Former Congressman George Santos Fined for Manipulative Betting Scheme

George Santos, the former US House member who was expelled from his position in 2023 following a series of fraud and corruption charges, is entangled in a new financial affair. The US Commodity Futures Trading Commission (CFTC) ordered Santos on Friday to pay a $35,000 fine for manipulative betting.

According to the regulator, earlier this year, Santos purchased "event contracts" on the popular prediction market platform "Kalshi." The bet he made was simple: would George Santos himself attend President Donald Trump's State of the Union address in Congress.

To maximize his profits, Santos posted false statements on social media intended to make other investors believe he truly intended to attend, which drove up the value of the "yes" bet. After tilting the market in his favor, Santos simply did not show up to the speech – and pocketed a windfall of about $18,000. The commission's order requires him to return the winnings in full, with the remainder of the amount ($17,000) defined as a fine.

"Did not arrive due to storms"

In an attempt to lower the flames, Santos's attorney, Joseph Murray, stated that his client agreed to a settlement and the payment of the fine only to avoid lengthy legal proceedings, but does not admit to the accusations.

"Mr. Santos did not hide his intention to attend from anyone, nor did he hide his change of plans. There was no intention to defraud anyone and there was no intention to manipulate any market," Murray claimed.

According to the defense attorney, Santos did indeed intend to attend the speech, but was forced to change his plans due to flight disruptions caused by winter weather on the East Coast.

The affair was exposed thanks to the vigilance of the "Kalshi" platform itself. Robert Dano, the company's head of enforcement, said: "Earlier this year, we flagged suspicious trading by George Santos in connection with the markets surrounding the State of the Union address. We investigated the matter and quickly referred it to the CFTC, along with the evidence required for action against him." The company also announced that it would take independent enforcement measures against Santos for violating the exchange's rules, and would work to return the funds to the affected investors.

A new bubble – with new challenges

Despite early reports in the American media that the platform had also transferred the information to the Department of Justice, the latter clarified on Friday that it is not conducting a criminal investigation against Santos regarding this case.

This affair sheds light on a more serious challenge: the massive boom in the field of election and political betting puts to the test the ability of platforms like "Kalshi" to monitor insider trading. Earlier this month, it was reported that a teleprompter operator at the White House was under investigation on suspicion of conducting insider trading through the very same platform.

The current fine adds to the list of Santos's offenses, who was expelled in 2023 from Congress by his colleagues after a serious indictment that revealed a series of blatant lies about his past and accusations of illegal use of campaign funds.