Opinion column invokes George Santos ban in warning on prediction markets

A Florida State University opinion column has held up Kalshi’s lifetime ban of former Representative George Santos as a warning about insider knowledge and manipulation in prediction markets.

The column argued that markets can be gamed when a participant has personal knowledge of the event being traded. It described Santos as publicly saying he would attend President Donald Trump’s State of the Union address, while wagering on Kalshi that he would not, then failing to appear.

As we reported in August, Kalshi permanently barred Santos after finding that he had misled the public about his attendance in order to profit from the market. The platform imposed a $71,356 fine and said Santos made more than $17,000 on bets that he would not attend; the Commodity Futures Trading Commission required him to return the gains in a settlement and levied a further $17,500 penalty.

The new column called Santos’s punishment Kalshi’s first lifetime ban. Federal authorities had begun investigating the trades earlier in the year after Kalshi froze Santos’s account and referred the matter to the CFTC and Justice Department. Santos had denied knowing whether he had a Kalshi account and called the insider-trading allegation “preposterous.”

The column placed the episode in a broader critique of the sector’s marketing and user base. It said Kalshi had used advertisements featuring Timothée Chalamet, Giannis Antetokounmpo and José Mourinho, while Polymarket produced an advertisement with more than a dozen celebrities, including LeBron James, Spike Lee and Eli Manning.

It argued that prediction markets profit from younger people facing financial anxiety. Northwestern Mutual’s 2026 Planning & Progress Study found that 32% of Gen Z respondents and 24% of millennials were invested in or considering prediction markets or sports betting. Among Gen Z respondents interested in high-risk investments, including prediction markets, sports betting and crypto, 80% said they were motivated by feeling financially behind.

The opinion piece also cited a Wall Street Journal analysis finding that 67% of Polymarket profits went to 0.1% of accounts. A Kalshi spokeswoman said nearly three users lose money for every user who profits.

Trading volume on Kalshi and Polymarket reached $24.2 billion in April, according to the column. But it cautioned that the measure may be inflated by wash trading, in which traders transact with themselves to create an appearance of greater activity. A Columbia University study estimated that about a quarter of Polymarket’s historical volume was likely wash trading.

The column acknowledged that prediction markets can serve financial purposes. It cited a paper by Federal Reserve Board economists finding that Kalshi forecasts for interest rates and inflation can outperform professional forecasters.

It nevertheless contended that platforms’ claims to be financial exchanges rather than sports-gambling sites have allowed Kalshi to avoid state gaming taxes, offer access from age 18 rather than 21, and operate in states where sports betting is illegal. Sports account for roughly 80% to 90% of bets placed on Kalshi, the column said.

The Santos case is not the only alleged use of privileged knowledge on such platforms. NPR reported that a U.S. Army Special Forces soldier was charged over a Polymarket wager tied to the capture of former Venezuelan leader Nicolás Maduro, and that a Google employee was charged with using confidential company information to make more than $1 million on Polymarket search-trend bets. The soldier pleaded not guilty.