Prediction markets are now ‘bespoke insurance’ for businesses, and a Los Angeles restaurant group’s $60,000 hedge on Kalshi is the latest example

One Los Angeles restaurant group traded $60,000 on Kalshi to hedge against the Dodgers’ abbreviated playoff run, and it’s just one example of how prediction markets are transforming how companies, particularly small businesses, are calculating and responding to risks.

Kalshi told Fortune that the hospitality group, which was unnamed but operates 25 bars, including several near Dodger Stadium, made the trade on the platform if the city’s MLB team did not advance to the World Series. The Dodgers lost in the NLCS to the Milwaukee Brewers last week, and the position returned almost twice the original bet. The stake helped the business make up for the revenue it would have gotten had the Dodgers played more playoff games.

The use of prediction markets as a financial hedge is likely to grow, a sign that these platforms are not just alternatives to online sportsbooks or prop bet forums, but a financial and decision-making tool.

“You could imagine that there are other risks that businesses face that if there were a market available which functions similarly to the insurance market, then those businesses might want to participate in that kind of a market,” Joshua Mitts, a law professor at Columbia University who studies prediction markets and securities law, told Fortune. 

The example of the restaurant group making a trade as a hedge for the Dodgers’ playoff performance “is functionally quite similar to a form of bespoke insurance,” he added.

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