Sports bars use Kalshi trades to insure against short playoff runs

Sports bars and restaurants are beginning to use Kalshi contracts to offset the revenue risk of a hometown team’s brief playoff run, turning the same sports outcomes that drive crowds into a potential financial hedge.

Rizzo’s Bar & Grill, next to Chicago’s Wrigley Field, traded $7,500 on the Cubs hosting two or fewer home playoff games. The Cubs were swept by the San Diego Padres in two road Wild Card Series games, leaving the bar with no home postseason dates and producing a payout of a few thousand dollars. Andrew Rizzo described the approach as “almost like a hedging insurance policy” and likened it to filing a claim for lost business.

The Athletic reported that Rizzo’s family has owned the property by Wrigley since 1946. Its business evolved from Cubs Park Service Station to stadium parking, before the family opened Rizzo’s Bar & Inn in 2017. Baseball season supplies a significant share of its revenue, while a long postseason run can improve margins as packed bars draw fans holding higher-priced playoff tickets.

The strategy works by accepting a loss on the trade if the desired games take place, while recovering that loss through stronger sales. One4One owners Justin Robinson and Rich Kim took a $1,250 position on the New York Knicks winning the NBA Finals in four games after New York won Game 1. The Knicks beat the San Antonio Spurs in five games, so a longer series brought the game-day business that would have offset a losing trade. Had New York swept the series, the position would have paid about $10,000 to replace some revenue from the missing game.

The pair also spent about $500 hedging against the New York Yankees missing the playoffs, judging baseball revenue to be more volatile. Kalshi said business hedging through its markets remains “still nascent but growing fast,” although it said most sports-trading volume still comes from everyday users.

As this publication reported Oct. 16, a Los Angeles hospitality group used a $60,000 Kalshi position to cushion the loss of World Series-related business after the Dodgers fell short.

The practice has also reached larger sports-linked liabilities. In August, an insurance company placed wagers that would pay $3 million if LSU won the college-football national championship, matching the performance bonuses the university would owe coach Lane Kiffin in that event. Dustin Gouker called small-business hedging a novel and meaningful economic use case, but said the number of businesses using it remains small relative to ordinary sports traders.

The backdrop is a sharp expansion in sports prediction trading. Pew Research Center found combined monthly global volume on Kalshi and Polymarket rose from $26 billion in May to $53 billion in July, largely because of sports. Sports became the most-traded topic on both platforms, with Kalshi sports trading exceeding $58 billion and Polymarket’s approaching $22 billion across June and July. Those figures measure notional taker volume, counting each contract at a $1 value rather than its transaction price.

Rizzo is now considering whether similar contracts could protect against revenue lost in a possible baseball lockout or shortened season, which he said would leave area bars with a major hole in revenue.