Spotify has demanded that Kalshi remove its logo from the prediction market platform after manipulated streams influenced the settlement of a Spotify-based betting market.
Summary
- Spotify has asked Kalshi and Polymarket to remove its logo after a manipulated streaming-based prediction market.
- More than 500,000 fake Spotify streams reportedly influenced a Kalshi market tied to Malcolm Todd’s song.
- The dispute comes as the CFTC investigates Polymarket and seeks new rules for prediction markets.
According to a Bloomberg report, Spotify has asked both Kalshi and Polymarket to remove its branding from their platforms and make clear that neither company has any partnership with the music streaming service. The request follows the discovery of manipulated streaming activity that affected a prediction market tied to Spotify’s monthly U.S. music charts.
Spotify reportedly detected and removed more than 500,000 artificial streams that pushed Malcolm Todd’s song Earrings into the platform’s most-streamed tracks in the United States for the month. Kalshi had already settled a market based on which song would finish as Spotify’s most-streamed U.S. track during that period, making the manipulated streams directly relevant to the outcome.
Regulatory scrutiny has intensified around prediction markets
At the same time, prediction market operators are facing increasing attention from U.S. regulators. As crypto.news reported earlier, the Commodity Futures Trading Commission has opened an investigation into Polymarket that extends across several parts of its business, including its social media operations.
The investigation follows a Wall Street Journal report alleging that Polymarket hired dozens of mostly college-aged content creators to publish staged trading videos intended to attract new users. Bloomberg subsequently reported that the CFTC’s inquiry is not limited to those marketing practices and covers additional aspects of the platform’s operations.
Separately, state regulators have continued challenging prediction market platforms, arguing that some contracts function as unlicensed sports betting products. Meanwhile, the CFTC has filed lawsuits against several states while asserting that it has exclusive authority to regulate federally supervised prediction markets.
The regulator is also seeking public feedback on proposed rules for prediction markets that address concerns over insider trading and market manipulation. According to the CFTC, comments on the proposal will be accepted through July 31.
Kalshi settlement has drawn criticism from a top trader
Criticism of Kalshi’s handling of the Spotify market has also come from within its own trading community. Caleb Davies, a trader who estimates he has earned more than $1 million on the platform, accused Kalshi of settling the market despite repeated warnings that Malcolm Todd’s sudden rise in Spotify rankings warranted further investigation.
In a public statement, Davies alleged that Kalshi was aware of suspicious trading conditions while continuing to offer liquidity rewards tied to one of the affected contracts. He questioned whether the platform prioritized collecting trading fees over addressing potential market manipulation.
Spotify’s request also extends to Polymarket because it lists similar prediction markets based on Spotify streaming performance. According to Bloomberg, the company wants both platforms to stop displaying its logo and clarify that they are not affiliated with Spotify, as markets linked to streaming rankings could encourage participants to artificially inflate song plays in an attempt to profit from prediction contracts.
The dispute adds another layer of pressure on prediction market operators as regulators examine how these markets are run and whether incentives tied to real-world events can create opportunities for manipulation.
