Kalshi has permanently blocked a user for the first time

[Davidvictorson]

Will there be anything related to Polymarket?
What do you think - will this become a widespread practice? If so, will prediction enthusiasts try to bypass them?
[/quote]
I made a related comment about this on a similar post yesterday.
The prediction market has created a new problem that the gambling industry has never seen before.
This is just one of the isolated incidences that has even been made public. There are many more that are still not yet public.
I believe that so many people will continue to find a way to manipulate their predictions for gains.
The question remains is that how many users can they block and fine?

[crwth]

It's a great move on their part, knowing people can take advantage of something they control. It is a different kind of insider trading.

It feels like they have some kind of surveillance techniques to detect these kinds of things? They probably have behavioral pattern analysis that checks how certain users act and what they bet on.

Market manipulation is serious IMO and should be dealt with.

[Patikno]

Kalshi has permanently blocked a user for the first time.

https://www.tradingview.com/news/the_block:87e69f97f094b:0-kalshi-issues-first-permanent-ban-to-former-rep-george-santos-over-state-of-the-union-trading/

He was former congressman George Santos. The platform claims that he traded in contracts for his own appearance at the president’s speech and then tried to influence their price through public statements.
Santos earned $17,839 from the transactions. Now he also faces a fine of $71,556.

Will there be anything related to Polymarket?
What do you think - will this become a widespread practice? If so, will prediction enthusiasts try to bypass them?

I think the move Kalshi made was quite prudent, especially if the case was well-substantiated and the user had committed a serious enough violation to warrant a deterrent measure. Furthermore, the impact of such strict rules could influence other markets to adopt similar policies. Actually, Polymarket already enforces strict rules as well; if I recall correctly, they once blocked a user who was a member of the military.

In my view, prediction markets are still in a developmental stage, so they need to refine their rules and policies to anticipate and address any signs of fraud or illegal activity. Ultimately, the trend is clearly moving toward very strict regulations and policies, particularly regarding insider trading.

[STT]

That guy just doesn't stop with all the schemes.  Realistically they have to block the idea of betting on Santos knowing its just too tempting to him personally to arrange bets or favorable results on himself for gains.   
   Purely for bad publicity alone I would steer clear of any involvement with someone like him or anyone similar who are basically corrupt for life by their most honest nature, you cant say its a surprise when something negative happens.  It reflects badly on the website itself.

[alegotardo]

Kalshi has permanently blocked a user for the first time.

[....]

It is a failed attempt to block people in a market that has not any regulation... this is the same that a self-exclusion from casino: it serves no purpose due to the fact that there are other ways to keep betting.
There will always be a way to get around this, and it is not difficult at all: he can bet on other sites, use a third party’s identity (of relatives or friends) or even pass a privileged information to other people and pay a "small commission".

Anyway... if there are manipulation even in the traditional stock market, which is very well regulated, then do you really believe this will be of any use for the crypto prediction market, which has practically no regulation!? That is impossible.

[danherbias07]

They are just admitting that there are flaws in their prediction market. They can ban all the popular users on their website, but they cannot stop the loopholes that are happening, which they cannot trace. Who knows how much they are making at this minute.
I think the solution is stricter account checking, but that takes away the privacy of the user. But if there's a promise of good security for the accounts received, then I think a reputable prediction market won't have a problem with it. Another solution could be erasing those lines that have a tendency of being manipulated.

[Hispo]

That guy just doesn't stop with all the schemes.  Realistically they have to block the idea of betting on Santos knowing its just too tempting to him personally to arrange bets or favorable results on himself for gains.   

I am surprised Santos is actually not in prison and away from the public, after he has pleaded guilty and got ousted from the house of representatives/congress.
He is not even supposed to be part of betting markets, in my opinion.

If there is someone who deserves to be excluded from betting market it's him.
That guys is basically a perpetual scammer, and a disgrace to the American people and American politics.

It makes me wonder whether Polymarket and other prediction market makers will follow Kalshi and exclude that charscter from ever participating on predictions.

[Peanutswar]

[...]

He was former congressman George Santos. The platform claims that he traded in contracts for his own appearance at the president’s speech and then tried to influence their price through public statements.
Santos earned $17,839 from the transactions. Now he also faces a fine of $71,556.

Will there be anything related to Polymarket?
What do you think - will this become a widespread practice? If so, will prediction enthusiasts try to bypass them?

So basically, they are trying to create a manipulation right here we know that there is an edge if you have an insider calls about the recent happenings and like what the congressman did there they have an information about the possible statements and outcome and most probably they have seen already this in the polymarket and grab the opportunity to make an earning but imagine its more 4x expensive for your fine than your wins. Its ideal if politics is or any government related persons will get out of touch in these gambling and market.

