Kalshi, Polymarket traders ‘seek alpha’ in creative ways : NPR
Singer Charlie Puth performs the national anthem before this year’s Super Bowl on February 8. One prediction market trader made thousands of dollars by listening to a replay of the event and correctly guessing how long Puth’s rendition of the anthem would take.
Patrick T. Fallon/AFP via Getty Images
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Patrick T. Fallon/AFP via Getty Images
Before the Super Bowl, 21-year-old Caden Booth of Cincinnati was looking for an “alpha.”
It’s financial slang for finding a competitive advantage. With the rise of prediction markets allowing people to bet on elections, sports, musical performances and live press conferences, traders are getting more and more creative to outsmart other bettors.
In Booth’s case, that literally meant going the extra mile. Armed with a stopwatch and a recording device typically used to capture bird sounds, Booth took a flight from Ohio to the San Francisco Bay Area so he could stand outside Levi’s Stadium in Santa Clara, Calif., to time rehearsals of “The Star-Spangled Banner.”
A flood of money was flowing into prediction markets for niche questions unrelated to the game itself. One of them was: how long would it take to sing the national anthem? Traders invested almost $2 million making guesses.
“I thought I was going to show up and there would be 500 people on lawn chairs trying to make easy money,” said Booth, who shares tips on his TikTok. “But I was the only one.”
Caden Booth, a 21-year-old TikTok influencer, traveled from Ohio to the Bay Area to record the duration of the Super Bowl national anthem rehearsal, leading to a successful prediction market bet. He brought a stopwatch and a recording device usually used to capture bird sounds.
Caden Stand
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Caden stand
When he saw a formation of planes flying over the stadium, he knew singer Charlie Puth’s rehearsal was about to start, so he got his stopwatch ready. He timed the patriotic ballad at 104 seconds and placed winning bets that yielded several thousand dollars. He wouldn’t reveal exactly how much he had earned since then, he said: “I got a lot of hate for doing that,” with some calling him a cheat.
Booth says he put the haters away.
“I try to make money on prediction markets for fun the same way I try to win a video game,” he said. “Going to the stadium seemed pretty obvious. I think you’ll see more people outside the stadium next year.”
Kalshi and Polymarket saw nearly $5 billion in betting the week before the Super Bowl, inviting opportunists of all kinds.
One account on Polymarket correctly guessed 17 out of 18 bets on the halftime show, including that Ricky Martin and Cardi B would perform. Another punter on Kalshi placed $500,000 on Lady Gaga’s appearance, sparking accusations online that someone might have profited from confidential information.
Under federal derivatives laws, which apply to prediction markets in the United States, the use of manipulative or deceptive practices, such as trading in non-public information, is illegal.
Kalshi says he does not comment on investigations, but that the platform’s surveillance team continually monitors markets for suspicious transactions.
When an advantage is hidden under the hood of a website
The search for alpha, as traders in the prediction market call it, comes in all forms.
Some buy television antennas to gain a small, split-second advantage during live events where traders bet six-figure sums on what words or phrases someone says. Others are scouring social media for clues, like a trader who placed a bet on Lady Gaga’s Super Bowl performance after a muffled clip of her pregame rehearsal circulated on TikTok. Then there are traders who discover hidden information on websites for a handsome salary.
Take, for example, one of prediction trader Brandon Fean’s biggest wins. It came after digging through hip-hop artist Travis Scott’s website. Fean’s digital research led him to inspect the HTML code of Scott’s website and he spotted an error: A not-yet-public announcement regarding single sales for Scott’s song “4X4” was visible in the site’s code.
Sales figures indicated that Scott’s song would be #1 for the coming week.
“You just have to know where to look to find alpha,” said Fean, a 25-year-old public school teacher in suburban Philadelphia and a dedicated trader on Kalshi, a leading prediction market site.
Fean used this discovery to bet that Lady Gaga and Bruno Mars’ song “Die With a Smile” would not top the Billboard charts, despite the market’s odds of considering it the favorite. At the time, other traders thought Scott’s single had only a 6% chance of being the top song of the week.
But Fean’s gold nugget made him confident, and he bet $719 on Scott landing in first place. His payment: $10,438.
“This tip is difficult to implement now because most have realized that people are looking to see what new information they can find on sites,” he said. “But don’t worry, I know a lot about music, so I think I still have an advantage.”
Prediction Market Traders Put a New Spin on an Old Idea
Such tactics have a long history, said Chester Spatt, a finance professor at Carnegie Mellon University. High-frequency traders on Wall Street have used new technologies to gain a two-millionth of a second advantage over their competitors. Even further back in history, he said, in the 1800s, people peered through a telescope into the number of ships coming ashore to gain competitive information on raw material imports.
“Market participants always have an incentive to invest in information that gives them an advantage,” he said. “Is that a bad thing? I’m not sure. But if you’re betting on these prediction markets, it should make you exercise some caution before trading.”
Several prediction market traders interviewed for this story declined to reveal their best “alpha,” saying they didn’t want to reveal their secret sauce to others.
During discussions between Kalshi traders on the online Discord forum, some show their reluctance to reveal their business tricks by misusing them.
Since this is a chronic online community, this can take the form of ironic banter, whether it’s an informational advantage or quick airplay.
“The antenna is super slow,” said Discord user Oliv, whose avatar is a cartoon dog with green shorts, sarcastically. “Don’t try.”
The comment received eight laughing emoji reactions.
