An independent financial economist has partnered with Kalshi to build a new AI tool on top of the prediction-market exchange, designed to help small businesses hedge against everything from bad weather to election shocks—without needing to hire a Wall Street bank.

The tool, called Blanket, quietly launched in stealth at tryblanket.app and is going live publicly this week, according to materials shared exclusively with Fortune and an interview with its cocreator, Lauris Zminsky, a London-based founder who describes himself as a "forward deployed philosopher" on his X account, where he states his ambition for "markets for all priceable states of the world."

Blanket is "powered by Kalshi," meaning it routes users to Kalshi's Commodity Futures Trading Commission (CFTC)-regulated prediction markets, but it was built and is owned by Zminsky, who does not work for the company. Kalshi holds the distinction of being the first exchange designated by the CFTC to list event contracts—binary options tied to real-world outcomes—as fully regulated derivatives, a status that separates it from offshore prediction-market platforms that have drawn their own regulatory scrutiny.

Zminsky, a former consumer fintech founder and trained financial economist, said he began experimenting with Kalshi's event contracts late last year as a way to prove that prediction markets could have "true, durable economic use" beyond pure speculation. His first project, built with a Kalshi employee, aspires to match S&P 500 companies' risk factors with existing Kalshi markets. Blanket, he says, is the self-serve evolution of that idea—aimed at Main Street rather than the S&P. Zminsky told Fortune he has been working frequently with Kalshi because of overlapping social circles: "a bunch of my friends … actually work at Kalshi and do a lot of great stuff with Kalshi." He was coy about whether he might eventually go in-house.

After Kalshi launched a promotion with sports bars in May, Zminsky told Fortune he had an idea: "What if you actually can take this up a notch and build a tool that is not only probably useful for the Kalshi team and their endeavors—to scale their S&P insurance hedging initiative—but a self-service tool where anybody can come in if they own a small business?" With a simple prompt, he explained, a reasoning engine could help small businesses identify Kalshi markets that might help them run a promotion or hedge against a core business risk.

This may not be transformative for how small businesses operate, Zminsky cautioned, "but you can definitely de-risk a lot of your balance sheet exposures" by finding the right markets and sizing the bets correctly.

How Blanket Works

Blanket's pitch is straightforward: a bar owner, laundromat operator, or regional restaurant enters a concrete concern—hurricane season in Florida, a spike in fuel prices, an unusually warm winter—and the AI "reasoning engine" suggests specific yes-or-no markets on Kalshi that could offset that risk if the adverse outcome materializes. Many of these risks fall into gaps that traditional commercial insurance either does not cover—such as reduced foot traffic from unseasonable weather—or prices too high for small operators to justify.

Crucially, Blanket is not a trading app.

"You can't execute a trade. There's no money moving through that application or system at all," Zminsky said. "It's a reasoning tool. It's a discovery tool that funnels you towards Kalshi." Once a user clicks through, execution, compliance, and customer vetting all happen on Kalshi's side, which operates as a federally regulated event-contract exchange. A Kalshi spokesperson told Fortune that Blanket is a fully external project that simply references public Kalshi contracts and that Kalshi's compliance team was not involved in its creation.

A typical query takes "maybe 30 seconds" for the AI to process and return a short list of candidate markets, with plain-English explanations of how each maps onto a given business risk, Zminsky said. It will also inform users when no suitable market exists and display "near misses," creating a live wish list of missing contracts that Kalshi's team can monitor as demand signals. "You get inbound requests, you get market intelligence, and hopefully quite a lot of people potentially using Kalshi to hedge against the core business risks," he said.

Kalshi's Broader Hedging Push

Kalshi, founded in 2018, has leaned heavily into hedging as its response to critics who argue prediction markets are simply legalized gambling. On its marketing site, the company showcases bars, restaurants, and consumer brands that hedge events such as weather for ice-cream shops and refunds tied to Knicks games. Utopia Bagels, for instance, was presumably off the hook for free bagels after the Trump-attended loss in Game 3 of the NBA Finals.

Nicolas Hull, who leads small-business hedging at Kalshi (LinkedIn), has already been quietly working with firms using these kinds of strategies. Blanket is designed to give them—and thousands of similar businesses—an on-ramp without requiring a sales call.

"SMBs [small and medium-size businesses] are turning to Kalshi to hedge against the real world," Hull told Fortune. "Whether it's the financial fallout from weather anomalies, major sports tournaments, or freight and tariff volatility, business owners are using our platform to protect their bottom lines." He called it a "massive growth segment" for Kalshi, saying he expected it to expand as more companies discover this "innovative way to offset costs and manage uncertainty." The push comes as prediction markets more broadly have surged into mainstream visibility, with platforms reporting record trading volumes around election cycles and cultural events.

Historical Parallels and Democratized Finance

Zminsky argued the technology is less exotic than it sounds—similar in spirit to the opaque derivatives that contributed to the 2008 Wall Street crisis, but fundamentally safer. Speaking from London's Kensington neighborhood, he drew a parallel to nearby Lloyd's of London, founded in the late 1600s as a hedging operation out of a coffee shop before becoming an insurance giant.

