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Former Republican Congressman George Santos is under federal investigation over trading activity tied to a Kalshi prediction market on whether he would attend President Donald Trump’s State of the Union address, in a case that could become another landmark test of market manipulation rules for event contracts.
According to NPR, which cited three people with direct knowledge of the investigation, authorities are examining whether Santos traded using information unavailable to the broader market while simultaneously influencing trader expectations through his public statements.
Trading data from Kalshi shows Santos related contracts generated unusually large volumes in the days leading up to the speech, with more than $1.1 million changing hands on the day of the event alone.
Santos denied wrongdoing, calling the allegations “preposterous” in a statement posted on social media. He said his legal team had contacted the Department of Justice and that he would cooperate with any official inquiry.
To the 100’s of reporters calling me through the night.
Stop!
My legal team and I were made aware by a report from NPR yesterday that the DOJ might be looking into me. So now my legal team is in contact with the DOJ to see what is going on.
I will comment further when…
— George Santos (@Georgesantos) June 3, 2026
The prediction market allowed users to wager on whether various public figures would appear in the House gallery during Trump’s State of the Union address.
Interest accelerated rapidly as the event approached. Total market volume climbed from $520,095 on Feb. 22 to $1.49 million the following day before surging past $7.8 million on Feb. 24, when the speech took place.
Santos emerged as one of the market’s most actively traded participants.
Data shows that Santos related contracts represented 35.16% of all trading volume on Feb. 22, while volume tied to his attendance reached $1,100,183 on the day of the speech, accounting for more than 14% of the market’s total activity.
According to NPR, investigators are examining allegations that Santos publicly encouraged traders to believe he would attend while privately holding positions that would benefit if he stayed away.
One day before the address, Santos posted a video on X saying, “I’m going to be there for the State of the Union in the gallery, guys.”
State of the union update! pic.twitter.com/y9nrYpCyU4
— George Santos (@Georgesantos) February 23, 2026
Following the post, market odds of Santos attending reportedly jumped from roughly 20 cents to 76 cents, signaling growing confidence among traders.
However, sources cited by NPR alleged Santos had already established positions betting that he would not attend. When he ultimately failed to appear, those contracts paid out, allegedly generating tens of thousands of dollars in profits.
Unlike many financial misconduct cases that begin with regulatory investigations, this one reportedly originated inside Kalshi.
People familiar with the matter told NPR that the exchange’s surveillance systems detected suspicious trading patterns, froze Santos’ account, and referred the activity to both the Commodity Futures Trading Commission (CFTC) and the Department of Justice. Those referrals reportedly led to the ongoing federal investigations.
The case follows a series of enforcement actions involving prediction markets over the past year.
Earlier this year, Kalshi sanctioned political candidates in Minnesota, Virginia, and Texas after they traded on contracts tied to their own elections. More recently, former White House teleprompter operator Gabriel Perez left government service after allegations he profited from Kalshi’s “Mentions” markets by allegedly trading on advance knowledge of President Trump’s prepared speeches.
The Santos allegations differ because investigators are reportedly examining whether a participant attempted to influence market prices through public statements before taking the opposite position.
Todd Phillips, a former Georgia State University professor who has written extensively on prediction market regulation, told the Associated Press the allegations appear to resemble market manipulation more closely than traditional insider trading.
Meanwhile, Polymarket has reportedly ended its paid relationship with Santos following the allegations. Santos had worked with the platform as an influencer after receiving clemency from President Trump last year.
The investigation also arrives during an increasingly contentious debate over who should regulate prediction markets.
This week, a bipartisan coalition of 44 state attorneys general urged the CFTC to withdraw its proposed rule governing sports related event contracts, arguing the agency lacks statutory authority over products they view as sports gambling.
At the same time, federal regulators continue defending their jurisdiction in court, while judges across multiple states have issued conflicting rulings on whether prediction markets fall under federal commodities law or state gaming regulations.
Against that backdrop, the Santos investigation carries significance beyond a single trader.
If prosecutors pursue the case, it could help establish how existing fraud and market manipulation laws apply when participants are not merely trading on private information but are also capable of influencing the outcome, or at least market expectations, through their own public conduct.
As prediction markets expand into politics, sports, and current events, the outcome may shape both platform surveillance standards and future regulatory enforcement across the industry.
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