Kalshi and the corruption of everything
NPR's Bobby Allyn writes:
An editor who works for YouTube's biggest creator, MrBeast, has been suspended from the prediction market platform Kalshi and reported to federal regulators for insider trading, Kalshi officials said on Wednesday. It's the first time the company has publicly revealed the results of an investigation into market manipulation on the popular app.
The MrBeast employee, whose name was not disclosed, traded around $4,000 on markets related to the streamer, the company said.
Kalshi investigators discovered that the trader had "near-perfect trading success" on bets about the YouTuber's videos with low odds, making the wagers appear suspicious, according to company officials.
Many people place wagers about MrBeast on Kalshi. People bet hundreds of thousands of dollars on what he will say in his next video. There are markets on the number of subscribers he will bring on this year. And people are betting on when exactly MrBeast will get married.
It's astonishing to me that a country that has been so tentative about legalizing online sports gambling has stumbled into permitting these so-called "prediction" markets, setting the conditions for "insider trading" to graduate from Wall Street to every conceivable corner of public life. Everything, and everybody, is now corruptible, and there's no way to stop it at this scale.
Update: Wired reports on a second incident involving Kyle Langford, a former Republican candidate for governor of California:
In the case of the political candidate, Kalshi cited a video posted online “that appeared to show him trading on his own candidacy.” Kalshi froze the candidate’s accounts and reported the activity to the Commodity Futures Trading Commission, the government agency that oversees prediction markets. It instituted a five-year ban and is fining the account a penalty 10 times the size of the initial trade, which Kalshi says it intends to donate to charity.
It's commendable, I suppose, that it was Kalshi itself that investigated the allegedly illegal trading. Though it'll be harder to stop savvier operators who don't go to the trouble of posting videos of themselves detailing their crimes.