Prediction market operator Kalshi has permanently banned former U.S. Rep. George Santos from its platform and imposed a $71,356 penalty over trading tied to his attendance at President Donald Trump’s 2026 State of the Union address.

The decision marks the first permanent ban in Kalshi’s history and adds a new dimension to a case that has already drawn scrutiny from U.S. regulators. Kalshi’s compliance department said it found reasonable cause to believe Santos engaged in illicit trading, and it also cited his lack of cooperation with the company’s investigation.

Santos, a New York Republican, was expelled from the House in December 2023 and later pleaded guilty to federal fraud charges, adding to the profile of a case that has become a test of how prediction-market operators police self-referential contracts.

How the State of the Union Bet Unfolded

Santos traded contracts tied to whether he would attend the February 24 address. Federal regulators later determined that he earned more than $17,000 from the trades after making public statements about his plans that affected market prices.

The Commodity Futures Trading Commission (CFTC), which regulates U.S. derivatives including event contracts, previously settled the case with Santos in July. Under that agreement, he surrendered his trading profits, paid a $17,500 civil penalty, and accepted a three-year ban from prediction-market trading.

Santos has denied intentionally manipulating the market. His attorney said the settlement was intended to resolve the dispute without prolonged litigation and did not constitute an admission of wrongdoing.

The controversy deepened after Santos publicly indicated he planned to attend the State of the Union, only to later say that travel problems prevented him from reaching Washington. That change in circumstances drew scrutiny because his trading positions were tied directly to his own attendance.

Prediction Markets Face Greater Scrutiny

The Santos case emerges as prediction markets face growing attention over insider trading and market manipulation. Kalshi has increasingly emphasized its surveillance and compliance systems as trading volumes expand, and event contracts tied to political outcomes have grown into one of the sector’s most actively traded categories.

The platform had previously referred Santos’s activity to federal authorities. Regulators have since taken a broader interest in whether people holding privileged information can profit from event-based contracts — a question that touches anyone whose own actions or inside knowledge directly determine a contract’s outcome.

For Kalshi, the lifetime ban signals a tougher stance toward participants who violate its rules. For Santos, it adds a platform-level restriction on top of the separate three-year federal trading ban already imposed by regulators.