Money Stuff: MoviePass Is Back With Betting

Back in the 2010s, we used to talk about “the MoviePass economy.” There was a company called MoviePass. Its core business model was that you paid it $9.95 per month, and in exchange you got to see as many movies as you wanted in theaters. Movie tickets, back then, usually cost $12 or so, so if you saw even one movie a month this was a good deal for you. How was MoviePass able to offer you that deal? Uh. It went and paid full price for the movie tickets and lost money on every customer. How was that sustainable? Uh! Some of the answers to that question are:

1. Lol it obviously wasn’t.
2. “Big data,” MoviePass would occasionally say, with the opposite of a straight face: When you signed up for its service, MoviePass obtained some data about you, which it could … something … something … something. MoviePass itself never bothered to complete that sentence, but in the 2010s “data is the new oil” was a thing that people (including MoviePass) sometimes said, so maybe this pitch was compelling.
3. For a while, MoviePass would improve its unit economics by secretly changing people’s passwords to lock them out of their accounts. That way, (1) they couldn’t buy any movie tickets, (2) they were still paying $9.95 per month and (3) they couldn’t cancel. This really happened! 
4. At a higher level of generality, MoviePass’s business model was sustainable, for a while, because its investors were willing to sustain it. MoviePass could lose money on every customer every month, because investors thought there was a plausible business model in there somewhere. “Eventually,” they thought, “something something something.” Eventually MoviePass would strike deals with theaters to lower its costs. Eventually it would find some ancillary revenues. Eventually the data would pay off. Something! The point, in the 2010s, was rapid user growth. If you got a lot of enthusiastic users, you could turn them into money. Network effects, winner-take-all markets, blitzscaling, something something something.

The last point, in particular, was everywhere in the 2010s; thus “the MoviePass economy,” a term I took from Kevin Roose. Venture-backed startups like Uber and WeWork really were racing to achieve scale even as they lost money; venture capitalists would give them piles of money to do that, on the theory that eventually they would be able to flip the switch to profitability. (“You always find product market fit when your product is giving away money.”) MoviePass was the eponym for this because its business model was so clearly absurd, but it was not itself a venture-backed startup; weirdly, it was a division of a public company. In hindsight, this theory was often correct; Uber is profitable now. Sometimes it was not. MoviePass shut down and liquidated in bankruptcy in January 2020.

Anyway, I have enjoyed this trip down memory lane, but now it is 2026 and the economy is different. If the 2010s were all about rapid user growth and negative gross margins, the 2020s are all about … gambling! Gambling gambling gambling! The economy, now, is memes and sports gambling. Everything is being financialized in the form of prediction markets.

This strikes me as strictly worse than the MoviePass economy of the 2010s: In the olden days, venture capitalists would compete to give you cash to subsidize your lifestyle; now, they try to get you to bet your house on the value of your house. But that’s life, man; you gotta adapt.

You know who has adapted? MoviePass. At the Ankler, Matthew Frank writes:

There are no second acts in American lives. Just don’t tell MoviePass co-founder and CEO Stacy Spikes. …

In 2021, Spikes—in a redemption arc he likens to Steve Jobs at Apple and Michael Dell at Dell—bought back the assets of his company out of bankruptcy, once valued at around $500 million, for $140,000. …

Users can now subscribe to multiple plans, including a $33-a-month tier that allows up to four movies. ...

A former Miramax VP of marketing, Spikes tells me he realized MoviePass’s future couldn’t be built on just movie tickets. ...

If MoviePass couldn’t match the big chains, then what? The answer, as I’ve seen before, came from the predictions market, or as Spikes says, “through gamification.”

The speculation market is projected to become a trillion-dollar ecosystem by the end of the decade. If MoviePass could claim even a sliver of that attention, Spikes reasoned, it could offset long-term decline in its core subscription business—a crucial hedge as the theatrical industry continues to struggle.

He’s got a movie prediction market thingy called Mogul:

Mogul is not intended to be a competitor to the Kalshis and Polymarkets of the world, which Spikes likens to the NASDAQ and New York Stock Exchange. He wants to be the specific category or volume play that feeds into those larger exchanges, rather than carrying the massive capital and licensing burden required to be a complete marketplace. The goal is also for Mogul to funnel into MoviePass and boost the subscription service. Over 630,000 users were on the waitlist to join the Mogul platform, while roughly 5,000 users played the initial private beta version that launched last May. The plan for Mogul to make money is initially through contest fees for fantasy sports-style competitions, subscription tiers that unlock reduced contest fees and access to limited-entry contests and tokenized trading transactions. Eventually, Spikes hopes studios will sponsor or partner on contests tied to film releases.

