Elon Musk odds low to win OpenAI suit

In the eyes of prediction markets traders, Elon Musk is hurting himself in the trial against OpenAI.

The multibillion-dollar lawsuit against OpenAI went to trial on April 27 in federal court in Oakland, Calif. The day after proceedings started, Kalshi traders were calling for a 60% likelihood Musk would win the case. Those odds dropped to just under 34% on May 2, two days after Musk concluded his testimony.

Eric Zitzewitz, professor of economics at Dartmouth College, said the odds against Musk winning are “not enormous” but suggested that the “market reacted” to how headlines and news are covering the trial.

Musk’s testimony spread over three days and wrapped up on April 30. The billionaire accused OpenAI CEO Sam Altman and the company’s president Greg Brockman of trying to “steal a charity.”

“I came up with the idea, the name, recruited the key people, taught them everything I know, provided all the initial funding,” he said.

Musk disputed with OpenAI lead counsel William Savitt of Wachtell Lipton during cross examination, claiming he lied and asked deceitful questions that were “designed to trick” Musk.

Also possibly hurting his chances in the eyes of traders is a filing revealed this week that Musk texted Brockman about a possible settlement just days before the trial.

As of Wednesday afternoon, traders say Musk’s chance to win against OpenAI is at 40%. 

Kalshi has over 150 related contracts to Musk and his companies, but the one related to his case against OpenAI ranks third for highest traded volume. The contract on Musk’s lawsuit, which opened in January, has over $890,000 in trading volume with nearly $48,500 traded in the last 24 hours.

Musk and Altman founded OpenAI in 2015. Musk also donated roughly $38 million to the AI company and claimed the amount was used for commercial purposes, according to the lawsuit.

In a post on social media platform X, OpenAI said Musk’s case was “baseless.”

Kalshi has over 150 Musk-related contracts active on the site. Total trading activity on the billionaire’s case against OpenAI is the third highest out of all the active events related to him. It’s surpassed by a contract valued at over $4.2 million that’s debating when SpaceX will officially announce an initial public offering. SpaceX is a hot topic in prediction markets with another contract gauging when the company will have the 12th launch for Starship, with more than $1.5 million changing hands.

SpaceX confidentially filed for an IPO with the Securities and Exchange Commission, but has yet to formally announce its offering. The rocket builder plans to debut around June and could seek a valuation of $1.75 trillion, Bloomberg first reported, citing people familiar with the matter. 

Other Musk-related events, like when the billionaire will reach trillionaire status or when SpaceX and Tesla could merge, have also seen high interest.

One reason why the contract focused on Musk’s OpenAI suit has high trading volume could be tied to the event’s timeline, Zitzewitz said.

“People like to trade things close to being resolved,” Zitzewitz said. “I’m more likely to trade in a market where lots of people are there.” 

OpenAI continues to be a non-profit but has controlling stake in its for-profit business after completing its recapitalization in October. It launched its for-profit subsidiary in 2019, about a year after Musk left the board.

Disclosure: CNBC and Kalshi have a commercial relationship that includes customer acquisition and a minority investment.