Prediction market operator Kalshi disclosed it has referred evidence of insider trading by former Congressman George Santos to the Commodity Futures Trading Commission (CFTC), marking a significant enforcement test for an industry now drawing increased interest from the Trump family.
Kalshi spokesperson Laura Frank confirmed that the company's surveillance systems flagged trades by Santos connected to State of the Union address markets earlier this year. The matter was investigated internally before being handed off to federal authorities. Kalshi is also pursuing its own action against Santos for violating exchange rules and stated that any monetary penalties recovered will be used to reimburse affected traders.
“Being federally regulated means that Kalshi bans market manipulation, insider trading, has limits on the types of markets it lists, and publicly reports all trades to the CFTC daily,” Frank said. The company maintains that its custom-built trade surveillance mirrors systems used in equities markets.
White House Proximity and Tradable Information
The Santos case is not isolated. Federal officials are separately examining trading activity by Gabriel Perez, a former White House teleprompter operator. Investigators are probing whether Perez used advanced knowledge of presidential remarks to place wagers on Kalshi markets tied to specific speech content. The inquiry underscores the structural risk created when market participants possess information that directly prices political outcomes.
A study by Columbia Law professor Joshua Mitts and University of Haifa professor Moran Ofir found bets on prediction markets achieved a nearly 70% win rate, estimating $143 million in profit for the traders—well beyond statistical probability. Some academic figures, such as George Mason University professor Robin Hanson, argue that insider information serves the market's purpose of informing decisions. Kalshi has taken the opposite approach, focusing on referrals and enforcement.
Trump Family Expands Into the Sector
The enforcement actions occur as the president's family deepens its commercial ties to the prediction market industry. Trump Media & Technology Group is developing TruthPredict, a platform allowing users to trade contracts on major events. The company simultaneously launched Truth API, a paid service delivering machine-readable Truth Social posts—including those of President Trump—to Wall Street clients ahead of the general public.
Donald Trump Jr. serves as a paid strategic advisor to Kalshi, while his venture firm 1789 Capital has invested in competitor Polymarket, where he also sits on the advisory board. The overlap between executive branch proximity and prediction market equity creates an unprecedented financial ecosystem around the presidency. As the industry fights for legitimacy, the ability to police privileged information access will determine whether these platforms survive federal scrutiny or become a vehicle for monetizing political access.