It was a busy week in court for prediction markets, from a big lawsuit from the New York attorney general to a win for Kalshi in Minnesota. Daniel O’Boyle of InGame and I break down all the important news on the legal front and beyond in this week’s Event Horizon podcast.
Show notes:
Legal stuff, from InGame:
The rest:
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The Event Horizon briefing
A quick look at what matters most in prediction markets.
📍 The Big Story
CFTC Orders George Santos to Pay $35,000 for Manipulative Trading of State-of-the-Union Event Contract (press release): The Commodity Futures Trading Commission today announced an order filing and settling charges against former Congressman George Santos for engaging in manipulative activity in an event contract — whose underlying event Santos controlled — designed to affect the price of the swap.
Under the order, Santos must disgorge the profits he made from his unlawful trading totaling $17,569.98 and pay a civil monetary penalty of $17,500. Santos agreed to a cease and desist from further violations of the Commodity Exchange Act and CFTC regulations. Under the order, a three-year trading ban is imposed on Santos.
The order finds that between February 12, 2026, and February 25, 2026, Santos traded a contract titled “Who will attend the State of the Union?” and more specifically, traded on whether he would attend the 2026 State of the Union or not.
While buying and selling positions in this market, Santos posted on social media about his plans to attend or not attend the SOTU. In his social media posts, Santos made a series of material misrepresentations and omissions about whether he would attend the SOTU. After these posts, the SOTU contract prices moved in a direction that was favorable to Santos’ positions which allowed him to make over $17,500.
Kalshi’s Head of Enforcement, Robert DeNault offered this statement: “Earlier this year, Kalshi flagged trades by George Santos in connection with markets related to the State of the Union. We investigated and quickly referred the matter to the CFTC, providing the evidence needed to secure an action against him. Kalshi will also pursue its own enforcement action for violating exchange rules, and if monetary penalties are recovered, we’ll work to reimburse affected traders.”
🔍 Some thoughts…
It’s obviously good to hear that people affected may get their money back
The ink wasn’t even dry on the settlement when Santos started coming after Kalshi on social media:
George Santos@GeorgesantosI don’t often agree with AG James or Gov Hochul but today NY got it right! @Kalshi is a bona fide gambling website.ag.ny.govGovernor Hochul and Attorney General James Announce New York Has Sued Kalshi for Running Illegal Gambling Operation7:47 PM · Jul 31, 2026 · 20K Views12 Replies · 3 Reposts · 35 LikesNot for nothing, we keep hearing the refrain that “insider trading is illegal. But this doesn’t feel like much of a penalty, so far. Clearly, Santos is not exactly quaking in his boots after the episode.
Hopefully everyone understands that “catching George Santos manipulate a market at Kalshi involving himself that he also tweeted about” was not exactly one of the great detective stories of our time. If you want all the backstory:
🔭 What To Watch For
What’s next in New York?: Stakes are high in the Empire State, where Kalshi faces an attorney general who wants the prediction market to stop serving the state, and pay a lot of money. If you’re playing catch-up:
The questions in the short term are 1. if Kalshi can find some way to stop this from moving forward, and 2. if NY can stop Kalshi from serving the state. Stay tuned.
CFTC Chairman Michael Selig is not a fan:
Mike Selig@ChairmanSeligRather than seek reasoned answers from the courts, Letitia James and New York seek to force an unprecedented sudden shutdown of prediction markets nationwide. The @CFTC has already sued to stop this and will continue to defend its jurisdiction.1:55 PM · Jul 31, 2026 · 59.1K Views21 Replies · 22 Reposts · 270 LikesHere’s a statement from Bill Miller, president and CEO of the American Gaming Association:
“A massive, bipartisan coalition of attorneys general across America have made clear sports betting on so-called ‘prediction markets’ like Kalshi is illegal. We applaud the State of New York for taking this important and necessary action today to uphold the rule of law, protect consumers, and defend the nearly 70,000 New York jobs supported by the legal gaming industry. It is estimated that the “prediction market” evasions of state and tribal law have siphoned more than $1.2 billion in gaming tax revenue from critical community initiatives across America.”
Finally, a really good post on LinkedIn from attorney Peter Hammon on all of this (posted here with his permission): I’ve seen a lot of nonsense on this site and Twitter about the Kalshi vs. New York lawsuit and (potential) fines.
1st, if your attorney or regulatory advisor didn’t prepare you to stomach that a handful of states would win their initial cases against prediction markets, then you should find new help. I say that as someone who wants PMs to stick around!
