Los Angeles bar group uses $60,000 Kalshi trade to hedge Dodgers revenue

A Los Angeles hospitality group traded $60,000 on Kalshi to hedge against the Dodgers missing the World Series, according to Fortune’s Oct. 19 report. The position returned almost twice the original stake after the Dodgers lost to the Milwaukee Brewers in the National League Championship Series.

Dodgers hedge offsets lost bar revenue

Kalshi told Fortune that the unnamed group operates 25 bars, including several near Dodger Stadium. The trade helped offset revenue the business would have received from additional Dodgers playoff games.

The transaction illustrates a business use for prediction markets beyond wagering on a preferred team: tying a position to an outcome that could hurt revenue, so a payout can cushion the loss.

Columbia University law professor Joshua Mitts described the Dodgers hedge as “functionally quite similar to a form of bespoke insurance,” Fortune reported.

The report did not identify the hospitality group or specify the market symbols and contract terms used. It described the return as almost twice the original bet, rather than providing an exact payout or net profit.

Weather markets offer another business hedge

Fortune also reported that a Los Angeles ice cream shop used bets on the arrival of cold fronts to hedge against slow demand. The shop was not named.

Mitts said these hedges work best for yes-or-no outcomes, such as weather events or games. Dartmouth College’s Eric Zitzewitz said repeated sporting events provide data that can help markets produce well-calibrated prices, while noting that trading fees add to the cost of a hedge.

The insurance comparison describes the economic purpose of these trades; it does not establish that an event contract is an insurance policy or that its payout fully covers a business’s losses.

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Source: As reported by Fortune.

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