Kalshi Data Highlights Unusual George Santos Trading Before Federal Investigation
Kalshi market data shows suspicious trading activity tied to George Santos as federal authorities open an investigation into his State of the Union bets.
Former Republican congressman George Santos is under federal investigation for suspicious trading activity in a market on whether he would attend President Trump’s State of the Union address. Kalshi data shows Santos-related trading accounted for more than 35% of the market’s volume the day before the speech and exceeded $1.1 million on Feb. 24, the day of the event.
NPR first reported the story after speaking with three people with direct knowledge of the trades.
They claimed that Santos used his own social media presence to manipulate the market. While Santos publicly suggested he would attend, the sources said he had already taken positions that would profit if he did not.
Santos denied wrongdoing in a statement posted on social media Wednesday.
The bases of the accusation is preposterous and I look forward to supplying any information asked of me to any agency that inquires.”
Santos added that his legal team was in contact with the Department of Justice after learning of the reported investigation and said he would provide further comment when appropriate.
Unusual Trading Activity
Kalshi traders placed more than $7.8 million in bets on Feb. 24 in a market tied to who would appear in the House chamber gallery during the State of the Union address.
Traders had built up the market for days, with $520,095 traded on Feb. 22, $1.49 million the day before the speech, and over $7.8 million the day Trump delivered the speech. Santos emerged as one of the most actively traded individual figures in the Kalshi market.
On Feb. 20, 9,166 shares of the Santos contract were traded, marking the highest single-day volume among the named participants tracked that day.
Two days later, Santos-related trading accounted for $182,881 in volume, or 35.16% of the market’s total daily volume of $520,095.
On Feb. 24, the day of the speech, Santos-related volume rose to $1,100,183. That represented 14.09% of Kalshi’s total $7.8 million in volume that day.
According to NPR, investigators are examining whether participants traded using knowledge unavailable to the broader market.
One day before the speech, Santos posted a video to X:
“I’m going to be there for the State of the Union in the gallery, guys.”
The market reacted quickly, with the odds of Santos attending rising to $0.76 from around $0.20, signaling high confidence among traders that he would appear.
However, sources with direct knowledge of the trades told NPR that Santos had already bet in himself not attending. When he did not appear, those positions paid off.
The sources allege Santos earned tens of thousands of dollars when the market resolved.
Kalshi Flags the Activity, Polymarket Ends Influencer Deal With Santos
Kalshi itself caught the suspicious trading activity. According to NPR, people familiar with Kalshi’s internal investigation said the platform noticed the transactions and froze Santos’ account. It then referred the issue to the CFTC and DOJ. Those referrals led the two agencies to open their respective investigations.
Many notable insider trading scandals have embroiled the prediction markets sector over the past 12 months. Exchanges have introduced new standards and automated systems to try to catch offenders.
Earlier this year, Kalshi took action against political candidates in Minnesota, Virginia, and Texas after they traded on markets tied to their own races, highlighting growing regulatory scrutiny of participant conduct.
According to the Associated Press, Polymarket is terminating its paid relationship with Santos following the allegations. Santos had been working with the company in an influencer capacity after receiving clemency from President Trump last year.
Reached by NPR, Santos neither confirmed nor denied having a Kalshi account. Santos also mentioned that he personally knew Kalshi co-founder Luana Lopes Lara, who he referred to as “a fellow Brazilian”, and would contact her to discuss the situation.
Some experts believe the allegations may more closely resemble market manipulation than traditional insider trading.
“What he’s accused of sounds a lot more like market manipulation than insider trading,” Todd Phillips, a former Georgia State University professor who has written extensively about prediction market regulation, told the AP.
Familiar Figure at Center of the Investigation
The alleged scheme follows a familiar pattern that observers saw throughout Santos’ career.
The 37-year-old former congressman for New York’s Third Congressional District became one of the most controversial figures in modern American politics after a series of fabricated claims about his background surfaced.
Santos lasted less than a year in Congress after taking office in January 2023. Prosecutors indicted him that May on 13 counts of wire fraud, money laundering, and theft from political donors.
The House expelled him that December, making him just the sixth person in U.S. history to face expulsion from the chamber. He served four months of a seven-year federal prison sentence before President Trump commuted his sentence in October.
The fresh investigations into Santos come at a time when congressional lawmakers have sounded alarms about how people with insider knowledge can manipulate markets and defraud ordinary bettors.
The Santos investigation may become one of the first major tests of how prediction markets address alleged misconduct involving participants who can directly influence contract outcomes.
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