Liars are liars; famous liars are fabulists. That’s how it goes. It’s like how all assassins always get their middle name used.
And George Santos is an all-timer. The man has concocted the following stories, all proven false: He produced Spider-Man on Broadway; was a collegiate volleyball star; worked on Wall Street for Citigroup and Goldman Sachs; is Jewish (later clarifying he was “Jew-ish”); ran a charity for dogs; his mom was in the World Trade Center on 9/11; and he was not a drag queen for at least one evening in Brazil.
So when we find out the feds are now looking at Santos for insider trading tied to a Kalshi market, I understand the first reaction.
First we stomp him, then we tattoo him, then we hang him, then we kill him, etc.
But I’m going to resist that.
Not because Santos has earned any good faith. Please. This was not clean, or normal, or something anyone should want happening on a regulated exchange. The point is that the phrase “insider trading” is doing a lot of work here, and it doesn’t hold up.
Kalshi listed a market on whether Santos would attend President Trump’s State of the Union address. Santos reportedly bet that he would not attend. Then he publicly said he would be there. The market moved toward yes. Then he did not attend, and he allegedly won from trading on it.
The feds aren’t dumb. The allegation isn’t that Santos bet on himself, it’s that he bet no, posted that he’d be in the gallery to juice the price, then no-showed and cashed out. On purpose, that’s not an edge. That’s manipulation, and they should nail him for it, if true.
Good luck proving it, though. You’d have to show the gallery post was a deliberate, market-moving lie, and not just George Santos doing what George Santos does every time he opens his mouth. He’s too much of a liar for this to be a clean fraud case. The thing that makes him look guilty is the thing that makes it impossible to pin down.
The whole thing is ugly. It’s exactly the sort of thing that should make regulators, bettors, lawmakers, and anyone with a working sense of market integrity start reaching for the fire alarm.
But “ugly” is not the same thing as “complicated,” and it’s a far leap to get to actual, honest-to-goodness “insider trading.”
Inside his head
George Santos had nonpublic information about whether George Santos planned to attend an event. How is that “insider trading”? What is the “inside” part? His own schedule? His own intention? The contents of George Santos’ head, a place no reasonable human should be forced to visit?
This is where the insider trading idea starts to crumble. As we’ve been told countless times, prediction markets are built on the idea that people with information improve prices. People with better information should be able to express it, and the rest of the market gets smarter.
Well, nobody had better information about whether George Santos would attend the State of the Union than George Santos.
The problem is not that he had an edge. The problem is that Kalshi listed a market where the person with the best possible edge was also the subject of the market, the sole source of public information about the market, and the only person whose decision would ultimately resolve the market. And let’s not forget this is a market about a person who is a known liar.
But even so … doesn’t even matter if he’s a liar or not. Even if he ended up going to the State of the Union, the problem remains.
Because this is not an insider trading issue. This is a trader-eligibility issue.
No betting on you
You can’t bet on yourself in sports, and you shouldn’t be able to trade on yourself in prediction markets. But according to the narrow definition laid out by the CFTC, you pretty much can.
Of course, Kalshi already knows this. Back in March, Kalshi rolled out a rule barring political candidates from betting on their own races. Then in April the company enforced it, hitting three congressional candidates with suspensions for wagering on their own elections. One of them, a Virginia Senate candidate, admitted he dropped $100 on himself on purpose, just to get caught and make Kalshi look bad. Worked well enough.
So clearly Kalshi can police a guy betting on himself. It just wrote the rule for candidates and elections, and Santos isn’t a candidate and this wasn’t an election. It was a market on whether a man would show up to a speech. So the rule that would have stopped this didn’t cover it, and the single most-known liar currently alive wandered right into the gap. That’s not some great market-integrity riddle. It’s a guy finding the hole in the fence. (And also, please, show me the economic utility of a market concerning if Santos — or anyone — would attend the State of the Union address, which is a column for another day.)
No one is innocent
While I’m here, we bettors don’t get to act like helpless victims. If you put American dollars on any market that basically says “George Santos will do the thing George Santos said he would do,” you were not exactly buying 30-year Treasury bonds. You’re betting a Santos prop, and the risk was disclosed. The risk was named George Santos.
So no, this is not fine, this is not OK. Santos is (allegedly) not some innocent here. Kalshi was right to freeze the account, and if Santos lied to move the market, regulators should treat that seriously.
But as an insider trading morality play where Kalshi comes off as the good guy and Santos the evil manipulator … no, I’m not buying that.
The real problem is equal parts simple and dumb.
The simple part: Kalshi built a market about a fabulist and everyone is surprised the fabulist may have putzed around in the market. That’s not proof prediction markets are evil, but it is proof that prediction markets, when they wander into human props, need the same integrity rules as sports betting. At minimum, namely, don’t let players bet on themselves.
The dumb part: If you build a George Santos market, do not act shocked when George Santos becomes the problem.
