Kalshi Bans Ex-Congressman George Santos for Life

Kalshi has given out its first ever lifetime ban to ex-congressman George Santos over alleged insider dealing.

The former U.S. congressman is accused of trading on his own appearance at Donald Trump’s State of the Union address in February. Kalshi’s compliance team swung into action, uncovering supposed insider dealing involving the congressman’s account.

In receiving a lifetime ban from the prediction market platform, Santos becomes the first to receive such an accolade.

Sarcastically, Santos “thanked” Kalshi for the ban on X, adding, “Let’s see how much longer you guys are around for.”

Santos Lashes Out at ‘Unserious Company’

Santos had already paid a $35,000 fine after the CFTC, the prediction markets regulator, looked into the suspicious trades.

The former congressman hit out at Kalshi on his X account, calling it an “unserious company” that “violates its own notices and deadline”.

Kalshi’s compliance team unearthed suspicious trades in February. It was alleged that Santos himself had made false claims about his movements leading up the State of the Union address. However, his comments moved the market price and Santos earned nearly $18,000 on the price move.

How Prediction Markets Attract Controversy

The difference between prediction markets and conventional sportsbooks is in the way “traders” can bet on a host of markets covering sports, politics, and culture.

Instead of betting against a centralized bookmaker, you trade against other users.

As well as transparency, prediction markets offer unusual markets that can be a target for inside traders. These include “mention markets”, contracts based on what a public figure will do or say during a speech.

However, they also include contracts on attendances, such as Donald Trump attending the World Cup final or in this case Santos appearing at the State of the Union address.

Key to the case against Santos was the use of “non-public information”. Only he and a handful of others were aware he would attend. Santos is alleged to have used that “inside information” to trade shares on Kalshi.

Santos Joins a Growing List

The Santos ban comes just days after a former White House operator was fined $172,000 for betting on Trump speech predictions.

Gabriel Perez made trades on Kalshi while working as a teleprompter operator. He used prior knowledge of Donald Trump’s speeches to buy event contracts on what the POTUS would say.

The fine was reduced after the CFTC praised Perez’s “exemplary co-operation”.

Kalshi Battling After Ninth Circuit Loss

Kalshi is evidently keen to show it’s keeping its house in order with this latest ban. It had a setback late last week after losing in the U.S. Court of Appeals for the Ninth Circuit.

Following a ban in Nevada last year, a district court there gave Kalshi a temporary restraining order to keep its sports contracts active.

However, that order was ended in November and the prediction exchange appealed.

The Ninth Circuit court voted 3–0 last week to uphold the ban and deny Kalshi the opportunity to keep its sports contracts live in Nevada.