Key facts
- NEXTPredict paid a $12,000 premium to hedge its upcoming conference.
- The hedge is on contracts that pay out if more than 50% of flights into JFK are canceled on October 21.
- The potential payout is around $3 million, representing NEXTPredict's total investment in the event.
- Susquehanna acted as the market maker for the trade on Kalshi.
- Pierre Lindh, co-founder of NEXT.io, stated this is the first time an event industry company has hedged on a prediction market.
NEXTPredict, an organizer of prediction markets, has hedged its upcoming conference by purchasing contracts on Kalshi that pay out if more than half of flights into New York's JFK airport are canceled on October 21. The $12,000 premium covers roughly $3 million in potential losses, representing the organizer's total investment in the event.
The trade, executed through Kalshi with Susquehanna as market maker, settles on whether more than half of flights scheduled to land at John F. Kennedy International Airport are canceled on October 21, the main travel day before NEXTPredict's October 22-23 summit. Pierre Lindh, co-founder and managing director of NEXT.io, told Decrypt that the threshold was chosen as a proxy for broader disruption, stating, "We had a conversation with Kalshi and Susquehanna, and we said, ‘Why don’t we use airport disruption as the vector?’ Because if there is 50% flight cancellation from JFK on the 21st of October, it means that something has happened in the world."
Lindh cited past events, including a blizzard before a New York show and Middle East conflict escalation, that impacted delegate travel and led to revenue loss. He noted that standard event insurance often doesn't trigger for such external disruptions if the conference itself proceeds, even if attendance is severely affected. "Event insurance is focused around what happens inside the venue," Lindh said, contrasting it with the prediction market hedge. He also expressed a preference for prediction markets over traditional insurance, citing an insurer's incentive to find reasons not to pay versus Kalshi's role in determining contract conditions.
The flight cancellation contracts were self-certified with the Commodity Futures Trading Commission and built for NEXT.io as an institutional customer, with retail traders unable to access them. Concerns that such contracts could incentivize flight disruptions were addressed by Lindh, who argued that the hedge represents the other side of the same instrument: "A business with real exposure, buying protection, on a regulated venue, with an institutional market maker taking the other side."
Both Kalshi and Susquehanna see this as a significant development for prediction markets. Kalshi CEO Tarek Mansour called it "prediction markets moving beyond forecasting and becoming practical business infrastructure," while Joe Grubb of Susquehanna noted the structure allows for the transfer of institutional risk that previously had no execution path. Lindh anticipates this will open doors for other companies in the event industry to manage similar risks.