Pre-Taped Reality TV Markets Raise Fresh Insider Trading Concerns
Credit: Kalshi
Insider trading questions are once again circling prediction markets, this time centered on pre-taped reality shows such as Survivor.
A recent New York Times report highlights how platforms like Kalshi and Polymarket are offering contracts on pre-taped shows such as Survivor, The Bachelorette, and Top Chef, raising concerns that individuals with prior knowledge of outcomes could exploit the system.
‘Predicting the Past’ Creates Structural Integrity Risk
Most reality TV shows are pre-taped before they air. That means the outcomes are already known by contestants and people connected to the shows.
The Times points to a Survivor episode in which one contestant held a 98% probability of elimination despite 21 possible outcomes. That contestant was eliminated.
A similar pattern emerged in the following episode. One contestant held a 98% probability and eventually left the show.
Such pricing accuracy suggests markets may be incorporating nonpublic information rather than purely aggregating opinion.
For the upcoming episode on March 25, one contestant currently sits at 90%, down from 99%, while another sits at 72%, down from around 90%.
In the season winner market, which trades over $10 million in volume, one contestant currently sits at 89%. The second closest is 7%, while the third is 3%. There are nearly 20 contestants left.
The Times points out that there have been leaks before, and now there’s a market-driven financial incentive to leak outcomes.
A similar incident surrounded the popular poker show National Heads-Up Poker Championship. The winner was spoiled on a Polymarket months before the show even began airing.
Continuous Insider Trading Concerns
The issue is not isolated to reality television.
Recently, reports surfaced suggesting possible insider trading related to the Super Bowl, where family members of celebrities, such as Amazon founder Jeff Bezos, allegedly spread information on college campuses about whether they would attend the game.
There were also questions of insider trading related to U.S. military action in Iran and Venezuela, where newly established accounts placed large bets hours before the announcements.
These incidents have led to multiple bills introduced at the federal and state levels to restrict certain types of event contracts or to prohibit prediction markets altogether.
Leading platforms like Kalshi and Polymarket have moved to address some of these concerns.
Last month, Kalshi announced that it had closed two insider trading cases and referred them to the Commodity Futures Trading Commission. Meanwhile, Polymarket announced a partnership with Palantir and TWG AI to create an AI-powered surveillance platform to detect insider trading.
Enforcement Gap Remains a Core Issue
Despite mounting concerns, enforcement remains limited.
The CFTC oversees derivatives trading, but has largely stayed away from policing prediction markets. The agency might also not have the capability to do so, as noted by Columbia Law professor John C. Coffee.
Recently, the CFTC acknowledged the need for rules governing prediction markets. Earlier this month, the agency and the SEC announced a “Joint Harmonization Initiative.” It stated that the agency would be working together to hammer out policies for prediction markets, crypto, and other novel products. The CFTC has also sought public feedback on creating the rules.
For now, until regulators implement new rules and prediction markets self-police, questions about insider trading may persist.
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