Prediction Markets' Insider Trading Crackdown Spreads Past George Santos to a Google Engineer and a Former White House Aide

Since Kalshi handed George Santos its first-ever lifetime ban on August 28 over his State of the Union bets, the prediction-market industry's insider-trading problem has stopped looking like a one-off scandal involving a disgraced ex-congressman.

Two more cases have surfaced. A Google engineer is accused of insider trading on Polymarket, according to Wired, which reported the engineer's defense is that he was "just gambling." Separately, a former White House teleprompter operator has been ordered to pay $172,000 in a related insider-trading case, according to the Epoch Times. That report says the ex-staffer, identified as Perez, had advance access to presidential speeches before they were delivered and misappropriated that information.

The Santos Fallout Keeps Growing

The Santos ban itself is old news at this point, but the enforcement wave around it keeps producing new names. Kalshi's August 31 announcement, covered by CBS News and WFTV, also disclosed three-year trading bans against failed gubernatorial candidates in California and Maine, plus a $2,589 fine and three-year ban against North Carolina congressional candidate Laurie Buckhout, who called betting on her own campaign "a dumb mistake."

Santos, for his part, hasn't backed down. He called Kalshi "an unserious company" on X and mocked the platform's staying power, according to CBS News. His $71,356 penalty and lifetime ban followed a separate $35,000 settlement with the Commodity Futures Trading Commission in July, after regulators said he made more than $17,500 trading on whether he'd attend the 2026 State of the Union while publicly claiming he would show up, then didn't.

A Structural Contradiction, Not Just Bad Actors

The Atlantic argues these cases aren't isolated bad apples but evidence of a fundamental contradiction in how Kalshi and Polymarket position themselves. Kalshi CEO Tarek Mansour has said he doesn't "really know what this has to do with gambling." Polymarket CEO Shayne Coplan described his platform last year as "the most accurate thing we have as mankind right now," and argued that letting people trade on inside information actually "creates this financial incentive for people to go and divulge the information to the market" — which, in theory, makes the forecast more accurate.

That logic runs headlong into basic market-integrity rules. If insider trading is good for accuracy, banning it protects fairness but weakens the pitch that these are oracles of truth. If insider trading is bad, the platforms have to actually police it. This means building enforcement infrastructure that starts to look a lot like a regulated exchange, or a casino with compliance officers. Trading volume gives the stakes: Kalshi has topped $200 billion and Polymarket has topped $100 billion in trades this year, according to the Atlantic's reporting.

The Fair Pushback

There's a genuine, non-cynical argument on the other side of these penalties. Santos and Buckhout's defenders would say betting on your own future personal conduct — showing up to a speech, winning your own election — isn't the same as classic insider trading, which involves trading on material nonpublic information about a company or a third party. Santos made this point himself on his podcast in March: "I guess people lost money. Some people made unexpected money. That's to show you how fragile these markets are." It's a fair question whether regulators are stretching a securities-law concept built for corporate insiders onto ordinary people betting on themselves.

Kalshi's head of enforcement, Robert DeNault, rejected that framing in an interview with CBS News, saying the company has a compliance team "to catch bad actors, punish them, and deter other people from doing it again," and that this kind of manipulation "is not new," even if prediction markets are. The distinction Kalshi draws is that Santos didn't just bet on his own plans. He made public statements designed to move the contract price in his favor before reversing course, which the CFTC characterized as market manipulation, not just a personal wager.

The Legal Backdrop Hasn't Settled

All of this is unfolding against an unresolved legal fight over what these contracts even are. The Ninth Circuit ruled Friday, August 28, that Nevada can enforce its gambling laws against Kalshi's sports contracts, rejecting the company's argument that federal commodities law preempts state gambling regulation. This conflicts with an earlier Third Circuit decision favoring Kalshi in New Jersey, according to the Daily Wire. Judge Ryan Nelson wrote for the panel that "the CFTC is not a national gambling regulator" and that "no one suggested it was until over a decade after the law was passed." Kalshi spokeswoman Dani Lever said the company intends to keep fighting and still reads the ruling as preserving federal protection for its exchange status.

That circuit split raises the real possibility the Supreme Court eventually decides whether contracts like these are financial instruments under federal jurisdiction or state-regulated wagers. Meanwhile, the Google engineer's Polymarket case and the Perez teleprompter matter remain open, with no criminal charges disclosed in either so far. Whether the CFTC or another agency pursues formal action against either individual, and whether Polymarket follows Kalshi's lead with its own public enforcement disclosures, remains to be seen.