It was the first free item given away in the history of Club Penguin.
If the player talks to Sensei in the Fire Dojo or Water Dojo while wearing this, he comments "Ahh, the Beta Hat. The most ancient of all hats. I rarely wear mine."
Screenhog designed the Party Hat. He picked what he thought were "tacky party colors and put them on a classic cone hat". He chose "tacky" colors when designing the item to hopefully make the item less desirable and unwanted in the future.