Ahead of the Super Bowl, 21-year-old Caden Booth of Cincinnati was looking for "alpha."
That's finance slang for finding a competitive edge. With the rise of prediction markets allowing people to bet on elections, sports, musical performances and live press conferences, traders are becoming increasingly creative to outmaneuver other bettors.
In Booth's case, it meant literally going the extra mile. Armed with a stopwatch and a recording device typically used for capturing bird sounds, Booth boarded a flight from Ohio to the San Francisco Bay Area so he could be outside of Levi's Stadium in Santa Clara, Calif. to time rehearsals of "The Star-Spangled Banner."
A gusher 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 perform the national anthem? Traders poured in nearly $2 million taking guesses.
"I thought I'd show up and there would be 500 people in lawn chairs trying to make easy money," said Booth, who shares side hustle tips on his TikTok. "But I was the only one."
When he saw a formation of jets fly over the stadium, he knew singer Charlie Puth's rehearsal was about to kick off, so he got his stopwatch ready. He clocked the patriotic ballad at 104 seconds and placed winning bets that netted many thousands of dollars. He wouldn't reveal exactly how much he made since, he said, "I've gotten a lot of hate for doing this," with some calling him a cheater.
Booth said he's brushed off the haters.
"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 felt pretty obvious. I think you'll see more people outside the stadium next year."
Kalshi and Polymarket saw nearly $5 billion in wagers the week leading up to 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 bettor on Kalshi put down $500,000 on Lady Gaga appearing, prompting accusations online that someone may have been cashing in on confidential intel.
Under federal derivatives laws, which apply to prediction markets in the U.S., using manipulative or deceptive practices, like trading on nonpublic information, is illegal.
Kalshi says it does not comment on investigations, but that the platform's surveillance team is constantly monitoring markets for suspicious trades.
When an edge is hiding under a website's hood
Alpha-seeking, as prediction market traders call it, is coming in all different forms.
Some are purchasing TV antennas to get a tiny fraction-of-a-second advantage during live events where traders wager six-figure sums on what words or phrases someone says. Others scour social media for clues, like a trader who bet on Lady Gaga performing at the Super Bowl after a muffled clip of her rehearsing before the game circulated on TikTok. Then there are traders uncovering information hiding on websites for a handsome payday.
Take, for instance, one of prediction market trader Brandon Fean's biggest wins. It came after poking around the website of hip-hop artist Travis Scott. Fean's digital sleuthing led him to inspect the HTML code of Scott's website, and he spotted a mistake: a not-yet-public announcement about single sales for Scott's song "4X4" was viewable in the site's code.
The sales figures indicated that Scott's track would be No. 1 for the upcoming week.
"You just need to know where to look to find alpha," said Fean, a 25-year-old public school teacher in the Philadelphia suburbs who is a devoted trader on Kalshi, one of the leading prediction market sites.
Fean used this his discovery to wager that Lady Gaga and Bruno Mars' song "Die With a Smile" would not be topping the Billboard charts, despite the market odds considering it the favorite. At the time, other traders thought Scott's single had only a 6% chance of being the week's top song.
But Fean's nugget of gold made him confident, and he bet $719 on Scott landing in the No. 1 spot. His payout: $10,438.
"This trick is hard to do now because most have figured out people are looking to see what unreleased info they can find on sites," he said. "But don't worry, I know a lot about music, so I think I still have an edge."
Prediction market traders put a new spin on an old idea
Tactics like these have a long history, said Chester Spatt, a finance professor at Carnegie Mellon University. High-frequency traders on Wall Street have used new technology to gain a two-millionths of a second advantage over rival traders. Even further back in history, he said, people in the 1800s would glimpse with a telescope the number of boats docking ashore to secure competitive intel about commodity imports.
"Participants in markets always have an incentive to invest on information that gives them an edge," he said. "Is that a bad thing? I'm not sure it is. But if you're betting in these prediction markets, that should give you some cautiousness before trading."
Multiple prediction market traders interviewed for this story refused to reveal their best "alpha," saying they didn't want to let others in on their secret sauce.
In chats among Kalshi traders on the online forum Discord, some show their reluctance to reveal their trading tricks by misdirecting.
Since it's a chronically online community, that can take the form of tongue-in-cheek quips, whether about an informational edge or a speedy antenna.
"Antenna is super slow," Discord user Oliv, whose avatar is a cartoon dog with green shorts, said sarcastically. "Don't try it."
The comment received eight cry-laughing emoji reactions.
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