What is new, he said, is casting those protections as event contracts that anyone can see and price. "What prediction markets unlock is having the ability to take credit-derivative-like exposures and make the reference asset be an event," Zminsky explained.

A Kalshi spokesperson likened Blanket's approach to the insurance sector, noting that Blanket recommendations are tailored to insurance use cases. Large "losses" in such a scenario mean the unwanted event did not occur, while large "wins" mean it did. "It's about making sure people lower their overall risk, not about promoting big wins or big losses."

To Zminsky, this represents another step in making Wall Street-grade tools accessible to everyone: "You take instruments that were previously only bilaterally traded by extremely large financial institutions, and you make them accessible for a broader [audience]."

When asked what prevents a 2008-style blowup from democratized finance, Zminsky answered: "Regulation." Kalshi's contracts are standardized, electronically traded, and overseen by the CFTC. "You can see what everything is on Kalshi," he said. "Anybody can open up the actual contract [and] read the rules."

The Hypergamblification Tension

However, Zminsky's own writing points to an unresolved tension at the heart of tools like Blanket: Are they sober risk-management infrastructure, or part of a broader shift toward turning speculation into entertainment?

In an August 2025 article on X titled "Play As Mechanism: An Intro to Hypergamblified Market Design," Zminsky argued that "at its core, play has always been about risk, speculation, and dopamine"—from Roman dice games and casinos to sports betting and opening Pokémon packs.

"This isn't a bug," he wrote. "Speculation is the feature. It's what makes games sticky, viral, and communal. When risk is in the loop, attention compounds." He labeled this convergence "hypergamblification"—"the merging of speculative play-like mechanics and financial speculation into one viral entertainment substrate."

Prediction markets, in that framework, are not merely hedging tools but games: "If you strip away the branding, prediction markets are a game. The market is the entertainment loop; the payoff is truth at settlement." The appeal, he argued, is that small pools let retail participants "move the line," and "consequence is the content"—conjuring a world of democratized, gamified finance in which speculation drives ever upward. "Odds are memes," and bets naturally drive conversation that in turn drives more bets. "They're durable because they fuse speculation with consequence and distribution."

That framing sits uneasily alongside Blanket's hedging pitch.

"That's really old," Zminsky said of the essay. "I have better ones," he added, before stating it has "absolutely" zero connection to his work on Blanket. "I deliberately moved away from that."

He was careful to insist the app is "just a discovery tool" for small-business balance sheets, with no money moving through it. Yet his hypergamblification thesis assumes that any system wired into markets will eventually behave like an arcade plugged into a financial system—"every cabinet a micro-market, every action priced, every new player adding liquidity to the loop."

The essay, Zminsky explained, was "more related to the fact that, you know, I think a lot of young adults don't necessarily see a pathway towards homeownership or having a reasonably paying job that provides them with sufficient amounts of financial security … They're leading towards more of a lottery ticket approach towards life, which I do think is very disruptive and healthy."

When asked whether this constituted "financial nihilism," he agreed, before calling it a "structural, sociopolitical issue" beyond his scope to comment on. "Our dopamine receptors are being captured every single day," Zminsky added. "And that just primes us to really find the most rewarding or short-term solutions for any of the needs or problems … that we're effectively facing in our individual lives." His earlier essay reflected his sense that "a lot of young people are embracing lottery-ticket economics because, you know, they don't really see another way out." But his Blanket work is separate from that, he emphasized.

Kalshi's Response

For Kalshi, which has weathered regulatory battles and ongoing scrutiny from gambling opponents, that ambiguity cuts both ways. On one reading, Blanket is exactly what critics say they want: a regulated, transparent way for everyday businesses to hedge concrete risks that insurance either does not cover or prices out of reach. On another, it is a new interface drawing more people into an underlying architecture whose creator openly celebrates "risk, speculation, and dopamine" as the core mechanism of play—and sees prediction markets as its purest expression.

When asked about this critique, Kalshi told Fortune it sees itself as "the safest venue for people to trade on," with every customer-protection feature that state-regulated sportsbooks offer, including trading breaks, self-exclusion, and deposit limits. The company also cited mental-health features through partnerships with firms like Birches Health for traders who feel uncomfortable with their platform usage.

Compared with casinos, Kalshi said its customer-protection measures are superior because they are enforced nationwide rather than varying across state lines. The company also argued it is fundamentally not comparable to a casino because it does not financially benefit from maximizing customer losses. "We are incentivized to take these potential issues seriously in a way that casinos are not," the spokesperson said.

And compared with other commodities exchanges, Kalshi said its mental-health measures are superior simply by existing: it is the only commodities exchange to offer any such services, despite the fact that all others offer financial products that can involve speculation.

An Open Question

Are prediction markets creating a new field of speculation that channels the human instinct toward hypergamblification in the 21st century, or are they unlocking a market for hedging and exchanging information that has always existed but never had the technology to express itself fully? Zminsky said he is continuing to research this question and may become a founder again in the future.

One thing he is certain of: he is glad to be in London rather than New York, where he lived for three years before a recent relocation. "I need a little bit more grounding energy. New York can be extremely distracting."

This story was originally featured on Fortune.com.