Santos ordered to pay $35K for Kalshi trades on himself

WASHINGTON — Former Long Island Rep. George Santos has agreed to pay $35,000 to resolve a federal investigation into allegations he improperly placed self-rigged wagers about himself on the online prediction marketplace Kalshi.

At issue is the bet Santos placed on Kalshi that he would not attend President Donald Trump’s State of the Union address in February, while publicly posting on the social media site X his intention to be there, Newsday previously reported.

The settlement of the federal probe was announced through a statement Friday from his lawyer, confirmed separately by the Commodity Futures Trading Commission. The agency regulates the country's derivatives markets, including futures, options and swaps — and now predictive markets like Kalshi and rival Polymarket.

"Mr. Santos has agreed to resolve the CFTC’s inquiry and put this matter behind him," his lawyer, Joseph Murray, said in the statement. He said Santos had no intent to deceive anyone.

The CFTC said Santos must disgorge the profits he made, totaling $17,569.98, and pay a civil penalty of $17,500.

The agency also said Santos has agreed to "cease and desist from further violations of the Commodity Exchange Act and CFTC regulations." The order also imposed a three-year trading ban on Santos, it said.

The settlement order confirms that between Feb. 12 and Feb. 25, Santos traded a contract titled "Who will attend the State of the Union?" and traded on whether he, himself, would be there.

"Santos made a series of material misrepresentations and omissions about whether he would attend the SOTU," the CFTC says. "After these posts, the SOTU contract prices moved in a direction that was favorable to Santos’ positions which allowed him to make over $17,500."

Murray, Santos' lawyer, said this was the first time Santos had traded on a prediction market, and that he actually did book travel to attend the State of the Union. But Murray said winter weather along the East Coast led Santos to decide it wasn't safe to travel.

He added, "this was a civil, administrative resolution; there are no criminal charges and no finding or admission of liability."

A source previously told Newsday that Kalshi later closed Santos' account with the prediction site and referred the matter to federal agencies. 

Nejat Seyhun, a finance professor at the University of Michigan, has told Newsday the issues of the matter touched on unsettled legal territory.

"This is probably not insider trading but could be (market) manipulation, which is also illegal," he suggested in June. The relevant hook, Seyhun said, is language that prohibits the use of "any manipulative, deceptive, or fraudulent scheme in connection with swaps or commodity transactions."

In his statement Friday, Murray said, "There was absolutely no intent to deceive any person nor attempt to manipulate any market."

Santos, who represented a congressional district that includes parts of Nassau, Suffolk and Queens counties, became the sixth member of the U.S. House ever expelled in December 2023. That came after a Committee on Ethics report detailing misuse of campaign funds and lying on financial filings.

But federal prosecutors by then had already indicted Santos earlier that year on multiple charges of wire fraud, money laundering, theft of public funds, making false statements to Congress, identity theft and unauthorized use of donor credit cards. He initially pleaded not guilty, but ultimately admitted the charges in August 2024.

In April of last year, Santos was sentenced to 7 years in prison. Months later, Trump commuted his sentence. In doing so, he described Santos on the social media site Truth Social as "somewhat of a rogue," but one Trump said had "the courage" to always vote Republican.