Undercover Boss Stephen Cloobeck Exposed for Betting on Himself In California Governor Race At Kalshi

By jili tutorial · September 2, 2026

Stephen Cloobeck Fined for Betting on His Own Candidacy in California Governor Race

Stephen Cloobeck, the founder of Diamond Resorts and the first-ever CEO to appear twice on the reality show Undercover Boss, has been caught wagering on himself in the California gubernatorial race. The prediction market platform Kalshi announced enforcement action against Cloobeck on Monday, along with two other political candidates. Cloobeck received the stiffest penalty: a $31,770 fine and a three-year ban from the platform.

The 64-year-old businessman purchased $10,000 worth of contracts tied to his own candidacy. Although Kalshi did not explicitly confirm whether he bet on himself to win or lose, the timing suggests a speculative move just before he withdrew from the race.

Cloobeck’s Betting Activity and Campaign Withdrawal

Cloobeck launched his campaign in November 2024, raising $3.4 million in donations. One donor, Freda Payne from Encino, said, “I’m putting my dollars on someone I feel can get the job done — that is looking at what’s important to me as a citizen of California.” Cloobeck also put his own dollars into the race — literally.

According to Kalshi, there was no trading activity on Cloobeck until October 2025. At that point, his daily trading volume suddenly jumped to a few thousand dollars, mirroring the activity of other top-traded candidates. His chances of winning briefly spiked to 92% — suggesting a large bet on his victory — before dropping sharply.

A month after that spike, Cloobeck withdrew from the race and endorsed Representative Eric Swalwell. Polls at the time showed Cloobeck with less than 1% support. “I’m happy to say tonight that I’m going to merge my campaign into his and give him all the hard work that I’ve worked on,” Cloobeck said.

Scandal and Criminal Investigation Swirl Around Cloobeck and Swalwell

In April 2026, allegations of rape and other sexual misconduct forced Swalwell to suspend his campaign and resign from Congress. When the case became public, Cloobeck distanced himself from the disgraced politician. In a Fox News interview, he said, “Don’t bust the trust… you bust the trust, you don’t exist in my life.”

The FBI raided Swalwell’s home last week and stopped him at an airport, seizing his electronic devices as the investigation continues. Cloobeck himself is also under criminal investigation. He pleaded not guilty last month to charges of witness tampering. Arrested in April, he faces three counts of attempting to dissuade a witness from testifying and one count of harassment. Prosecutors allege Cloobeck threatened alleged victims of his ex-fiancée, Adva Lavie, as well as her attorney and the attorney’s family.

Lavie, an OnlyFans model accused of robbing older men she met through dating apps, has also pleaded not guilty. Cloobeck called off their wedding, scheduled for June, as details of Lavie’s alleged crimes emerged.

Kalshi Sanctions Multiple Candidates for Insider Trading

Cloobeck wasn’t alone in facing penalties. Kalshi also issued fines and bans to Laurie Buckhout and Ben Midgley, political candidates in North Carolina and Maine, respectively.

Buckhout received a fine of just over $2,500 for wagering on herself to win election to the House of Representatives. She had purchased fewer than $1,000 in contracts tied to her candidacy. Kalshi banned her from the platform for three years. “I bet on myself. Literally,” she said in a statement. “It was a dumb mistake, and as soon as I learned there was an issue, I worked to make it right. Safe to say my career as a Kalshi trader was short-lived.”

Midgley also bought fewer than $1,000 in contracts on himself in the Maine gubernatorial race. However, he received a $5,434.30 fine — nearly double Buckhout’s — and a three-year ban.

The prediction market operator also sanctioned Gabriel Perez and George Santos this week. Perez, who worked as President Donald Trump’s teleprompter, was fined $65,000 by the CFTC and banned from Kalshi for three years. He had made over $100,000 in profit from wagers on Trump’s speeches, all of which he was forced to surrender.

Santos, a former congressman, received the first-ever lifetime ban from Kalshi. He also paid the CFTC $17,500 for betting on his own attendance at the State of the Union address earlier this year. Following his settlement with the CFTC in July, Santos vowed to “fight tooth and nail” to recategorize Kalshi as a gambling platform. He was previously an ambassador for Polymarket, but the company dropped him amid the insider trading investigation.

Enforcement Signals Tougher Stance on Political Markets

Kalshi’s Head of Enforcement, Robert Denault, said the sanctions demonstrate the company’s commitment to eradicating insider trading. “It doesn’t matter who you are: violate our rules or federal law, and you will face the consequences,” Denault wrote in a post on X.

Critics argue that these cases provide more evidence that political markets should not be open to public trading. Kalshi recently suffered a legal setback: on Friday, the Ninth Circuit ruled that the company’s sports markets should be classified as sports betting and held to state gambling laws. Kalshi said it will appeal the verdict, setting the stage for a potential Supreme Court showdown.