Spotify Kalshi Polymarket scandal intensifies as the music streaming platform requests logo removal. According to a Bloomberg report, Spotify has reached out to Kalshi and Polymarket, asking them to remove its logo and clarify that neither has a partnership with it.
This comes after the company identified manipulation of music rankings tied to prediction markets.
Why the Spotify Kalshi Polymarket scandal matters
Spotify identified and removed over 500,000 artificial streams. Specifically, these had made Malcolm Todd’s song “Earrings” one of the most popular on its charts. Kalshi notably settled a prediction market based on these artificial streams. The market in question was for the most frequently streamed Spotify song in the U.S. for last month.
Consequently, this comes amid increased scrutiny of prediction markets, with concerns of market manipulation and insider trading. As previously reported, Polymarket is facing a broad CFTC probe amid allegations that the platform paid online creators to create fake bets and winnings.
Meanwhile, state regulators continue to crack down on these prediction markets. They claim that the platforms operate as unlicensed sports betting platforms. At the same time, the CFTC has sued several states to defend its exclusive jurisdiction over the platforms.
Top Kalshi trader calls out Kalshi
Top Kalshi trader Caleb Davies called out the prediction market platform for settling the market based on artificial streams. He had urged them to investigate, as there were many plausible reasons Malcolm Todd’s timely surge on Spotify was not due to artificial boosting.
The trader, who estimates having made over $1 million on Kalshi, accused the prediction market platform of being well aware of the fraud taking place in the Spotify market. “Yet they continue to provide liquidity rewards, including in one of the targeted strikes. Is it so important to Kalshi to collect fees that they provide an incentive in fraudulent markets?” he said.
It is worth noting that Polymarket also offers Spotify markets. Therefore, this explains why the streaming platform reached out to both prediction markets. These markets may incentivize traders to artificially boost the streams in a bid to win their bets.
CFTC proposes new rules for prediction markets
Amid this development, the CFTC is proposing new rules for prediction markets. Specifically, these rules address concerns about insider trading and market manipulation. The regulator has already requested comment on these proposed rules, with a deadline of July 31.