Spotify wants Kalshi to remove its logo after the streaming market scandal
Spotify demanded that Kalshi remove its logo from the betting market after a fraudulent broadcast affected the settlement of the Spotify-based betting market.
Summary
- Spotify has asked Kalshi and Polymarket to remove its logo from the streaming-based speculation market.
- More than 500,000 fake Spotify streams are reported to have impacted Kalshi’s market share of Malcolm Todd’s song.
- The dispute comes as the CFTC is investigating Polymarket and seeking new rules for futures markets.
According to a Bloomberg report, Spotify has asked Kalshi and Polymarket to remove its logo from their platforms and to clarify that neither company has a partnership with the music streaming service. The request follows the discovery of a fraudulent streaming service that affected the speculation market associated with Spotify’s monthly US music charts.
Spotify has reportedly discovered and removed more than 500,000 artificial streams that pushed Malcolm Todd’s song “Earrings” to the most streamed tracks on the platform in the United States for a month. Kalshi had adjusted the market based on which song would end up as Spotify’s most streamed song in the US at that time, making the stream adjusted directly to the result.
Regulatory scrutiny has intensified in the speculation markets
At the same time, operators of prediction markets are facing increasing attention from US regulators. As crypto.news previously reported, the Commodity Futures Trading Commission has opened an investigation into Polymarket that extends to several parts of its business, including its communications operations.
The investigation follows a report by the Wall Street Journal that Polymarket hired dozens of college-aged content creators to publish commercial videos on the platform aimed at attracting new users. Bloomberg then reported that the CFTC investigation was not limited to those marketing practices and included additional aspects of the platform’s operations.
Separately, federal regulators have continued to challenge betting market platforms, arguing that some contracts operate as unauthorized sports betting products. Meanwhile, the CFTC has filed lawsuits in several states while asserting that it has exclusive jurisdiction to regulate state-supervised speculative markets.
The regulator is also seeking public feedback on proposed rules for speculative markets that address concerns about insider trading and market manipulation. According to the CFTC, comments on the proposal will be accepted until July 31.
The Kalshi settlement has received criticism from a top trader
Criticism of Kalshi’s handling of Spotify’s market has also come from within its trading community. Caleb Davies, a trader who estimates he has earned more than $1 million on the platform, accused Kalshi of fixing the market despite repeated warnings that Malcolm Todd’s sudden ascension to Spotify warrants further investigation.
In a public statement, Davies alleged that Kalshi was aware of suspicious trading conditions while continuing to offer cash prizes associated with one of the contracts involved. He asked if the platform prioritized collecting trading fees over dealing with possible market manipulation.
Spotify’s application also extends to Polymarket because it calculates similar prediction markets based on Spotify’s streaming performance. According to Bloomberg, the company wants both platforms to stop displaying their logo and clarify that they are not affiliated with Spotify, as markets linked to streaming ratings can encourage participants to upload songs in an attempt to win speculative contracts.
The controversy adds another layer of pressure to operators of speculative markets as regulators examine how these markets are managed and whether incentives linked to real-world events could create opportunities for manipulation.
