Former Rep. George Santos (R-N.Y.) has agreed to pay $35,000 to settle with the Commodity Futures Trading Commission over wagers he placed on prediction market platform Kalshi earlier this year, the agency announced Friday.
Santos placed bets on whether he would attend President Trump's State of the Union address in February while also posting about his attendance plans on social media, according to the CFTC settlement order. The former congressman, who was expelled from the House in December 2023 following a series of ethics scandals, did not admit wrongdoing as part of the settlement.
What the Right Is Saying
Republican defenders of Santos and some free-market advocates have characterized the CFTC action as overreach. "This is a $35,000 civil settlement for someone who was no longer in office," said a spokesperson for Americans for Prosperity, a conservative advocacy group that has supported prediction market innovation. "Kalshi operates legally under CFTC supervision, and these markets serve legitimate economic functions."
Texas Rep. Troy Nehls, who served with Santos in the House Republican conference, offered measured comments: "George made plenty of mistakes, but I think we need to be careful about how far we extend regulatory authority into prediction markets. These are tools that millions of Americans use." The American Legislative Exchange Council released a statement arguing that political prediction markets "provide valuable forecasting information" and should not face excessive federal scrutiny.
What the Left Is Saying
Democrats and government ethics advocates have pointed to the settlement as another example of Santos's pattern of legal and regulatory troubles. Rep. Ritchie Torres (D-N.Y.), who represents parts of Santos's former district, said the former congressman's conduct "demonstrates a disregard for the rules that govern public officials." The Democratic Congressional Campaign Committee declined to comment specifically on the settlement but noted Santos's history of federal charges related to wire fraud and campaign finance violations.
Good Government Group, an ethics watchdog organization, called for increased scrutiny of prediction markets involving elected officials. "When sitting members of Congress are wagering on their own legislative activities, it raises serious questions about conflicts of interest," said Sarah Longwell, the group's executive director, in a statement to The Hill.
What the Numbers Show
The CFTC settlement represents Santos's second major civil enforcement action in recent months. In May 2024, he pleaded guilty to wire fraud and aggravated identity theft charges brought by the Justice Department, agreeing to cooperate with investigators in exchange for a recommended sentence of five to seven years. He was expelled from the House in December 2023 by a vote of 214-0, with 105 Republicans joining Democrats.
KalshiEX LLC received CFTC approval in 2022 to offer event contracts tied to economic indicators and later political outcomes. The platform has processed more than $500 million in trading volume since its launch. The CFTC's enforcement action against Santos is the agency's first involving bets placed by a former federal official on their own legislative activities.
Santos represented New York's 3rd congressional district for one term, winning his 2022 race by approximately 8,000 votes. His campaign was financed largely through small-dollar donations, though federal prosecutors alleged he embezzled funds from his campaign and lied to donors about his background.
The Bottom Line
The settlement highlights the CFTC's growing focus on enforcement actions involving prediction markets as they expand into political forecasting. While Santos is no longer in office, the case establishes precedent for how the agency views bets placed by current or former government officials on their own activities.
Santos faces an August sentencing date on his criminal charges. His attorneys have indicated he will seek leniency based on cooperation provided to federal investigators examining other matters. The CFTC settlement does not affect his criminal proceedings.
Prediction market operators and financial technology companies are watching the case closely for signals about regulatory boundaries, particularly as platforms like Kalshi continue to offer contracts tied to congressional activity and election outcomes.