never showed up. Instead, he shared a post on X as Trump was making his speech: “Watching SOTU from an airport tv was not part of the plan! FML.”
So, what does this have to do with insider trading?
The Commodity Futures Trading Commission (CFTC) and Department of Justice (DOJ) are now investigating whether Santos rigged the system on Kalshi and laid bets on his own attendance, saying he’d be there while betting he’d be a no-show — and making money in the process.
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Asked if he had a Kalshi account, Santos told NPR, “I’m not saying yes, I’m not saying no.”
Feds cracking down on insider trading in prediction markets
David Miller, the CFTC’s director of enforcement, spoke about the crackdown earlier this spring, saying the agency saw insider trading in prediction markets as its top priority.
“Unfortunately, a myth has spread that insider trading is permissible, even encouraged, in the prediction markets,” he said, noting that it’s a direct violation of CFTC regulations and the Commodity Exchange Act.
“We will aggressively detect, investigate, and, where appropriate, prosecute insider trading in the prediction markets.”
Kalshi co-operates in these investigations, using AI to identify questionable activity and forwarding suspicious accounts to federal authorities.
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In April, U.S. prosecutors charged a U.S. Army Special Forces soldier with insider trading on the prediction market Polymarket for betting that Venezuelan leader Nicolás Maduro would be captured. More recently, the DOJ charged a Google software engineer for allegedly using the tech company’s internal data to make more than $1.2 million on Polymarket.
“The American people want this greed-driven conduct investigated and prosecuted,” said Jay Clayton, U.S. attorney for the southern district of New York.
But that may be easier said than done.
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The challenges of proving insider trading
Both the DOJ and CFTC face challenges with insider trading cases in prediction markets.
First, the agencies have to prove someone acted as an “insider,” which is easier to do in a financial organization than an online prediction market platform. And even if there is substantial proof, the DOJ and CFTC face a daunting task in enforcement, grappling with a multinational industry that is expected to grow to $1 trillion by 2030, according to the Bernstein investment firm.
Meanwhile, the New York Times reports two CFTC officials were put on leave and placed under investigation after raising concerns about the agency’s handling of prediction market cases.
As for Santos, whether the former congressman faces any charges is anyone’s bet.
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Laura Boast is an Associate Editor with Moneywise.com and a lifelong content creator who has reached international audiences at Discovery, CBC, Blue Ant Media, Bond Brand Loyalty and more.
