Hollywood Quietly Banning Prediction Market Betting on Movie News, Release Dates (Exclusive)

If you’re an industry insider tempted to drop a few thousand on Kalshi predicting who will be cast as the next James Bond, think again.

The Hollywood Reporter has learned studios and production companies have been quietly issuing new guidelines to employees warning them not to engage in prediction market betting.

The warnings prohibit employees from placing bets on news events like studio earnings, casting, or even release dates. Passing information along to friends and family for them to place bets is likewise forbidden. At least one company set up a hotline where staffers can anonymously report on their fellow employees suspected of placing bets.

In a way, such updates are an expansion on longstanding rules which forbid employees from insider trading in the stock market. And many instances of prediction market profiteering using insider corporate information might violate federal law already. But with prediction markets allowing betting on everything from who will be cast as the next Wonder Woman to who will be eliminated on Dancing with the Stars, the opportunities for stealthily cashing in on insider knowledge has dramatically increased.

“You now have, essentially, an explosion in the number of employers who have to think about insider trading rules from an ethical standpoint,” says Joshua Mitts, a law professor at Columbia University who has extensively studied the legalities and trends surrounding prediction market betting. “And totally apart from the question of criminal prosecution, is just the compliance problem — educating your employees on what’s allowed.”

THR’s parent company, PMC, which also owns Dick Clark Productions and other publications such as Variety and Deadline, has likewise updated its employee handbook to ban prediction market betting in recent weeks. Among other things, the company forbids betting on “award nominations, casting decisions, production timelines and release dates.”

Some improper betting among entertainment industry insiders has already made headlines, yet the reported cases almost certainly represent just the tip of the iceberg in terms of betting behind the scenes.

In February, Kalshi disclosed that a video editor working for MrBeast’s company made $5,000 by improperly using confidential information to place bets about MrBeast content. The employee was fired and slapped with a $20,000 penalty.

While in April, a Puck column revealed someone who worked on a CBS competition show and had been making money through prediction markets.

One TV network source lamented that even though their company’s insider trading policy prohibits betting on prediction markets related to their work, the opportunity for insider bets remain rampant. For example, there are markets on what a guest will say on the Tonight Show, Saturday Night Live or other talk shows, many of which are pretaped or have dress rehearsals. Some of those shows have audiences made up of the public, and those people could bet without fear of breaking any rules.

Interestingly, one major betting site, BetOnline, temporarily pulled its page allowing people to wager on the who will be cast as the next James Bond this week after the final auditions were expected to have taken place. The reason, according to a representative: “Sharp money” suddenly came down hard in favor of Callum Turner, surging him to the top of the odds chart above longtime favorite Jack Lowden, causing internal concern that the bets might be the result of a credible leak.

In March, a study by Mitts and University of Haifa’s Moran Ofir estimated $143 million in anomalous profit being made across Polymarket during a two-year period, a figure that’s certainly ramped up dramatically since given the number of betting categories that have increased.

While some prediction market betting has been argued to have societal value — for instance, a company hedging against a costly change in government policy — Mitts notes betting on entertainment industry news isn’t really one of them.

“There’s a high degree of asymmetric information [in terms of a handful of studio insiders knowing certain upcoming announcements], and a high degree of secret information, but there’s very little social utility to having this priced correctly,” says Mitts. “With a straight face, can you really say society is making better decisions because we know the probability of who’s going to win a reality TV show, or the probability of a movie sequel?”

That said, while a couple of insiders have been caught betting on entertainment news, studios will have a very tough time stopping employees from betting. Prediction market bets can be difficult for employers to trace to individual employees, particularly on blockchain-based platforms. “With blockchain-based trading, it can be basically impossible [to catch a better] if you know how to use a mixer correctly and know how to hide your identity behind multiple layers of intermediation,” Mitts says. “So it’s quite hard for employers to suss it out through an open source investigation.”

Perhaps most famously (and worrisomely), in February six newly created Polymarket wallets earned $1.2 million by accurately betting on U.S.-Israeli strikes on Iran. Nobody has been caught.

Over the summer the Commodity Futures Trading Commission, which regulates prediction markets in the U.S., put out an open call for the industry to weigh in on what should be legal to trade on, and what shouldn’t. The CFTC declared that betting on award shows like the Oscars and Emmys should be allowed “because the award turns on evaluative judgments, not on measurable occurrences dependent on the participants’ skill or athletic ability in the activity itself, it is a contest, not gaming.”

However, it was less certain about other forms of entertainment:

“For example, should game shows, reality show competitions, pageants and similar events be considered to be ’gaming’?” the CFTC wrote. “The Commission notes that game shows are typically subject to varying standards intended to promote impartiality and fair competition. Other competitions may allow departure from such standards to enhance their entertainment value. Music and talent competitions often have similarities to elections. How, if at all, should the Commission consider these characteristics in the context of event contracts involving these activities?”

A number of comments to the CFTC complained about bets made on the last season of Survivor, where the winner appears to have been tagged early, thanks to aggressive bets on prediction markets.

In a quirk of financial history, there are only two types of prediction market bets explicitly outlawed by Congress in the Onion Futures Act of 1958: Onion futures contract, and motion picture box office receipts. In other words, it is illegal to offer bets on how much revenue a film will see at the box office, despite all the myriad other bets available that touch on the entertainment business.

If regulators decide to crack down on prediction market betting, Mitts notes that the entertainment industry might be a prime candidate for increased regulatory scrutiny given the high potential for insider trading and “low social benefit” of the bets. “If you’re going to prioritize an investigation or strict policies, it would seem that these kinds of entertainment markets might be good candidates for that.”

Alex Weprin contributed to this report.