[jcojci]

Lets hope Polymarket doing the same as Kalshi. They started clean people who trying to do that. But this practice will not stop even they start using tight regulation on their platform such as blocking the person. But who knows this could be the way reducing the bad practice so far.

But those people might change their way and will be very careful to continue the practice so Kalshi and Polymarket will not easy to track them. I just wonder if this is really for clean up the mess from prediction market or is it just for gaining more attention from public that they want to do something to change.

[Dump3er]

Will there be anything related to Polymarket?
What do you think - will this become a widespread practice? If so, will prediction enthusiasts try to bypass them?

This has not changed the fact that insider betting can not be eliminated from the prediction markets. Only few are known, there are many that are not known to the public.

I do not have any findings or statistical report about it, but when something is occuring and reported, there are many more than are not known.

People will also get smart to avoid detection.

And one of the biggest issues is - where do they draw the line?

They can perhaps, with luck, identify closer family members, but what if an old school friend bets on a prediction market that's related to a politician who has all the means to influence it? Maybe the pool of people is not unlimited, but on a platform where all sorts of markets can be opened, it is impossible to investigate all of them and see whether there are connections between the bettor and a person that can impact that market because of a public or corporate role.

And I agree that as soon as they catch some, everyone else knows they have to improve to hide in the future. And sympathy or proximity are rather strong pros for anyone to take part in a prediction market especially when they have personal elements like relating to one specific individual.

I think this block that OP mentioned is supposed to be symbolic, as if platforms try to cope with the problem but in reality they can't.

[red4slash]

In a notice of settlement of disciplinary action filed on Monday, Kalshi said Santos violated its rules by trading a bet on whether he would attend the State of the Union. He was then ordered to pay a fine of just over $71,000.

paying a fine will not stop him from doing it again.

True, cases like this keep repeating when there is an opportunity and the problem that happens now is that the opportunity always comes even though there are regulations on prediction markets, especially for those who have the latest information that has not been spread but in the end the same incident always happens again and again so the fine does not guarantee he does not do it again in the future.

But on the one hand there is no more severe sanctions than fines (for now) against those who are proven to be in violation because it is difficult to make this a serious crime so they will only get sanctions like this every time they are proven.
There needs to be full self-awareness of the players to make this wiser but because of greed often things that are actually prohibited are always used as loopholes and are considered not a problem if they only do occasionally.

[Darker45]

This is good news, but this also goes to show how certain events in the prediction markets could easily be manipulated. This case is quite easy to resolve because he's got an account himself, placed the bets himself, and made statements that are public. What if he made clandestine arrangements that would also sway the price and the result to his favor? Would Kalshi have gotten any clue?

Also, since Kalshi implements mandatory KYC, blocking certain users that are betting on events they could manipulate is easy. However, does that strictly block them from manipulating the market, influencing the price, and making easy money from it? No.

[Dogedegen]

Will there be anything related to Polymarket?
What do you think - will this become a widespread practice? If so, will prediction enthusiasts try to bypass them?

I don't see how such a block would work, if the markets are decentralized they can some in all kinds of ways to bypass the restrictions. VPNs and new wallets would be one, another would be simply to tell their partner or friends to make some kind of bet in their name and then they can proceed to do the same manipulative thing that they have done here. The only real way to tackle this kind of issue is by using legals means and heavy punishments including jail time. Anything less than that will only work temporarily, so this is mostly a well intended measure but in the end it does not really do anything.

And one of the biggest issues is - where do they draw the line?

They can perhaps, with luck, identify closer family members, but what if an old school friend bets on a prediction market that's related to a politician who has all the means to influence it? Maybe the pool of people is not unlimited, but on a platform where all sorts of markets can be opened, it is impossible to investigate all of them and see whether there are connections between the bettor and a person that can impact that market because of a public or corporate role.

And I agree that as soon as they catch some, everyone else knows they have to improve to hide in the future. And sympathy or proximity are rather strong pros for anyone to take part in a prediction market especially when they have personal elements like relating to one specific individual.

I think this block that OP mentioned is supposed to be symbolic, as if platforms try to cope with the problem but in reality they can't.

There is no place to draw the line because the bans happen after something wrong was done, and not before. So if we started to look for people to ban in advance there would be no end to it, and it is impossible to identify all contacts of a person who could be involved with this. This person that did this could have all kinds of partners and friends which are not known to be in a relationship to them. So the only thing that the platform can do is ban after it has already happened, but this is where the law should get involved. Even more if the same person has been caught doing it again, the punishment should increase more and more and also for those that choose to help him do it.

