Federal regulators have launched an investigation into former Rep. George Santos for suspected illegal trading in a prediction market contract. The Commodity Futures Trading Commission and Justice Department are examining whether Santos violated market rules by betting on his own non-appearance at this year's State of Union address. Kalshi, the prediction market platform, referred the suspicious trading activity to authorities in late February.

According to sources familiar with the matter, Santos allegedly placed a bet that he wouldn't attend the president's annual speech, despite prior social media posts suggesting he would. Kalshi's market rules prohibit participants from trading on contracts they can potentially influence, creating potential legal exposure for the embattled former congressman. Santos has denied the allegations, calling them "preposterous."

The investigation adds to Santos's legal troubles and raises questions about prediction market oversight. The case could prompt closer scrutiny of how prediction markets monitor and prevent insider trading or market manipulation. Santos faces potential regulatory action if authorities determine he violated trading rules designed to ensure market integrity.