Prediction market Kalshi is issuing its first lifetime ban, against former Rep. George Santos, for betting on his own attendance at President Trump’s State of the Union address.
The Republican ex-congressman and convicted felon made more than $17,800 after he said he would be watching the presidential speech in person, wagered against his own attendance and skipped town, according to federal regulators.
On Monday, Kalshi’s Compliance Department announced it is permanently suspending Mr. Santos, of New York, from direct or indirect access to Kalshi, including a $71,356 penalty. It’s the first time the platform has issued a lifetime ban, a Kalshi spokesperson told The Washington Times.
“Mr. Santos faces additional financial penalties and will be banned permanently from trading on Kalshi given his lack of cooperation” with the compliance department, the spokesperson said in a statement.
In response, Mr. Santos said on social media, “Hey @Kalshi thanks for the lifetime ban from your gambling platform. Let’s see how much longer you guys are around for.”
The action comes as Kalshi is cracking down on people who try to manipulate its platform, including Mr. Trump’s onetime teleprompter operator at the White House and three other former political candidates.
Lawmakers also are clamoring for a regulatory crackdown on prediction markets following a series of insider-trading scandals.
Kalshi’s rules state that a person capable of influencing the outcome of the event being wagered on cannot bet on it. Despite this, Mr. Santos placed a series of large trades on his attendance at the State of the Union, the Monday notice reads.
After placing his bets, he posted a series of public statements regarding his attendance to influence the market, including false or misleading statements, Kalshi said.
Mr. Santos said on social media that he would attend the February address, teasing his appearance and asking followers what he should wear, which drove up the odds of his attendance on the prediction marketplace.
While publicly signaling he would be in the gallery, Mr. Santos secretly placed wagers on Kalshi betting that he would not attend, federal regulators said.
When the speech began, Mr. Santos said travel issues left him stranded at an airport, causing the prediction market odds on his attendance to crash while netting him a profit on his counter-bets.
Mr. Santos’ trades had been flagged by Kalshi, which then froze his account and alerted the Department of Justice and the CFTC, both of which opened investigations.
The CFTC investigated the trades as a deceptive market manipulation scheme. Mr. Santos agreed to a $35,000 settlement, which included paying back roughly $17,000 in profits plus a fine, alongside a three-year trading ban.
On Friday, Mr. Trump’s longtime teleprompter operator, Gabriel Perez, was suspended from Kalshi over using insider information to generate over $107,500 in profits, including allegedly wagering on the State of the Union.
Kalshi said Friday it has reasonable cause to believe that Mr. Perez, a technical assistant who has been a teleprompter operator since Mr. Trump’s first term in office, bet on Kalshi’s “Mentions” market, where users can wager on whether specific words, phrases or topics are said during a public speech.
Between December and March, while working as a teleprompter operator for the White House, Mr. Perez bet on words or phrases the president may use during his speeches, given his exclusive access.
“Perez misappropriated that information—in breach of his duty of trust and confidence—to trade presidential mention market contracts,” the Commodity Futures Trading Commission said in a Friday statement.
The White House suspended the teleprompter operator in July after the prediction market platform flagged suspicious trades.
Mr. Perez is also suspended from Kalshi for three years, the prediction market said, noting that he did not admit or deny any of the platform’s findings or conclusions as part of his settlement.
Through Mr. Perez’s Friday settlement with the CFTC, he is required to pay a $65,000 civil monetary penalty and $107,539.02 in disgorgement, almost $92,000 of which will be from funds held in his Kalshi account.
Besides Mr. Santos’ banishment, Kalshi posted additional enforcement cases on Monday, all of whom cooperated with the compliance department and will be temporarily banned and owe fines.
Three people engaged in prohibited market activity after becoming candidates for public office: Laurie Buckhout, the Republican nominee for North Carolina’s 1st Congressional District; Ben Midgley, who ran for governor of Maine as a Republican; and Stephen Cloobeck, a billionaire former Democratic candidate for California governor who dropped out of the race.
Ms. Buckhout and Mr. Midgley both purchased less than $1,000 worth of contracts related to their candidacy, while Mr. Cloobeck purchased more than $10,000 worth of contracts related to his own candidacy, Kalshi said.
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