Sounds great. A strange fact is that, in the US these days, bets on virtually anything you can think of qualify as “commodity futures contracts,” with three important exceptions:

1. Securities — stocks, bonds, etc. — are subject to stricter rules, so US regulated prediction markets largely don’t offer bets like “Nvidia’s stock will go up.”
2. Onion futures are specifically forbidden.
3. Futures on “motion picture box office receipts” are also specifically forbidden, in the same sentence as the onions.

It’s probably fine, though; you can bet on Netflix streaming numbers or Rotten Tomatoes scores. It is fun to think that everything is gambling except onions and movies, but it’s probably not true.

For a while, you could sell $1 of crypto on the stock market for $2. This is called a “digital asset treasury company,” or DAT: You raise $100 million from investors in a stock offering, you use the $100 million to buy Bitcoin or Ether or whatever, and then your stock trades up to $200 million. Why did this work? There were reasons, but everyone has forgotten them by now, and it has stopped working. Strategy Inc., which pioneered the trade, now trades at 107% of its net asset value, down from more than 200% in the good old days. Many other digital asset treasury companies trade below 100%. Now you can sell $1 of crypto on the stock market for, like, $0.95. Never mind. 

You know all this, and we have talked about it a lot, but last summer people were more confused, and you really could raise a lot of money to do a digital asset treasury company trade. On July 8, this one was announced:

ReserveOne Inc. (“ReserveOne”), a newly formed, first-of-its-kind digital asset management firm inspired by the proposed U.S. Strategic Bitcoin Reserve and Digital Asset Stockpile, today announced it has entered into a definitive business combination agreement with M3-Brigade Acquisition V Corp. (NASDAQ: MBAVU, MBAV, MBAVW) (“M3-Brigade”), a special purpose acquisition company.

ReserveOne will hold and manage a diverse basket of cryptocurrencies anchored with Bitcoin, and including Ethereum, Solana, and others with the potential for yield generation through institutional staking and lending.

The transaction is expected to provide more than $1.0 billion in gross proceeds, including (i) up to approximately $297.7 million of capital held in M3-Brigade’s trust account (assuming no redemptions) and (ii) an aggregate of $750 million in committed capital from leading institutional investors pursuant to subscription agreements, consisting of $500 million of common equity and warrants, and an aggregate principal amount of $250 million in convertible notes (the “PIPE Offerings”).

Sure. Here is the investor presentation, a standard example of the type. I actually wrote about DATs the next day, but not the ReserveOne deal: The DAT deals were coming so fast and furious that I couldn’t be bothered to mention every billion-dollar DAT.

ReserveOne is not just a DAT, though; it is also a SPAC, a special-purpose acquisition company. In July 2024, M3-Brigade raised $287.5 million [1]  from public investors as a “blank check” company, with the goal of finding some company to merge with and take public. “We believe that our team’s experience with companies based in North America and in the energy sector (or related products or services) may be a source of potential business combination candidates,” M3-Brigade said at the time, but by the next year the cool move was digital asset treasuries. So it teamed up with some crypto people to launch a $1 billion pot of crypto, on the theory that a $1 billion pot of crypto should be worth $2 billion in the stock market. M3-Brigade would merge with ReserveOne, with M3-Brigade providing the public stock market listing and the billion dollars, and ReserveOne the crypto know-how.

Specifically, the $1 billion came from:

• The $287.5 million that M3-Brigade had raised in 2024 from blank-check public investors, plus interest it had earned on that money (so about $300 million), and
• About $750 million from new investors who signed on for this deal specifically: When M3-Brigade came to them to be like “hey want to do a DAT?” they were like “duh of course here’s our money.” These investors agreed to invest $750 million in common stock, warrants and convertible bonds when the ReserveOne merger closed. This is called a “private investment in public equity,” or PIPE, and the PIPE investors included “prominent strategic investors” like Blockchain.com, Galaxy Digital and Kraken, as well as some hedge funds and stuff.

