Kalshi Issues First Lifetime Ban to Former Congressman George Santos

Prediction market platform Kalshi has issued its first-ever lifetime ban, barring former US Representative George Santos over alleged market manipulation as the industry faces increasing pressure to crack down on abusive trading.

Santos was permanently banned after allegedly making manipulative trades that earned him around $18,000 by betting on whether he would attend former President Donald Trump’s State of the Union address, according to Kalshi’s disciplinary record.

The action comes as prediction platforms face growing scrutiny over market abuse. Recent enforcement efforts include regulatory action against a former White House employee and reported efforts by rival platform Polymarket to strengthen controls against questionable trading ahead of the US midterm elections.

According to Kalshi’s enforcement record, Santos placed a series of large positions in contracts tied directly to whether he would attend Trump’s speech. He then made public comments about his plans to attend in an effort to influence the prices of the “Yes” and “No” contracts. Kalshi said some of those statements were false or misleading.

Santos ultimately did not attend the event, which was the outcome he had wagered on. In addition to the permanent ban, Kalshi fined him more than $70,000 in an enforcement action issued late last week. Federal authorities have also reportedly been examining the matter. Santos did not immediately respond to CoinDesk’s request for comment.

Santos was expelled from Congress in 2023 after facing multiple criminal investigations. The former lawmaker was serving a prison sentence for fraud when Trump commuted his sentence last year.

Kalshi said the Santos case was one of five recent enforcement actions taken by the platform. Under its regulatory obligations, the company is responsible for monitoring and addressing potential market manipulation. The other four individuals received temporary bans after cooperating with Kalshi’s investigations.

“Mr. Santos faces additional financial penalties and will be banned permanently from trading on Kalshi given his lack of cooperation,” a company spokesperson said.

Regulators Also Target Prediction Market Abuse

The Commodity Futures Trading Commission, which oversees the prediction market industry, also took action against a former White House employee on Friday.

Gabriel Perez was ordered to pay more than $170,000 and received a three-year ban from trading. Regulators reduced his penalties after citing his “exemplary cooperation” with the investigation.

Perez previously worked as a White House teleprompter operator and placed bets on Kalshi contracts tied to whether Trump would mention specific words during public speeches. These “mention” contracts pay traders when particular words or phrases are spoken by public figures during designated events.

Meanwhile, rival prediction market Polymarket says it has expanded its monitoring systems as the upcoming US midterm elections place greater attention on how prediction platforms handle suspicious trading.

Shana Bautista, Polymarket’s global head of investigations and intelligence, told Reuters that the platform uses machine learning, blockchain analytics, trade surveillance and open-source intelligence to identify potentially unusual activity.

Polymarket has referred more than 100 cases to authorities. Those investigations have included wagers allegedly connected to a US soldier accused of using classified information to bet on the capture of Venezuelan President Nicolás Maduro, as well as suspected insider trading ahead of US military operations in Iran.

Polymarket also said its controls prevent most US users from accessing its international platform, in accordance with the terms of a 2022 settlement with the CFTC.

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