Prediction markets spark Spotify chart manipulation scandal

On June 28, trader Caleb Davies observed unusual activity on Kalshi, a U.S. prediction market that lets users wager on outcomes such as daily Spotify chart leaders. The next day, two songs saw a sharp rise in U.S. streams, prompting Davies to alert the platforms; Spotify subsequently deleted those streams. A third track, Malcolm Todd's 2024 release "Earrings," experienced a 70% jump in a single day, propelling it to the top of Spotify's U.S. chart and yielding a twentyfold return for bettors who had backed it on Kalshi.

Spotify later excised more than 500,000 bot-generated plays, but the market payouts were already finalized. The case underscores the rise of AI-produced music and large-scale streaming fraud, as illustrated by the 2024 indictment and guilty plea of producer Michael Smith for siphoning over $8 million in royalties. Experts warn that prediction markets turn chart positions into tradable assets, creating new incentives for manipulation beyond traditional royalty schemes.