The federal investigation into former Congressman George Santos for alleged insider trading on prediction markets has brought new attention to insider-trading risks in prediction markets.
The probe centres on Santos's bets regarding his own attendance at the State of the Union address. It follows a string of similar cases that have made it harder for the sector to argue it operates outside standard insider trading rules.
To the 100’s of reporters calling me through the night.
— George Santos (@Georgesantos) June 3, 2026
Stop!
My legal team and I were made aware by a report from NPR yesterday that the DOJ might be looking into me. So now my legal team is in contact with the DOJ to see what is going on.
I will comment further when…
More Than One Investigation
The Santos case is not isolated. A US Army soldier was recently indicted for netting $400,000 on Polymarket using classified intelligence about Venezuela. A Google software engineer was charged by the CFTC for making $1.2 million trading on search result data ahead of publication.
The common thread is material non-public information — the same legal standard applied in securities enforcement for decades.
Kalshi has responded by moving from platform operator to active enforcer. The exchange has publicly fined and suspended three political candidates for betting on their own races, a step that aligns with the platform’s broader effort to demonstrate regulatory compliance..
The platform also updated its integrity rules to define prohibited conduct explicitly, including trading on illegal tips and trading by anyone with influence over an event outcome. Polymarket has made similar updates.
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- Inside the Prediction Markets: DraftKings Bets on the CFTC Model
- CFTC Pushes Prediction Markets Into Formal Federal Rulemaking
Wall Street Takes Notice
The Santos investigation arrives as financial institutions are already examining how prediction markets fit within existing compliance frameworks.
JPMorgan Chase has reportedly reviewed guidance for employees on the use of platforms such as Kalshi and Polymarket, focusing on how established rules around insider trading and confidential information apply to event-based contracts.
Regulators have also become more explicit about how they view the sector. CFTC Chairman Michael Selig recently said the agency would not tolerate “fraud, manipulation, or insider trading, regardless of the technology or platform.”
The Santos investigation adds to a growing list of insider-trading and conflict-of-interest cases tied to prediction markets. Together with recent actions involving political candidates, government employees, and corporate insiders, it suggests regulators are increasingly applying traditional market-integrity standards to event-based contracts
