Spotify's streaming fraud problem is so significant that Kalshi traders are benefiting from manipulated charts.

      Spotify has eliminated over 500,000 streams from Malcolm Todd’s track “Earrings” due to suspected bot activity, as reported by the Financial Times.

      The song, which was initially released in 2024, unexpectedly climbed to the top of Spotify’s daily U.S. chart following a significant increase in streams. Concurrently, bettors on the prediction market Kalshi were wagering on whether Todd would achieve a No. 1 position on Spotify USA before the end of June. There are no indications that Todd or his team participated in any efforts to inflate the song’s streaming numbers. Kalshi has announced that it is looking into the issue.

      A chart movement resulted in a payout

      The report indicates that U.S. streams of “Earrings” surged nearly 70% between Sunday and Monday. Spotify subsequently retracted streams it determined were generated by bots, which repeatedly play tracks to give the illusion of popularity.

      Following this adjustment, “Earrings” dropped to fourth place on the U.S. chart for Monday. Nonetheless, Kalshi had already distributed payouts to traders who bet on Todd achieving the No. 1 position prior to the end of June. As per the Financial Times, those who wagered on this unlikely outcome could have realized returns of about 20 times their original bets.

      Can Spotify maintain accurate charts?

      For years, Spotify has confronted the issue of fake streams, often relating to royalty payments and chart integrity. Now, it must address an additional concern as these charts are also utilized for settling prediction-market wagers.

      Spotify's spam issue extends beyond music streams alone. Earlier this year, the platform removed tens of thousands of fraudulent podcast episodes associated with illegal online pharmacies and scam websites. Additionally, music streaming fraud has evolved into more sophisticated schemes. Prosecutors previously charged Michael Smith in a case involving AI-assisted streaming fraud that utilized bots and billions of fraudulent plays. He later accepted a guilty plea.

      Spotify claims to possess “best-in-class” systems for detecting and mitigating fake streams and does not compensate royalties for manipulated plays. Kalshi mentioned that it is in communication with Spotify and conducting an investigation, though the two companies are not entirely in agreement. Spotify's legal team reportedly requested Kalshi to eliminate its logo from the app and website, and Kalshi has subsequently included a disclaimer indicating that its products are not endorsed by Spotify.