A Malcom Todd song hit number 1 on Spotify and then was taken out of it.

A Malcom Todd song hit number 1 on Spotify and then was taken out of it because a Kalshi trader noticed the song had a 1 in 77 octillion chance of being number 1 on Spotify and called Spotify out for not properly filtering through botted streams. Let's talk about music and prediction markets, let's talk about insider trading, and let's talk about how both streaming and prediction markets can be gamed in equal proportion. First, prediction markets. We know Kalshi, we know Polymarket. Kalshi is a federally regulated prediction market, Polymarket is its main competitor. The bulk of the betting activity happens on sports and politics inside both platforms, which is about 80% of Kalshi's volume. It also does let you bet on music outcomes, like who's gonna win this Grammy or who's gonna have a number one song on Spotify this week. Though it's a much smaller sliver of their total trading volume, music is growing in popularity on the platform. All of 2025, Kalshi saw $70 million in volume of trading against music events, and just the first half of 2026, it's already hit $400 million. There's a school teacher who's an Ariana Grande super fan who's been trading on all things Ariana Grande and has made six figures so far trading on chart placements, streaming numbers, Oscar winnings. Polymarket and Kalshi have both been accused of fostering insider trading since they gained popularity. In January, there was a suspiciously well-timed bet against the capture of Venezuelan leader Nicolas Maduro. A person trading on Kalshi made $409,000. As it turns out, it was someone from within the US government. But the platforms themselves push back hard against the idea that they are able to be manipulated with insider information. Kalshi says they will intervene when someone is related to or has access to inside information, even when it's not federally regulated to do so. I think this is a double-edged sword for them. If they say this team is working really well, that means there's a lot of people trying to trade on insider information. If they say there's not a lot of people trading on insider information, I think that would lead people to believe that they're just not capturing them. Kalshi's CEO and co-founder went on a Billboard podcast a couple months ago to talk about music markets specifically because the music industry has been so susceptible to stream fraud, and the industry has a history of payola and songs on the radio and even getting songs on streaming playlists. So the question was, how does Kalshi plan to prevent some of these actors from making it so that these prediction markets could benefit them? She responded that they are putting their trust in Spotify. They think that Spotify has an incentive to be accurate about their charts because they have to pay out the royalties against the streams that they have, and that they were going to allow music trading to only really happen on events that were harder to manipulate. This brings us to what has happened this last week. A frequent Kalshi trader saw some anomalies in the behavior of who hit number 1 in the US streaming charts. This is a trader who has made six figures in the culture markets over the last couple of years. He conducts statistical analyses on Spotify's data to see where the streams are trending. He keeps track of events in culture like who's on tour, when they're releasing music. He noticed on Sunday night, out of nowhere, Malcom Todd's song called "Earrings" jumped 70%, taking the number 1 spot on the chart he was monitoring. He ran the Sunday to Monday change of the song through his models, and he said there was a 1 in 77 octillion chance of that happening randomly. When he reached out to Kalshi and said you should hold off on paying out until you've seen if this behavior is real, Kalshi said there are many plausible reasons for an event like this to occur, and they paid out the winners who had bet that Malcom Todd would have the number one song. Remember that being a 1 in 77 octillion chance. And then the next day when he reached out to Spotify and said I think these streams are fraudulent, they took 500,000 streams out of the pool. So Spotify won't pay out on the streams, but Kalshi has already paid out on the bets. In this aftermath, Spotify has requested to remove their logo and the verified by Spotify language from the Kalshi music market. Kalshi never promised that the stream events would be real, they just trusted Spotify to validate that they would be. I'm not surprised their bot detection has failed. We have heard cases of stream fraud in music streaming services, ever since streaming services were invented. In Spotify's defense, they took action as quickly as they could. But with the nature of what Kalshi offers, there's a real financial incentive to game a chart and maybe make more off of that position than you would have even made off of the streaming royalties. I also want to make clear we don't know who placed the Malcom Todd bet or who ran up the Malcom Todd streaming numbers. It might not be anyone related to him, because someone who's not related to him or his streaming numbers at all would have just as much incentive to win on that placed bet, maybe even knowing that the streams would end up being dismissed. There's a gap between the markets paying out and the streams being set. Until they get that gap closed, there's probably a real opportunity for continued manipulation.