Federal regulators are accelerating their oversight of political prediction markets. The Department of Justice and the Commodity Futures Trading Commission opened investigations into former U.S. Representative George Santos for alleged insider trading on Kalshi. Internal systems at the exchange flagged suspicious wagers placed by the former congressman ahead of President Donald Trump’s State of the Union address in February 2026.
Santos publicly claimed he would attend the speech, which pushed the market odds of his appearance near 75 percent. He simultaneously placed wagers against his own attendance. The former congressman ultimately skipped the event, citing travel issues, and secured profits in the tens of thousands of dollars from the transaction.
After identifying the trades, Kalshi froze the account and referred the activity to federal authorities. Santos told NPR he was unaware of the probe, maintaining he personally knows Kalshi co-founder Luana Lopes Lara. When asked about his trading activity, Santos said, “I’m not saying yes, I’m not saying no.”
The investigation follows his expulsion from Congress in December 2023 and his subsequent conviction for wire fraud and identity theft. He received a seven-year federal prison sentence before President Trump commuted his term in October 2025.
How Regulatory Scrutiny Targets Prediction Market Profiteering
The CFTC and DOJ are aggressively pursuing individuals exploiting non-public information on betting exchanges. In April 2026, a U.S. Army Special Forces soldier faced federal charges for utilizing classified intelligence to profit on Polymarket wagers regarding the capture of Venezuelan President Nicolás Maduro. Kalshi also fined three congressional candidates that same month for betting on their own races.
Retail bettors on Discord immediately recognized the sudden odds collapse during the State of the Union address. Users such as Roastinator.exe publicly criticized the market manipulation, highlighting the financial vulnerability of retail participants trading against insiders on these platforms.