Kalshi Issues Lifetime Ban to Former NY Representative George Santos

^{Former Rep. George Santos speaks to reporters outside the U.S. Capitol. He was issued a lifetime ban from Kalshi for manipulating prediction markets. (Photo: Xinhua/Alamy)} 

One of the most obtrusive advertisements on television of late is for the prediction market industry. These sites, led by Kalshi and Polymarket, let users test their predicting skills and trade on certain outcomes of real-world events.

One person won’t be able to do that anymore on either major site: former U.S. Representative George Santos of New York. Kalshi announced a permanent ban on Santos on Monday, Aug. 31, calling it the first-ever lifetime banishment in its business history. The ban stemmed from a market earlier this year on whether Santos, who was expelled from the House in 2023, would make an appearance at this year’s State of the Union address in February.

Santos has shown a penchant for straddling the line between legality and illegality. In April 2025, he was sentenced to more than seven years in prison after pleading guilty to wire fraud and aggravated identity theft.

Santos Manipulated Markets on State of the Union 

Santos made his mistake by trying to manipulate action on Kalshi. According to an announcement from Kalshi, Santos placed a series of large trades on the outcome of his own attendance between Feb. 2 and Feb. 25, then made "a series of public statements regarding his attendance at the event." Kalshi's Compliance Department determined that the "false or misleading statements" were attempts to manipulate action on both the Yes and the No choices.

"As a person capable of influencing the outcome of the underlying event, Santos was prohibited from trading in this market," Kalshi said in its announcement, citing its Exchange Rule 5.17(z).

Santos posted that he planned to attend the address and made a now-deleted post asking what suit he should wear, but later told followers he was "watching SOTU [State of the Union] from an airport TV."

Kalshi does have internal regulations regarding actions like this. These rules are similar to insider trading regulations in the investment world, which govern the use of stock market information not available to the general public. In Santos’ case, regulators said he used his influence over the event to manipulate the market, then trade on the outcome he had helped shape.

Santos was not only banned by Kalshi but also fined $71,356 for his actions. Santos made approximately $17,839.57 from the manipulated contracts. The Commodity Futures Trading Commission (CFTC) took separate action as well, settling with Santos in late July over the same conduct. The former Representative agreed to relinquish his trading profits, pay an additional civil penalty, and accept a three-year ban from prediction market trading.

It also turns out that this isn’t the first predictive market Santos has had issues with. In June, Polymarket ended a relationship with Santos, who worked for the company as an "online influencer."

Santos was rather dismissive of Kalshi and appeared to make a final prediction on X.

Predictive Markets Present a Quandary for Regulators

The predictive market industry has exploded in the last few years. Before 2024, the industry wasn't formally regulated, but the CFTC watched it with a suspicious eye, even before it was the official agency overseeing derivatives and futures markets.

These predictive markets were not allowed to offer markets regarding sporting events, political contests, economic indicators, or certain policy decisions. In November 2024, that changed.

The U.S. District Court for the District of Columbia ruled in Kalshi v. Commodity Futures Trading Commission that the offering of these predictive markets did not constitute gambling and was a permissible action. This opened the door for Kalshi and other prediction markets to enter previously prohibited areas where they couldn’t offer markets.

That expansion has raised a real enforcement challenge for people with knowledge of certain markets, such as Santos, and his appearance at the 2026 State of the Union. Just a month ago, Kalshi called out a White House teleprompter operator who made around $10,000 on the platform by using his insider knowledge on what President Donald Trump would say during his speeches.

The same can be said for markets on whether the U.S. would invade Venezuela and arrest then-President Nicolas Maduro. A Green Beret with inside knowledge of the invasion's planning manipulated the offerings and made more than $400,000 by trading on Polymarket. Under the auspices of the CFTC, that constitutes an insider trading action, using knowledge that the general public doesn’t have.

Individual states are taking different approaches to prediction markets, and the debate rages on over whether they function more like gambling or legitimate investment platforms. In the case of George Santos, Kalshi may be looking to make an example of the former Representative and demonstrate that it can police its own marketplace despite the industry’s growing scrutiny.

Refer to Cashback Terms & Conditions for full program terms.