There is an important difference between these two sources of capital, the public SPAC investors and the PIPE investors. The SPAC investors gave M3-Brigade their money in July 2024, and they can get it back: They bought shares at $10 per share, the $10 is sitting in a trust and earning interest, and, when the ReserveOne merger closes, the SPAC investors can choose either to keep their shares (which become shares of ReserveOne) or to get back their $10, with interest. (The merger has not closed yet, but the redemption would have been worth $10.61 as of the end of October, and it keeps earning interest so it’s worth more now.) The SPAC investors were giving M3-Brigade a “blank check,” but not quite: They handed M3-Brigade $287.5 million to buy whatever company it wanted, but they — like all SPAC investors — reserved the right to take their money back if they didn’t like the deal.

Also, the SPAC investors get to vote on the deal: M3-Brigade’s management signed a merger agreement with ReserveOne’s management, but M3-Brigade’s public shareholders get to vote on the deal before it closes. The vote is in a sense independent of the redemption right: SPAC shareholders can vote for the deal and redeem their shares. This creates somewhat weird incentives. If all of the SPAC shareholders hate the deal, they might vote against it, and then it won’t close. But it might be more rational for them all to vote for the deal, so that it does close, and then redeem their shares for $10.61. [2] (Historically, SPAC mergers often contained “minimum cash” provisions, saying that if more than X% of the SPAC shareholders redeemed, the deal was off, but as SPAC investors have gotten flightier those have gone away.)

The PIPE investors, on the other hand, haven’t given M3-Brigade any money yet: They have signed agreements to put up their money once the merger closes. And they did not give M3-Brigade a blank check: They invested specifically in this deal, they had the chance to do due diligence, and they knew exactly what they were signing up for. And so they don’t have redemption rights, or a vote: They already signed on for the ReserveOne deal, so there’s no need for them to vote on it, and no reason to let them out of the deal. They are fully committed. If the merger closes, they have to close on their funding.

Anyway, like I said, everyone signed up for this in July 2025, when “let’s put some crypto in a pot and sell shares” was a normal and lucrative thing to think. But the deal hasn’t closed yet, and that is no longer an especially lucrative thing to think. If you put $1 billion of crypto into a pot, the shares of that pot will be worth, like, $950 million. If you put $10 in this deal, you might have an immediate loss. (Not investing advice!)

And it’s worse than that. The actual math is more like this:

1. There won’t be $1 billion in the pot. All of the SPAC shareholders can redeem their shares. That means that there might be about $750 million in the pot, just the proceeds of the PIPE.
2. The managers of M3-Brigade get a cut. The sponsor of M3-Brigade is a company controlled by Chinh Chu, a former Blackstone executive. Chu’s company owns about 7.2 million shares of M3-Brigade, plus some warrants, for which it paid very little [3] : Those 7.2 million shares (about 20% of the total SPAC) are the sponsor’s fee for finding a deal. If the merger doesn’t close, those shares are worthless, but if the merger does close, they are worth tens of millions of dollars. (If the SPAC shares are worth $10, their redemption value, then the sponsor shares are worth $72 million, though that is probably an upper bound.)
3. Cantor Fitzgerald, the investment bank that underwrote the SPAC and advised on the merger, also gets a cut: It gets about $32 million of additional fees if the merger closes. [4]
4. Those cuts — more than $100 million for Chu and Cantor — dilute the value that the other shareholders get. “The other shareholders” probably means the PIPE investors, since the SPAC shareholders can just redeem and get their cash back. The PIPE investors will put in $750 million to get, you know, 85% of a pot of $750 million worth of crypto (which might be worth $700 million on the stock market). Not a great trade, or not anymore.

In July, the PIPE investors agreed to pay $10 per share of a DAT that they figured would trade at $15 or $20. But the DAT market collapsed, and that looks less attainable now.

But the merger hasn’t closed yet! They haven’t bought the crypto! Everyone could just walk away. “Never mind, putting $750 million into a pot to buy crypto is not the great trade we thought it was, forget it.” Presumably the PIPE investors would like that. The problem is that M3-Brigade’s sponsor wants the deal to close (it gets like $70 million worth of stock if it does), and Cantor Fitzgerald wants the deal to close (it gets like $30 million of fees if it does), even if the deal is not actually good for the regular investors. Meanwhile the SPAC shareholders don’t care one way or the other: Whether or not the deal closes, they can get their $10 back with interest.

But the SPAC shareholders, who don’t care, get a vote on whether the deal closes. The PIPE shareholders don’t. (The sponsor does: Its 7.2 million founder shares get to vote on the deal, and in fact it has signed a support agreement promising to vote for it, meaning that 20% of the vote is effectively locked up in favor of the deal.) And the SPAC shares trade, publicly. 

