On Tuesday, reports published that George Santos, the disgraced former Republican representative of New York, is under federal investigation for betting against his own attendance at President Donald Trump’s State of the Union address earlier this year. Santos, who posted a video on social media discussing his plan to attend the speech, ultimately didn’t show up — but he allegedly cashed in when the odds of his attendance rose to nearly 75% on the prediction market platform Kalshi.
Kalshi reported the suspicious trade to the Commodity Futures Trading Commission, which forwarded the matter to the Justice Department, NPR reported. Santos played coy about whether he had a Kalshi account, according to NPR. “I’m not saying yes, I’m not saying no,” he said.
Santos did not respond to MS NOW’s request for comment, but in a post Tuesday to X, he said, “my legal team is in contact with the DOJ to see what is going on,” adding, “The bases [sic] of the accusation is preposterous” and “I look forward to supplying any information asked of me to any agency that inquires.” The DOJ told MS NOW on Wednesday that it is not investigating Santos.
Santos’ alleged self-dealing is just the latest in a string of high-profile scandals involving public servants who have traded on nonpublic and even highly classified information to line their own pockets. A soldier involved in the January seizure of former Venezuelan President Nicolás Maduro is accused by the Justice Department of netting a $400,000 profit after allegedly betting on the event ahead of time with prediction broker Polymarket. Other linked accounts with suspected ties to the military have cleared more than $2.4 million in winning long-shot bets on the Iran war, a 98% win rate.
“Luck alone cannot explain those numbers,” Nicolas Vaiman, the CEO of data analytics from Bubblemaps, told CBS News last month.
Even aspiring elected officials can’t resist the pull of prediction markets. Kalshi fined and suspended three congressional candidates in April for betting on their own elections. One of the candidates, Democratic Minnesota state Sen. Matt Klein, made his wager while co-sponsoring a bill that would ban using prediction markets to bet on the outcome of an election (he later apologized). Pete Rose, eat your heart out.
The fast rise and light regulation around prediction markets have created a playground for unethical government officials who crave the rush of high-stakes gambling with the added benefit of knowing the outcome beforehand. That’s typically understood to be fraud. In Trump’s Washington, it appears to be just another way to turn information into a second income.
The fast rise and light regulation around prediction markets have created a playground for unethical government officials.
The problem has gotten so bad that lawmakers in both chambers of Congress are proposing federal legislation to ban government employees from trading on the information entrusted to them as public servants. Some lawmakers aren’t waiting on their colleagues to pass a law; in May, Rep. Kristen McDonald Rivet, D-Mich., banned herself and her staff from using prediction markets. Rep. Seth Moulton, D-Mass., and others have done the same, but in the absence of tough federal legislation, lawmakers are fighting a losing battle against the awesome power of greed.
Honest politicians are right to worry about the corrosive effect prediction markets have on public trust and good government. A Navigator Research poll published in April found that while more than 7 in 10 Americans have heard “a little” or “nothing” about major prediction market companies, they support “Congress banning anyone with insider information — so elected officials, their staff and others with insider information — from using prediction markets to bet on government actions like war, laws and other actions by net 49 points (67% support – 18% oppose).”
The bipartisan coalition of lawmakers eager to prevent the spread of public corruption will find no ally in Trump. The president attacked state efforts to regulate prediction markets in a post to Truth Social this week, arguing that the only way for America to “remain at the top” of the booming prediction market industry is to block safeguards that would prevent insider trading and open-air public corruption.
“Under my leadership, we are setting ‘rules of the road’ that are the Gold Standard for the States,” Trump wrote. “We cannot have SCUM like Chris Christie, Letitia James, Tim Walz, and JB Pritzker setting the rules!”
Trump’s seemingly sudden interest in prediction markets is all the more notable given his family’s growing links to the industry. The venture capital firm 1789 Capital, where the president’s son Donald Trump Jr. serves as a partner, is a major investor in Polymarket. Trump Jr. also serves as a strategic adviser to Kalshi.
Since the president’s eldest son took senior roles at both firms, the CFTC’s new chairman, Michael Selig, has noticeably relaxed the commission’s previously aggressive oversight of prediction markets. The shift at CFTC proved to be another winning bet for Trump Jr., even if it leaves regular Americans assuming the worst about what their public officials are getting up to in secret. The White House said in a statement to The New York Times that while the president “seeks a strong and profitable stock market for everyone,” he believes “members of Congress and other government officials should be prohibited from using nonpublic information for financial benefit.” A spokesperson for Trump Jr. told the Times that he had only offered advice and financial backing for Kalshi and Polymarket and made no trades on their platforms, nor did he lobby on their behalf to the federal government.
The president’s unapologetic self-dealing is a major driver of the public rot we’re witnessing throughout the government, but he alone can’t be blamed for officials’ sticky fingers. The temptation to profit from insider information has always existed; prediction markets have just made it easier than ever by lowering corruption’s barrier to entry. A lawmaker can learn a financially lucrative secret during a hearing, download a prediction market app, create an anonymous account and place a bet within minutes. It’s corruption at supercharged broadband speeds.
For every inept Kalshi or Polymarket trader who gets caught, there are likely dozens of government officials who are better at covering their tracks. A compromised CFTC and a few isolated congressional office policies won’t address the public corruption crisis that prediction markets have delivered to our national doorstep. Only a sweeping law can do that. If Congress wants to protect what little public trust remains in our government, they will need to move fast.
Max Burns is a Democratic strategist and founder of Third Degree Strategies. Find him on X, @themaxburns.