Warning: this story contains spoilers from the Season 3 finale of “Euphoria,” now streaming on HBO.
Weeks before HBO’s “Euphoria” series finale aired on May 31, fans had some theories about how it all might come to a close.
Online prediction markets Polymarket and Kalshi went a step further and put real money on the line, allowing users to wager whether the show’s main character, Zendaya’s Rue Bennett, would live or die. Just days before the final episode, odds she would die doubled.When the predictions turned out to be right − Rue fatally overdosed − winners took home some cash. (It might not have been their first haul; Polymarket also correctly predicted the fate of Nate Jacobs, played by Jacob Elordi; Nate indeed died a painful death in the May 23 episode.)There was roughly $500,000 to $540,000 riding on the “Euphoria” finale. (To quote Maddy, Alexa Demie’s character on the show, “You better be joking.”) And it all highlighted a growing concern in the industry: Is it fair? Is it okay to “financialize” entertainment? Is this going to spoil shows for fans?
How prediction markets are impacting Hollywood
Prediction markets allow users to wager on everything from elections and NBA championships to the outcomes of scripted TV shows and reality competitions.
While they have existed for decades, Kalshi and Polymarket have sparked a surge in interest over the past two years, especially as betting climbed to $40 million on the Papal election or $132 million on the latest U.S. presidential election.
Under U.S. law, prediction markets are not considered gambling services. The markets themselves do not set betting odds, and instead offer “event contracts” on the outcomes of real-world events. They are treated as derivatives markets, meaning they don’t have to follow SEC guidelines.
Making a wager on the end of “Euphoria” or “Survivor” may seem harmless compared to, say, betting on whether the U.S. will invade Cuba. But experts say that aside from spoiling a finale for fans, such bets could erode the very business of Hollywood.
“A lot of these programs and books sell on the suspense. If the suspense is gone, they’re going to lose a lot of viewership and a lot of revenue,” Naveen Khanna, a finance professor and insider trading expert at Michigan State University, tells USA TODAY. “Once I know the ending of a story, I’m very unlikely to go back and watch it.”
Networks, studios and production companies could lose up to millions of dollars if consumers have less incentive to watch a show or movie after its ending is spoiled, according to Khanna. Leaking the ending of a show is also a clear-cut case of insider trading, he says.
The results of an award show or season finale are a “predetermined outcome locked in a vault somewhere,” says John Kwatakye-Atiko, president of Popular Demand Entertainment, who has represented music executives, cryptocurrency companies and, occasionally, gambling websites.
“It’s not a prediction market; it’s an information market. It completely destroys the fairness for the average retail bettor,” he says. “When someone has insider information, they’re not looking to gamble $10 away; they’re looking to gamble tens of thousands of dollars. Someone would be willing to pay anywhere between $50,000 to $150,000 for that information.”Unlike the financial sector and even sports, the entertainment business is not set up to regulate betting compliance, Kwatakye-Atiko says.
“In sports, you have massive regulatory bodies policing the integrity of the game, whereas Hollywood has zero infrastructure to police a film set for gambling,” he tells USA TODAY. “They have NDAs, but an NDA won’t stop a disgruntled production assistant, editor, or junior executive from placing an anonymous crypto bet on Polymarket because they read the script six months ago.”
The process of getting the information from set or the editing room to the betting markets has also become much faster thanks to these prediction markets, Khanna says. While disclosure agreements are in place, he says nothing prevents an insider from having someone else leak information to trade on their behalf. Meaning your show may be spoiled before you even add it to your watch list.
Reality competition shows are struggling to keep their winners secret
Before CBS’s milestone 50th season of “Survivor” even premiered on Feb. 25, prediction markets seemed to know the winner.
Kalshi predicted that one contestant had an 83% chance of winning over the other 23 contestants by Feb. 18, while Polymarket gave the player an 87% chance. Trailing far behind them were the other two finalists. When the votes were read live in Los Angeles on May 20, the prediction markets were proved right.
Longtime “Survivor” host and executive producer Jeff Probst slammed both companies for “incentivizing people to lie, cheat and steal to get ahead,” telling Variety, “It doesn’t sit well with me as a human. I get it − they built a great business. They don’t care.”
Food Network’s “Chopped Castaways” won’t air its season finale until June 30, but Polymarket already has a clear frontrunner: one chef at nearly 40%, another at over 18%, while the rest of the cast’s odds are under 3% as of June 13.
In a statement to USA TODAY on June 9, a Kalshi spokesperson said they have banned insider trading on their platform and continue to find ways to prevent spoilers on their product.
“We use sophisticated surveillance systems to detect any suspicious activity − looking not just at a trader’s household, but at everything from their social activity to their personal connections,” the statement reads. “If our system flags anything suspicious, we investigate immediately and take action.”
Polymarket declined to comment on concerns of insider trading on its platform.
The Commodity Futures Trading Commission legally regulates both prediction sites. While the federal agency issued a 267-page proposal on June 10 with new guidelines on the types of event contracts allowed, it does not contain any language barring betting on non-live TV shows.
Dustin Gouker, an executive and analyst who covers the gambling industry, says the commission is not currently in the business of cherry-picking what can and can’t be traded on prediction markets.
“They’re going to limit some things,” he adds, “but that’s going to be a pretty small list.”
What will save your favorite shows
Gouker says the solution to safeguard shows is for prediction markets to stop allowing bets on events that have already happened. “Whether there’s insider trading, it kind of is immaterial,” he says. “Clearly, the answer got out and was reflected in the market odds.”
If the odds exist on these markets, there’s nothing stopping people from sharing those spoilers on social media or media outlets from covering them, Gouker explains.
Kwatakye-Atiko thinks it would also be safe for the markets to allow bets on the business side of Hollywood, such as how well a film will perform at the box office, rather than on the movie’s plot points. But because leaking spoilers is so profitable, he imagines the practice will continue until regulators intervene.
“Someone is going to lose [or win] a lot of money, and it’s going to come out that the game was rigged, and once that happens, the feds will come in and put the hammer down on these people, and they’re going to have to get in line,” he says.
As for those trying to avoid spoilers for their favorite shows, experts recommend avoiding or muting key terms related to prediction markets, or doing so altogether, because the odds are high that if the project has already been filmed, they’re right.
‘ The preceding article may include information circulated by third parties ’
‘ Some details of this article were extracted from the following source www.usatoday.com ’
