Spotify removed over 500,000 fake streams from musician Malcolm Todd's song "Earrings" around July 3, dropping it from the top spot on the U.S. charts to fourth place; Spotify's investigation found that the stream manipulation was directly tied to prediction market betting activity – traders on the Kalshi platform wagered on which song would become the most-streamed on Spotify in the U.S. for June.
Spotify Investigation Results: Process of Removing 500,000 Fake Streams and Chart Correction
According to Wired, Spotify spokesperson Laura Betti stated, "All streaming services face evolving stream manipulation issues. Spotify has industry-leading measures to detect and respond to manipulated streams, and we do not pay royalties for such streams."
Spotify's investigation found evidence of artificially manipulated streams for Malcolm Todd's song "Earrings" and ultimately removed over 500,000 fake streams, causing the song to drop from No. 1 to No. 4 on the charts; Spotify also asked Kalshi and Polymarket to remove its branding and clarified that there is no partnership with either platform.
Spotify's statement did not explain the specific mechanism behind the manipulation, so Davies' theory that the manipulation was directly linked to prediction markets remains an inference, not an officially confirmed conclusion.
Kalshi's $3 Million Market: Early Settlement Controversy and 30x Potential Returns
Kalshi's music chart prediction market attracted over $3 million in trading volume, with bets placed on the most-streamed Spotify song in the U.S. for June. Before Spotify completed its investigation, Kalshi had already declared Malcolm Todd the winner and settled the market based on the manipulated chart data; Kalshi's implied probability for Todd's win was set below 3%, meaning traders who bought cheap contracts could receive roughly 30x returns.
Kalshi spokesperson Elizabeth Diana stated that it has contacted Spotify and is actively investigating, confirming that it has removed the platform's branding at Spotify's request and revised wording that implied Spotify had verified the chart results.
Kalshi's head of enforcement, Robert Denot, previously told Davies that the streaming spike could also have had non-suspicious causes and offered the theory that Kalshi traders might simply be mimicking actions by peers on Polymarket.
Responses from Three Platforms and Caleb Davies' Reporting Process
Based on public statements from each party:
Spotify: Removed over 500,000 fake streams after investigation; corrected charts; asked Kalshi and Polymarket to remove its branding and clarify no partnership; stated it will not pay royalties for fake streams.
Kalshi: Stated it is actively cooperating with the investigation; has removed Spotify branding and revised related wording; settled the market based on manipulated data before the investigation was completed, with the dispute unresolved.
Polymarket: Stated that the Malcolm Todd incident was not listed as an option on its platform; said it is investigating broader streaming manipulation but has not yet found direct manipulation; refuted Kalshi's claim that "Polymarket traders were behind the scheme."
Whistleblower Caleb Davies is a professional trader who has earned over $1.2 million cumulative profit through prediction platforms, with $414,000 in gains from Kalshi's culture markets; Davies used statistical analysis to discover anomalous streaming spikes for "Earrings," calculating the probability of it occurring randomly at approximately 1 in 7.7 quintillion (11.24 sigma), and after contacting Spotify, Kalshi, and Polymarket, prompted Spotify to launch an official investigation.
Davies said he has now stopped participating in chart trading and lost $4,500.
FAQ
How many fake streams did Spotify remove, and how did it affect the charts?
According to Spotify's statement and reports, Spotify removed over 500,000 fake streams from Malcolm Todd's song "Earrings"; after removal, the song dropped from No. 1 to No. 4 on U.S. Spotify charts. Spotify stated it will not pay royalties for fake streams.
Why did Kalshi settle before the investigation was completed, and what is the controversy?
According to reports, Kalshi settled its June Spotify most-streamed song prediction market before Spotify completed its stream manipulation investigation, declaring Malcolm Todd the winner based on the manipulated chart data; this gave traders who bought Todd contracts at low prices a potential return of around 30x. Trader Caleb Davies criticized Kalshi for not promptly responding to his warnings, resulting in his personal loss of $4,500.
What implications does this incident have for prediction market regulation?
Amanda Fischer, former chief of staff at the U.S. Securities and Exchange Commission and policy director for "Better Markets," stated, "Unless platforms clearly determine that a contract is not easily manipulated, it should not be listed at all," adding that such contracts are "obviously easy to manipulate." Reports note that multiple arrests related to suspected insider trading on Polymarket have occurred this year, and both Kalshi and Polymarket have stated they are investigating broader manipulation issues; specific regulatory responses should be based on official announcements.
