George Santos’ latest alleged scandal highlights the insidious rise of prediction markets in politics

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 or not, 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 to X on Tuesday 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.” DOJ told MS NOW on Wednesday 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 over $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 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 seven in ten 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).”