NEW YORK (AP) 鈥� The online prediction platform Polymarket is ending its paid relationship with as federal regulators investigate whether the former congressman illegally at President Donald Trump鈥檚 State of the Union.
Santos placed the bets on another prediction marketplace, Kalshi, after publicly announcing his intention to be at the Feb. 24 speech, according to a person familiar with the investigation. He later blamed a delayed flight for missing the event.
The suspicious trades were detected by Kalshi and referred to the Commodities Futures Trading Commission, a federal regulator that has opened a probe into Santos for possible insider trading, according to a second person familiar with the investigation.
Both spoke to The Associated Press on the condition of anonymity because they were not authorized to discuss the matter publicly.
Santos was released from federal prison last October after Trump in a fraud case.
By the time of the State of the Union address, four months later, he was already working in an influencer capacity for Polymarket, using his substantial online platform to promote the controversial brand.
In response to an inquiry from the AP, a Polymarket spokesperson said the company was in the process of terminating the contract as a result of this week鈥檚 revelations.
Santos did not respond to phone calls and text messages from the AP. He wrote on Wednesday that the allegation was 鈥減reposterous,鈥� adding that his legal team was in touch with the Justice Department.
On his podcast, 鈥淒oing Time with George Santos,鈥� the former congressman has suggested that prediction markets are 鈥渆asily manipulable,鈥� and rife with abuse.
鈥淭here鈥檚 definitely some space for speculation. There will be investigations. There will be scrutiny,鈥� he said in March. 鈥淚 just want to make sure that people understand: It is not straightforward. It is not a crime to do prediction market. I don鈥檛 think people should be taking this seriously.鈥�
The financial regulator overseeing prediction markets, meanwhile, has pledged to take the issue of insider trading 鈥渆xtremely seriously.鈥�
鈥淭here is a myth in the mainstream media and social media that insider trading law doesn鈥檛 apply in the prediction markets. That is wrong,鈥� David Miller, the director of enforcement at CFTC, said during a recent talk at New York Law School. 鈥淚nsider trading in the prediction markets 鈥� where there is misappropriated information 鈥� is precisely the kind of serious violation that we are going after vigorously.鈥�
That pledge comes as the Trump administration has behind the prediction market operators and is actively suing states that have tried to regulate them. The president鈥檚 son, Donald Trump Jr., has invested in Polymarket through his venture capital firm and is a strategic advisor for Kalshi. And the CFTC has faced allegations of maintaining a friendly posture toward the industry it is meant to regulate.
Still, some bets have not escaped federal scrutiny.
Last week, prosecutors a Google engineer who allegedly used the company鈥檚 2025 鈥淵ear in Search鈥� data, before it was published, to enter Polymarket wagers about the most searched people of last year.
A spokesperson for Polymarket said the company had worked closely with the CFTC, along with federal prosecutors, ahead of the insider trading charges.
Experts said Santos鈥檚 own alleged actions didn鈥檛 appear to meet the same threshold for insider trading, since they would not have been based on stolen information. But the bets 鈥� coupled with his public statements 鈥� may run afoul of other financial laws.
鈥淲hat he鈥檚 accused of sounds a lot more like market manipulation than insider trading,鈥� said Todd Phillips, the director at Klaros Group and a former Georgia State University professor who has written extensively about prediction market regulation.
The federal regulator could also bring a civil action against Santos, potentially resulting in a steep fine and a ban from trading, he noted. But the rapid rise of online betting platforms has meant there are few similar cases to draw from.
鈥淲e didn鈥檛 have examples of people trading on contracts involving themselves. That is new, and it allows people to change their behavior in order to profit,鈥� Phillips said. 鈥淯ntil pretty recently, the question of George Santos being at the State of the Union was not something that had ever been traded before.鈥�
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Associated Press reporter Larry Neumeister in New York contributed to this report
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