Kalshi Weather Odds Are Coming to a Weather App Near You

Kalshi Inc. has entered a partnership with The Weather Company to bolster the data it uses to settle contracts in rapidly growing weather and climate prediction markets.

The prediction platform is seeking to establish market-implied probabilities as another source of weather information, while promoting the contracts as a tool for companies to manage risk. Under the deal announced Thursday, The Weather Company also plans to add Kalshi’s real-time weather probabilities for some users of its weather.com website and mobile app.

Weather betting has boomed on prediction markets like Kalshi and Polymarket, where individual traders and meteorological experts put money behind predictions for temperatures, rainfall or snowfall in particular areas on specific dates.

But suspected tampering earlier this year at a weather station at Paris’s Charles de Gaulle airport highlighted both the vulnerability of such contracts and their reliance on official measurements to determine winners and losers. That case has been referred to police and prosecutors, but the investigation is still ongoing, according to government forecaster Météo-France.

The role of prediction markets more widely is hotly debated, with concerns about glorified gambling, manipulation and insider trading weighed against claims that they create economic and social value by providing better information about what is likely to happen.

“Helping people understand what we collectively think about what’s going to happen when it comes to weather is another valuable added signal,” said Will Brackett, Kalshi’s head of partnerships.

Weather remains small compared with other trading categories that have fueled Kalshi’s rapid expansion, like sports, which has accounted for roughly half the trading volume over the past year, according to data analyzed by DeFi Rate.

Still, Kalshi’s weather and climate contracts have grown quickly. Trading volume across the category has jumped 500% so far this year, from a year earlier, and is tracking toward $1.1 billion on an annualized basis, according to the company.

Kalshi sees a path for weather to follow a broader trend on the platform. Markets that might initially attract participants making trades on the amount of snowfall in New York City or the temperature in Los Angeles can generate enough volume and useful pricing data to draw businesses and institutional investors.

Farmers are using Kalshi to buy hedges that pay out if heat waves meet certain thresholds to cover agricultural losses, the company said. Small businesses say the platform is an easier way to offset weather risks than traditional options like derivatives and insurance, according to Brackett.

“When it rains matters for everyone,” Brackett said. For a construction crew, “it really matters if they’re pouring concrete at 3 p.m. You happen to get delayed, there’s fines, there’s penalties.”

Brackett said Kalshi is already seeing more companies approach the platform about hedging risks and he expects weather and climate markets to develop in a similar way.

Weather has some advantages in making that leap. Unlike many sports or entertainment contracts, temperature, rainfall and other weather conditions create measurable financial risks for industries including energy, agriculture and construction.

Eric Zitzewitz, an economics professor at Dartmouth who has studied prediction markets, said growing short-term weather contracts could help build liquidity and interest in longer-term climate markets.

Those markets are far less developed, but researchers, including projects backed by the reinsurance industry, have experimented with prediction markets as a way to draw out expert views on risks — such as cyclone activity and the timing of the next El Niño — that are difficult to price.

“A lot of the stuff that gets priced will be kind of silly like sports, but we should be also able to get some interesting things priced with all of those eyeballs,” he said. “If we’re going to get climate prediction markets, I think it’s one of the potentially most important use cases for prediction markets.”

Under the Kalshi deal, The Weather Company is running observations through its own quality-control system before they are used to settle Kalshi contracts, comparing readings with nearby stations and weather model analysis to screen out values that are physically implausible. Its system ingests government observations as well as readings from a network of more than 400,000 personal weather stations.

“There’s also some screening that we do to make sure that it passes, let’s say, a meteorological smell test,” said James Belanger, vice president of meteorology at The Weather Company.

Photograph: The Kalshi logo arranged on a laptop in New York, on Monday, Feb. 10, 2025; photo credit: Gabby Jones/Bloomberg