Which means that, if you are a PIPE investor who no longer likes the deal, there might be a way out:

• Buy shares of M3-Brigade in the open market. They have traded between $10.63 and $10.89, give or take, over the last month.
• Vote against the deal.
• The deal fails and you never have to put up the PIPE money.
• The SPAC winds up, and you get back $10.65 per share or so on your SPAC shares, leaving you more or less flat.

In early December, Anson Funds Management LP disclosed that it had acquired 9.9% of the SPAC shares. I do not know if Anson is a PIPE investor in ReserveOne, but it has done other DAT PIPEs, and one can make some guesses. And on Dec. 14, an advisory firm called United First Partners published a research note on this situation at M3-Brigade and a few other DAT SPACs. The analysts wrote:

Taken together, the various areas of concern speak to a broader need for transaction restructuring, better alignment of economics, as well as questions as to why these SPACs have chosen to pursue a DAT strategy, given the shift in sentiment around the structure, and a broader lack of clear rationale for the structure in the first place. ...

A core issue at hand is that in at least some instances, there is an asymmetric skew in favor of not only the SPAC sponsor, but contributors of cryptocurrencies to the public vehicle. … On top of this, the foundational premise of DATs, in that they can trade at premiums to NAV, has largely disappeared. …

Investors can also consider voting against the various deals considered, while engaging with sponsors to address concerns on structures. 

That might have alerted other PIPE investors to the possibility of buying up SPAC shares to vote down the deal.

The problem is that two can play at that game. M3-Brigade’s sponsor already owns 20% of the vote. And on Dec. 19, M3-Brigade’s bank, Cantor Fitzgerald, announced that it now owns 27.1% of the SPAC’s voting stock, and that it bought that stock specifically to influence the vote:

CF&Co. acquired the Class A Ordinary Shares in order to participate in any general meeting of the Issuer. CF&Co. currently intends to vote in favor of each of the proposals described in the Issuer's preliminary proxy statement dated December 5, 2025 (the "Preliminary Proxy"). The Issuer has granted CF&Co. a waiver of Article 49.5 of the Amended and Restated Memorandum and Articles of Association of the Issuer thereby permitting CF&Co. to redeem any and/or all Class A Ordinary Shares owned by CF&Co.

The Reporting Persons or their affiliates may purchase additional Class A Ordinary Shares or other securities of the Issuer and/or dispose of Class A Ordinary Shares or other securities of the Issuer in varying amounts and at varying times depending upon Reporting Persons' continuing assessment of pertinent factors, including, without limitation, the availability of Class A Ordinary Shares at particular price levels, the availability and nature of opportunities to dispose of Class A Ordinary Shares at particular price levels, resale restrictions applicable to the Reporting Persons, and the status of the Issuer's proposed Business Combination (including the likelihood of its approval). 

Article 49.5 says that anyone who holds more than 15% of the SPAC stock can’t redeem it for cash without M3-Brigade’s permission: If you buy 27% of the stock, vote for the deal, and try to redeem your stock for cash, the company can say no. But here the company has agreed to say yes. Cantor has no economic interest in these SPAC shares — it can vote them and then redeem them for cash — but it has bought enough votes to, probably, seal the deal. I am not sure that was what the PIPE investors were signing up for, but then again, what were they signing up for?

Sure, great:

Prediction-market gamblers are looking for President Trump’s next target.

After a mystery trader won more than $400,000 with a timely wager that Nicolás Maduro would soon be out as Venezuela’s leader, Polymarket, a popular crypto-based betting market, added fresh contracts that let users bet on whether the U.S. will soon strike Colombia or Cuba, too. 

A couple of points here. First, these markets are specifically on Polymarket, not Kalshi. The Wall Street Journal story goes on:

Regulated U.S. prediction markets face more constraints. They are overseen by the Commodity Futures Trading Commission, which can ban contracts that involve terrorism, assassination, war, gaming or illegal activities, as well as similar activities that the CFTC deems to be against the public interest.

Kalshi, a CFTC-regulated prediction market open to U.S. users, avoids listing contracts on wars. 

Above, I listed three categories of things that are not allowed on US prediction markets: stocks, onions and movie box-office receipts. Arguably the list is longer. The relevant statute allows the CFTC to block contracts involving terrorism, assassination, war or gaming, and the CFTC’s rules do categorically ban any contract that “involves, relates to, or references terrorism, assassination, war, gaming, or an activity that is unlawful under any State or Federal law.” But of course, as we discuss a lot around here, (1) most of the business of regulated prediction markets these days seems to be sports gambling, (2) that is obviously “gaming” and (3) the CFTC seems to be cool with it. Could Kalshi start listing war contracts? Who would stop them?

