Polymarket Ends Ties With Santos as Probe Continues

Polymarket Cuts Its Connection With Santos

Polymarket ended its partnership with George Santos this week. The move came after reports of a federal investigation. Authorities are looking into whether Santos traded on a market connected to his attendance at the State of the Union address.

The case involves a prediction contract offered by Kalshi. Users traded millions of dollars on whether certain public figures would attend the event. One day before the speech, Santos said he planned to be there.

During the address, Santos said he could not attend because of flight problems. Soon after, reports claimed Santos had placed a trade predicting he would not attend. The reports attracted attention because Santos may have known his plans before other users.

Federal Authorities Review Trading Activity

Kalshi reportedly found the trades and froze Santos’ account. The company then referred the matter to federal authorities. Investigators are now examining whether private information may have been used in the trade. Santos has not clearly said whether he had a Kalshi account. When asked about the issue, he did not give a direct answer.

The investigation adds to Santos’ long list of legal troubles. Last year, a federal judge sentenced him to prison on fraud charges. After serving several months, Santos received clemency from President Donald Trump. He later started working as an influencer for Polymarket — a role that has now ended.

Illinois Brings New Tax Challenge

Illinois approved a budget package that includes a new tax on prediction markets. The state became only the second in the country to introduce such a measure. The tax forms part of Governor JB Pritzker’s fiscal 2027 budget.

State officials expect the wider tax package to raise about $65 million. However, the exact prediction market tax rate has not been disclosed. Some industry supporters argue the tax could lead to double taxation. More than two dozen states are already considering laws related to prediction markets.

A Key Moment for the Industry

Several issues are now shaping the industry's future:

• Federal investigations into trading activity.

• New tax measures from states.

• Growing interest from lawmakers.

Nevertheless, prediction markets continue attracting users and investment. Companies want to expand, while regulators watch the market more closely.

For now, the Santos case remains the biggest story — raising fresh questions about trust, oversight, and how prediction markets should operate in the future.