2nd, New York was always going to come out guns blazing, mostly to protect the sanctity of the online sports betting licensing/bidding process there. Unlike most states, NY held a competitive bidding process for a closed market of online sports betting licenses. Ultimately, this netted out at 9 winning bidders each paying a $25m license fee and 51% of revenues to the state. “Closed” market is the key phrase because these companies agreed to pay an exorbitant fee structure for a legal oligopoly that no longer exists. Certainly, the bidders didn’t envision competing with Kalshi Polymarket Coinbase Robinhood et al when running the numbers.
3rd, a reasonable critique of New York doesn’t require hyperbole about the state being bought and paid for by gambling companies. That’s obviously dumb when you remember it’s NEW YORK and the offended party is the capital markets industry. A far more nuanced critique would be…why isn’t New York also publicly penalizing its current licensees (like DraftKings Inc. FanDuel Fanatics) for their prediction market activity in other jurisdictions?
🔥 Hot Market
One of the most-watched markets of the election cycle will be whether Democrats can flip a Senate seat in Texas blue. Prediction markets and polls both show a tight race between Ken Paxton and James Talarico:
📝 New Event Contracts
Self-certifications recently listed with the Commodity Futures Trading Commission:
Rothera (Robinhood/Susquehanna joint venture) listed several NBA futures
Kalshi filed for contracts about FIFA:
Underdog filed win probability markets:
Gemini posted several new sports markets:
💬 Quote Of The Day
📊 Volume Tracking For Saturday, Aug. 1
Kalshi volume: $1.38 billion
Sports + parlays: 85.2% of volume
Crypto markets: 13.8% of volume
Trend line from Ticker Tracker:
News roundup
Everything else important that happened in or was written about prediction markets:
🚨 Important stuff
SetterVC ranks Polymarket, Kalshi, in top 10 of late-stage pre-IPO unicorns: Ranking here.
⚖️ Legal and regulatory news
Betting on Classified Maduro Raid Not a Crime, US Soldier Argues (Bloomberg): “The US Army soldier charged with making winning Polymarket predictions based on classified information about the raid to capture then-Venezuelan President Nicolás Maduro asked a judge to throw out the case, saying the alleged bets aren’t a crime.”
“Lawyers for Gannon Ken Van Dyke, a special forces soldier who prosecutors said was involved in the planning and execution of the raid, called the prosecution ‘overzealous,’ and said the government’s case was based on untested legal theories.”
🔍 For what is/was a pretty major story even outside of prediction markets, it feels like everyone has kind of moved on from this. Maybe if we get more into the details of what happened, that could change.
Federal fight over betting markets puts Minnesota in Trump’s crosshairs (Star Tribune): “But it’s unclear whether the rest of Minnesota will ever see any restrictions. In U.S. District Court Judge Katherine Menendez’s ruling granting the pause on enforcement, she said the state is free to apply existing Minnesota gambling laws. That could trigger another lawsuit. The CFTC has dragged other states into court in recent months for doing so.”
Senate Indian Affairs Committee to Examine Prediction Markets and Tribal Implications (Holland & Knight): “For Tribal governments, the issue extends far beyond emerging financial products. Many Tribal leaders and gaming organizations have argued that sports prediction markets function as a form of sports wagering that bypasses the Indian Gaming Regulatory Act, Tribal-state gaming compacts and established Tribal regulatory systems.”
📣 Industry news
📖 Everything else you should know/read
Kalshi to allow bets on JFK flight cancellations, report says (Fox News): “Former New Hampshire Gov. Chris Sununu joins ‘Fox News Live’ to discuss rising travel delays, airport cancellations and Kalshi reportedly allowing bets to be placed on cancellations at John F. Kennedy International Airport.”
“That’s insane,” Sununu said about trading on flight cancellations.
Could Prediction Markets Replace Election Polling? (Tufts Now): “Q: Do you think prediction markets could make polls obsolete? A: I don’t think they are going to remove the use of polling at all. These markets are probably informed by polls more than anything else. I see them as downstream from polling.”
🤔 Amen. For all of the hype of PMs being better than polls, data from polls is still a major input into a lot of election markets!
Sex rumors, screaming in the office and fights over Trump Jr.’s affection: Inside the vicious battle between Polymarket and Kalshi (NY Post): “The bitter feud between the bosses of Polymarket and Kalshi has been even more vicious and petty than previously known – from battling over the affections of Donald Trump Jr. to the spreading of unsubstantiated, sex-drenched gossip, The Post has learned.”
An update from Sportico’s Dan Bernstein:
Looking at just the odds isn’t enough. How traders gain an edge on prediction markets (CNBC): “CNBC spoke to several active traders on prediction market exchanges about how they gain an edge. From using AI bots to purchasing an antenna, traders rely on tools and peculiar methods to compete against others, and it’s enough motivation for some to trade on the platforms full-time.”
