Prediction market Kalshi partners with The Weather Company for weather hedge settlements

Kalshi, the prediction market platform, has entered into a strategic partnership with The Weather Company, a leading weather provider, to expand and support the growing weather hedging activity on its platform through provision of settlement data.

According to the announcement, Kalshi will use The Weather Company’s enterprise-grade weather data feeds as its trusted source for verifying weather hedging settlements.

While at the same time, The Weather Company will incorporate Kalshi’s real-time probability data within select experiences on its flagship app and website, which will reportedly give consumers new ways to understand how markets are pricing weather risks.

Weather hedging as an industry has been around since the 1990’s, with weather derivatives, futures and options traded on exchanges and over the counter.

With severe weather events becoming more disruptive and increasing in frequency, managing weather-related risk and building resilience is becoming even more crucial.

Kalshi highlighted how interest in weather risk remains high, with 89% of U.S. adults reportedly saying that weather impacts how they plan their day-to-day tasks.

In addition, Kalshi explained that the total volume for the prediction market platform’s climate and weather vertical alone has grown by 500% year over year and is pacing toward $1.1 billion in annualised volume as traders continuously look to hedge weather risks or trade on shifting climate trends.

Kalshi also noted that businesses are utilising their platform to hedge on weather events, ranging from ice cream shops managing unseasonably cool summers to logistics firms managing precipitation impacts.

The platform’s partnership with The Weather Company is anticipated to deliver essential, scientifically-supported data to effectively manage changing conditions and facilitate informed, confident decision-making.

Kalshi’s weather and climate markets allow traders to stay updated on shifting weather and forecast predictions for everything from temperature, precipitation and other measurable conditions, which vary by market and location.

“The Weather Company provides the authoritative observation data used to settle these markets with a consistent, documented methodology for each market type. Kalshi designs the contracts, operates the exchange, and resolves markets under its regulatory framework. In addition to providing data for market settlement and content integration, the companies will also collaborate to explore creating new weather markets that touch climate, sports, culture and more,” Kalshi explained.

It’s also important to highlight that these are a form of parametric protection, given that Kalshi’s weather contracts are settled on actual weather data.

Third-party data and indices are critical to the triggers of parametric risk transfer arrangements, including weather hedges, with that data and a third-party verifier often utilised for settling contracts.

Dr. James Belanger, vice president of meteorology at The Weather Company, commented: “When weather data is used to verify outcomes in real time, accuracy and trust matter. Our priority is ensuring Kalshi’s settlements rest on objective, scientifically validated atmospheric data. Every value we deliver carries a documented method reviewed by our meteorologists and held to the same standard, whether it comes from one official station or is derived from several observation sources.”

Will Brackett, head of partnerships at Kalshi, added: “Weather is one of the fastest-growing and most crucial categories at Kalshi because it affects everyone – from individuals and businesses to governments. As prediction markets become a more valuable tool for understanding uncertainty, they offer a new lens to complement the trusted forecasting and expertise The Weather Company delivers every day. We’re proud to partner with the world’s most respected brand in weather to help people make sense of the world around them.”