Kalshi returns to canceled-flight markets with JFK airport wager, limiting bets to institutional users
Key Takeaways
- •Kalshi is offering a narrowly focused contract tied to flight cancellations at New York’s JFK airport on Oct. 22 and Oct. 23.
- •The contract is limited to roughly 1,000 institutional users and includes excluded events such as bomb threats, cyberattacks and laser incidents.
- •Susquehanna agreed to take the other side of the bet and pay out $3 million if more than 50% of JFK flights are canceled on the relevant days.
- •The conference host NEXTPredict paid $12,000 to create the contract, which Kalshi said was requested for a New York event.
- •Kalshi said it is discussing similar airport-based contracts with companies in freight and energy markets.
In mid-July, Kalshi received regulatory approval to list a new type of event contract that would allow users to wager on flight cancellations. The proposal quickly drew criticism on social media, where users warned that bad actors could try to force an airport shutdown to profit from the bet. Kalshi then said it was putting the controversial airport contracts on hold. On Tuesday, however, the company said it was moving ahead, albeit in a limited form.
Kalshi said it is now listing a contract that allows users to wager on whether more than 50% of flights into New York’s John F. Kennedy airport will be canceled on Oct. 22 and Oct. 23. As with other prediction market contracts, the odds will fluctuate over time based on betting activity, and the contract will settle on a simple yes-or-no basis. Because the market is tied to a specific airport and a narrow two-day window, it is far more targeted than the broader flight-cancellation wagers that initially raised alarms.
A Kalshi spokesperson said the contract will be available only to the company’s roughly 1,000 institutional users, a restriction that the company said should reduce the risk that a bad actor would seek to profit from it. The spokesperson also said the contract includes a series of “excluded events,” including bomb threats, cyberattacks and laser incidents, which would result in Kalshi refunding bets.
The new flight-cancellation contract, which applies to just two days at a single airport, is much narrower than what many people imagined when Kalshi first won regulatory approval for such wagers. Kalshi said it created the contract in response to a request from a firm hosting a conference in New York on those dates. The company developed the market with help from the market maker Susquehanna, which agreed to take the other side of the bet and pay out $3 million if more than 50% of JFK flights are canceled on the relevant days. The conference host, NEXTPredict, paid $12,000 to create the contract.
Based on those terms, the opening odds imply roughly 249-to-1 against most flights being canceled. Those odds, however, will change over time as weather patterns shift and as more bettors take positions.
The arrangement is essentially a new variation on insurance contracts that conference organizers and others have used to hedge against large-scale cancellations, making it relevant beyond prediction-market enthusiasts because it tests whether event contracts can serve a practical risk-management role in travel-related disruptions.
“No matter how much you plan and minimize the risk associated with an event, outside forces like weather and geopolitical events can derail even the best events,” said Pierre Lindh, co-founder and managing director of NEXTPredict. “Kalshi’s new flight cancellation market allows our company to provide a certain level of financial stability should certain events transpire.”
The conference in question is for people interested in the prediction markets industry, raising the question of whether the JFK airport contract is something other companies will replicate or whether it is largely a marketing exercise.
According to the Kalshi spokesperson, it is the former. The spokesperson said the platform is in discussions with other companies across several industries, including freight and energy markets, about creating similar contracts tied to flight cancellations at specific airports.
This story was originally featured on Fortune.com