Stephen Cloobeck was the first head of a company to appear twice in Undercover Boss. The founder of hotel group Diamond Resorts has now been exposed for wagering on himself to win the California gubernatorial race at Kalshi.
Kalshi announced enforcement action against Cloobeck on Monday, along with two other political candidates. Cloobeck faced the stiffest penalty of the three, paying a $31,770 fine. Kalshi also banned the 64-year-old businessman from using its platform for three years.
Cloobeck Bet on Himself Shortly Before Withdrawing
The prediction market platform revealed that Cloobeck wagered around $10,000 on himself to become the next governor of California. Cloobeck launched a campaign in November 2024 and raised $3.4 million in donations.
“I’m putting my dollars on someone I feel can get the job done, and that is looking at what’s important to me as a citizen of California,” said donor Freda Payne from Encino.
Cloobeck also put his dollars on himself. From analyzing Kalshi’s market, we can see he placed the bet in October 2025, a month before withdrawing his candidacy. His chances of winning briefly spiked to 92%, suggesting a big wager on him.
In November , Cloobeck withdrew his candidacy and endorsed Rep. Eric Swalwell’s run. A poll put support for Cloobeck at less than 1% shortly before his withdrawal.
“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.
Stalwell & Cloobeck Under Criminal Investigation
In April 2026, allegations of rape and other sexual misconduct led Stalwell to suspend his campaign and resign from Congress. When the case became public, Cloobeck distanced himself from the disgraced politician.
In an interview with Fox he said, ““Don’t bust the trust… you bust the trust, you don’t exist in my life.”
NEW: “Eric who?”
— Matthew Seedorff (@MattSeedorff) April 14, 2026
Fallout grows for Eric Swalwell as he faces sexual misconduct allegations, an ethics probe, and suspends his campaign.
I asked former supporter/donor Stephen Cloobeck if they’re still friends:
“Don’t bust the trust… you bust the trust, you don’t exist in my… pic.twitter.com/McWRTk4WR1
The FBI raided Stalwell’s home last week and stopped the 45-year-old at an airport, seizing his electronic devices as the investigation continues.
Cloobeck is also under a criminal investigation. He pleaded not guilty last month to charges of witness tampering. He was arrested in April and charged with three counts of attempting to dissuade a witness from testifying and one count of harassment.
Cloobeck is accused of threatening alleged victims of ex-fiancee Adva Lavie, as well as her attorney and members of his family. Lavie, an OnlyFans model, allegedly robbed older men whom she met through dating apps. She has also pleaded not guilty.
Cloobeck called off the wedding, which had been scheduled for June, as more details emerged of Lavie’s alleged crimes.
Kalshi Sanctions Several Political Candidates
In addition to Cloobeck, 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. Kalshi said she purchased fewer than $1,000 in contracts related to her own candidacy. The company also banned her from using 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 purchased fewer than $ 1,000 in contracts on himself in the Maine gubernatorial election. However, he received a $5,434.30 fine, almost double Buckhout’s. Kalshi also banned him for three years.
The prediction market operator also sanctioned Gabriel Perez and George Santos this week. Perez received a fine of $65,000 from the CFTC and a three-year ban from Kalshi for wagering on President Donald Trump’s speeches while working as his teleprompter. He made over $100,000 in profit from the wagers, which he also had to give up.
Santos, meanwhile, received the first-ever lifetime ban from Kalshi. The former Congressman also paid the CFTC $17,500 for wagering 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 previously worked as an ambassador for Polymarket, but the company dumped him amid the insider trading investigation.
Kalshi Head of Enforcement Robert Denault said the sanctions serve as evidence of the company’s determination to eradicate 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 will argue it is more evidence that political markets should not be available for public trading. Kalshi suffered a legal setback on Friday as the Ninth Circuit ruled the company’s sports markets should be classified as sports betting and held to state gambling laws. The company said it will appeal against the verdict, setting up a Supreme Court showdown.