[TedMosby]

That makes sense. This is the kind of insider trading and manipulation that I don't want to exist in prediction markets. If insider trading is done by a party that only has access to the information earlier than others, then I think it's okay, because prediction markets are unlike other centralized betting platforms where the odds are predetermined by the bookmaker. Insider trading is somehow needed to make the platform better align with reality.

However, if the insider trading is done by a party that has a direct relation to the event/market, like they have access to change the results, then I am not okay with that. And these people should be banned permanently from the prediction market. But like others here said, it's difficult to ban this kind of people. They probably can't bet on their activities anymore, but they can still do it indirectly, like asking people close to them to bet based on their information and what they are going to do.

The solution could be a wider ban. There should be moderation to filter and ban all markets that have a chance of involving those parties.

[Outhue]

Insider's will never be stopped from taking their advantages from prediction markets, if they can't do it themselves due to some problems like this they will find someone who they can trust that can do it for them, it's this very simple, I don't know what Kalshi is doing by making this move, it's not even a inch effective in any way, to me it's far from a good news, maybe to those who wanted the likes of Kalshi to do something about insiders.

[NotATether]

The "user" was a serial insider trader congressguy who was convicted and sentenced to jail in the US. It's a bit of a stretch to say that Kalshi banned him, because he should have been federally prohibited from trading any stocks and other financial instruments in the first place.

[FinneysTrueVision]

It’s no surprise that George Santos is involved in yet another ethics scandal. After Trump commuted his sentence and let him get out of prison, he must feel like he can get away with anything. Unfortunately for him, Kalshi requires everyone to do KYC. I know people can try to use fake information, but Santos is a very dumb criminal and probably didn’t try to hide what he was doing.

There was also Trump’s teleprompter guy who was accused of something similar. Cheating and manipulation are going to be a big problem for prediction markets as you would expect whenever there is money at stake. You will see a lot more fines and bans as these platforms become more popular.

As far as Polymarket, they aren’t regulated in most countries and don’t have mandatory KYC if you’re outside of the U.S. This might end up attracting more cheaters to their prediction market. They could try to do something to make it harder to cheat, but they don’t have to go to the same lengths as traditional casinos because they always make money from fees.

[swogerino]

If they just block the user, will that really stop him from taking advantage of prediction markets? There is still Polymarket and other platforms, and he does not even need to place the bets himself. He could simply give the insider information to someone else and let them bet for him. As long as he still has access to that kind of information, there are still ways for him to make money from the system.

So if this is his punishment, for me it does not look strong enough. A platform ban only removes one account, it does not really remove the advantage he has from the insider information. And, this one...

In a notice of settlement of disciplinary action filed on Monday, Kalshi said Santos violated its rules by trading a bet on whether he would attend the State of the Union. He was then ordered to pay a fine of just over $71,000.

paying a fine will not stop him from doing it again.

Exactly. He was not the most brilliant intelligent person to bet on himself in such platforms but if he is blocked here he already has learned the lesson which is to never again bet by himself. He of course has his inner circle which he can use now to place bets and make even bigger profits on Polymarket which is not as strict as Kalshi at least so far. It is good that some platform took action against manipulation yet it cannot be completely offset as many other platforms and people will keep doing that.

[hedgeh0g]

I don’t even know how prediction markets can combat this, because the usual KYC is no longer as effective as it used to be. We’ve all seen news about how all the leading exchanges were easily fooled by AI document generators, and on prediction platforms, insiders are even more interested in going through such a procedure.
After all, it’s easy for them to make money if they have information that no one else knows. I think some kind of regulation or region‑based restrictions are needed. I don't know. This is a question that is simply too complex in terms of its scale. And there are many pitfalls.

[cryptomaniac_xxx]

I don’t even know how prediction markets can combat this, because the usual KYC is no longer as effective as it used to be. We’ve all seen news about how all the leading exchanges were easily fooled by AI document generators, and on prediction platforms, insiders are even more interested in going through such a procedure.
After all, it’s easy for them to make money if they have information that no one else knows. I think some kind of regulation or region‑based restrictions are needed. I don't know. This is a question that is simply too complex in terms of its scale. And there are many pitfalls.

That's why there are certain nations that really wanted to ban this prediction markets as it's hard to stop. It's growing, billions maybe is flowing in the market and there are no signs of stopping. And with that well oiled machine that they have, and with the Trump investing on Polymarket, then this market will just go huge in the next couple of years.

So it's hard to combat it, and we really don't know what kind of measure to put up. As you have said, even KYC has been bypassed with the used of AI technology. Or even if that is not the case, they could have send a fake KYC from someone and make it legit.