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Western Grazers bought a prediction market contract offering up to $500,000 in protection against California failing to fix wage rules affecting its goat herders, according to Business Insurance. Castle Technologies created the hedge and used Kalshi to list the market.
California wage issue threatened grazing costs
Western Grazers uses targeted grazing to reduce wildfire risk. According to Business Insurance, a recent legislative interpretation eliminated California’s wage framework for goat herders.
The report described a risk that the company’s labor costs could quadruple if the framework was not re-examined by August, jeopardizing the business. A Castle statement identified the operation as including owner Tim Arrowsmith, eight herders and 4,000 goats.
Contract tied payment to legislative action
Western Grazers paid a fixed premium for a contract designed to pay up to $500,000 if California did not fix the wage rules by the end of September. Under the reported terms, restoring the framework or passing a similar measure would cause the contract to expire without a payout.
Castle worked with trading firm Susquehanna to define objective settlement criteria and structure the hedge. Susquehanna priced the contract and provided liquidity for the trade.
Castle says its services help businesses map and hedge legislative, regulatory, geopolitical and supply chain risks. Western Grazers was one of its first clients.
“Businesses face risks that traditional insurance often can’t cover. A rancher should be able to hedge a bill just like a farmer hedges wheat,” Castle CEO Lucas Cavalieri said in the company’s statement.
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Source: As reported by Business Insurance.
