Kalshi bans former congressman George Santos for life after State of the Union trades

Prediction Market Sanctions Sweep Hits Politicians, Traders, and a Former Teleprompter Operator

Ecorescuezone.com – The prediction market industry is entering a period of aggressive self-enforcement, and the latest round of penalties landed on Monday with particular force. Kalshi, one of the largest platforms where users wager on real-world outcomes, announced a lifetime ban on former New York congressman George Santos alongside three-year suspensions for two other political figures who bet on their own races. The actions arrive amid a broader regulatory tug-of-war over whether these platforms should be treated as gambling venues or as financial instruments, a question now working its way through federal courts.

The Santos Ban

Kalshi determined that Santos deceived the public about his attendance at President Trump’s State of the Union address in order to profit from wagers placed on the platform. Days before the presidential remarks, Santos uploaded a video to X declaring, “I’m going to be there for the State of Union in the gallery, guys.” He subsequently told followers he was “watching SOTU from an airport tv.” What his audience did not know: he had already staked money on Kalshi that he would not appear at the event.

The platform calculated his profit at more than $17,000. Under its federal license, Kalshi carries authority to impose financial penalties, and it levied a $71,356 fine on Santos. Separately, the Commodity Futures Trading Commission — the federal body that oversees prediction markets — ordered him to disgorge those trading gains as part of a settlement finalized last month. The CFTC also assessed a $17,500 penalty against him.

Santos, who did not respond to repeated comment requests, fired back on X:

“Hey @Kalshi thanks for the lifetime ban from your gambling platform. Let’s see how much longer you guys are around for.”

Before the State of the Union wagering became public knowledge, Santos had served as a paid promoter for Polymarket, Kalshi’s principal rival. Polymarket severed its relationship with him once federal investigators opened a probe into his betting activity. Santos also made violent threats directed at a journalist after that outlet first broke the story in June.

A Pattern of Fabrication

The ban lands on a figure already well known for embellishing his biography. Santos, now 38, represented New York in the House until his expulsion from Congress in 2023. In 2024 he pleaded guilty to federal wire fraud and identity theft charges. His resulting seven-year prison sentence was commuted by President Trump last year, shortening his time behind bars considerably.

Other Candidates Sanctioned

Kalshi’s Monday announcement extended beyond Santos. Laurie Buckhout, a Republican candidate seeking a congressional seat in North Carolina, received a fine and a three-year suspension after wagering on the outcome of her own race. She addressed the episode directly:

“I bet on myself. Literally. It was a dumb mistake, and as soon as I learned there was an issue, I worked to make it right. Safe to say my career as a Kalshi trader was short-lived.”

Billionaire Stephen Cloobeck, founder of the timeshare firm Diamond Resorts, drew a parallel three-year suspension and monetary penalty. Kalshi said he had placed $10,000 on his now-abandoned campaign for governor of California. A representative for Cloobeck did not return a comment request.

Ben Midgley, former president of Planet Fitness, who sought the Maine Republican gubernatorial nomination this year and was defeated, was likewise found to have placed money on his own candidacy. He received a three-year suspension and a financial penalty. Midgley also did not respond to a comment request.

The Perez Settlement and the Insider-Information Problem

The wave of platform-level sanctions follows a separate but thematically linked settlement involving Gabriel Perez, Trump’s former teleprompter operator. Perez used advance knowledge of the president’s scripted language to place profitable bets on so-called “mention markets” on Kalshi — wagers tied to whether specific words would appear in a speech. Regulators compelled him to return more than $100,000 in trading gains and assessed an additional $65,000 fine, a figure they attributed to his full cooperation with the investigation.

Federal prosecutors have criminally charged a small number of traders suspected of exploiting insider information on prediction market sites. Most of those cases, however, originated as referrals from Kalshi and Polymarket themselves, underscoring how much the industry currently polices its own participants.

The Regulatory Fault Line

The Trump administration has erected few formal guardrails around the rapidly expanding prediction market sector. In the absence of comprehensive federal rules, platforms bear the primary burden of detecting and punishing misconduct among their users. Meanwhile, the CFTC has sued several states that attempted to classify prediction market sites as gambling operations — a legal posture the agency had never previously adopted. The fundamental question of whether these platforms constitute gambling or a species of financial investment product is now being litigated in federal courts, pitting the industry and the administration against state-level regulators seeking to impose traditional gaming oversight.

For ordinary users, the practical upshot is that the platforms are tightening their own enforcement machinery. Lifetime bans, multi-year suspensions, and disgorgement orders are becoming standard tools, and the line between a casual political wager and a sanctionable conflict of interest is drawing sharper with each new ruling.