Second: These markets trade at fairly long odds. (This morning, I saw strikes on Colombia and Cuba by Dec. 31 at 10% and 14% probabilities, respectively; strikes by Jan. 31 were at 1% and 2%.) One interpretation of those prices might be “phew, the market thinks that Donald Trump is probably not going to bomb every country in our hemisphere.” But of course another interpretation might be “if you were advising Donald Trump, you could make a lot of money on Polymarket by persuading him to bomb Colombia in the next three weeks.” I wrote on Monday — about the mystery trader who made $400,000 on Maduro — that “it does seem bad for government officials to have incentives to do unexpected things to make themselves a quick profit.” Right?

The way that modern sportsbooks make money is with same-game parlays. Instead of betting “the Bills will beat the Jaguars,” you bet “the Bills will beat the Jaguars and Josh Allen will throw for at least two touchdowns and the total score will be at least 68 points and …,” etc. The sportsbook will give you a menu of things that might happen in the game, and you’ll pick like 10 of them and bet $20, and if they all happen you’ll win like $10,000, but if even one of them doesn’t happen you lose your $20. People seem to love these bets, and mostly lose, so they are very lucrative for the sportsbooks.

These are fundamentally correlation trades: The price of a bet like “the Bills will beat the Jaguars” depends on the probability of that happening, but the price of a bet like “the Bills will beat the Jaguars and Josh Allen will throw two touchdowns” depends on the probability of each of those things happening and their correlation. And so I have half-joked that the hot job in modern finance is being a trader on the correlation desk of a sportsbook, figuring out how to price all of these correlations. There are some intuitions here — “if a team’s star player scores a lot of points, then it will probably win and cover the spread, so there is a positive correlation between those events” — but there are some subtleties too. If the team goes up by 30 points, it might rest its star player, and he might not score many points. There are occasional stories about gamblers extracting large profits from sports books’ relatively crude correlation models. 

Here is a particularly funny one, though, from Bookies.com last month:

Boston-based DraftKings will have to pay $934,137 in winnings it sought to have voided, the Massachusetts Gaming Commission ruled by a 5-0 vote [on Dec. 18].

DraftKings told regulators that a patron had strung together a series of "Total Hit" wagers on Toronto Blue Jays player Nathan Lukes during the 2025 American League Championship Series. The patron used them to form several multi-leg parlays. His bets hit when the player finished with nine hits in the 7-game series against Seattle.

A review of the wagering data showed 27 parlays tied to the error. Of those, 24 would have resulted in full payouts totaling roughly $828,104.77 if all correlated legs were honored. Only three parlays included losing, non-correlated legs — tied to college football outcomes involving Clemson, Florida State, and Miami.

The book told regulators that a trader mistakenly allowed those "total hit" wagers to be strung together in multi-leg parlays. The "total hit" parlays of 5, 6, 7 and 8 hits in the series were combined with high-probability NFL money line wagers to boost their payout.

What was the probability that Nathan Lukes would get at least six hits in the ALCS? I don’t know, some number, let’s say 50%. What was the probability that he would get at least seven hits? Some lower number; that’s harder to do. What was the probability that, if he got at least seven hits, he would get at least six hits? Obviously 100%. DraftKings seems to have priced the “he gets five hits and six hits and seven hits and eight hits” bet at much longer odds than the simple “he gets eight hits” bet, which is a rookie mistake.

To be fair, this seems to have been an error not in its correlation models but in, uh, something else:

The issue stemmed from a misclassification that labeled Lukes as a “non-participant” rather than an active player in the sportsbook’s “Player to Record X+ Hits in Series” markets. That designation allowed a single trader to bypass built-in safeguards designed to prevent bettors from parlaying correlated outcomes from the same market.

As a result, bettors were able to combine multiple Lukes hit-threshold props into one wager — including 5+ hits (-303), 6+ hits (-105), 7+ hits (+235), and 8+ hits (+550). Functionally, the parlays created a single, inflated wager on Lukes recording eight or more hits in the series, but at dramatically enhanced odds.

If the sportsbook messes that up, can it take back the bet? DraftKings tried to void these bets, and some state gaming regulators let it, but others did not. 

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