Elon Musk unlikely to win OpenAI lawsuit

In the eyes of prediction market traders, Elon Musk is hurting himself with the lawsuit against OpenAI.

The multibillion-dollar lawsuit against OpenAI was heard on April 27 in federal court in Oakland, California. The day after the lawsuit began, Kalsi traders said Musk had a 60% chance of success. By May 2, two days after Musk finished testifying, the probability had fallen to just under 34%.

Eric Zitzewitz, an economics professor at Dartmouth College, said the chances of Musk winning the case were “not very high,” but suggested the market was “reacting” to how headlines and news coverage were covering the case.

Musk’s testimony lasted three days and ended on April 30th. Musk accused OpenAI CEO Sam Altman and company president Greg Brockman of “trying to steal philanthropy.”

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

During cross-examination, Musk clashed with OpenAI’s lead lawyer, William Savitt, who claimed that Musk lied and asked deceptive questions in order to “deceive” him.

Also potentially hurting his chances in the eyes of traders is a filing this week that said Mr. Musk sent a text message to Mr. Brockman about a possible settlement days before the trial.

As of Wednesday afternoon, Musk had a 40% chance of beating OpenAI, traders said.

The deal on Musk’s case began in January and has traded in excess of $890,000, with nearly $48,500 traded in the past 24 hours.

According to the lawsuit, Musk and Altman founded OpenAI in 2015. Musk also claimed that he donated approximately $38 million to AI companies and that the money was used for commercial purposes.

OpenAI said in a post on social media platform X that Musk’s claims are “baseless.”

Kalsi has more than 150 mask-related deals on its site. Total trading activity related to this billionaire’s lawsuit against OpenAI is the third highest among all active events related to him. That’s topped by a more than $4.2 million deal for when SpaceX formally announces its initial public offering. SpaceX has been a hot topic in prediction markets, with another contract measuring when the company will launch Starship’s 12th launch worth more than $1.5 million.

SpaceX has secretly filed for an IPO with the Securities and Exchange Commission, but has not yet officially announced it. The rocket maker is expected to debut around June and could seek a valuation of $1.75 trillion, Bloomberg first reported, citing people familiar with the matter.

There is also a lot of interest in other Musk-related events, including when billionaires will reach trillionaire status and when SpaceX and Tesla might merge.

Zitzewitz said one reason for the high volume of deals focused on Musk’s OpenAI lawsuit may have to do with the event’s schedule.

“People like to trade things that are closer to resolution,” Zitsewitz said. “I’m more likely to trade in a market with a lot of people.”

OpenAI remains a nonprofit, but has taken control of the for-profit business after completing a recapitalization in October. The company launched a for-profit subsidiary in 2019, about a year after Musk stepped down as director.

Disclosure: CNBC and Kalsi have a commercial relationship that includes customer acquisition and minority ownership.