Kalshi partners with The Weather Company to bolster weather trading

Kalshi has struck a partnership with The Weather Company to expand its weather-trading business. The deal will use the weather firm’s enterprise data feeds to help verify climate-prediction contracts, while Kalshi’s probabilities will appear on Weather.com and The Weather Channel app. The companies also plan to explore new markets tied to ski conditions and marathon weather.

As covered in July, Kalshi had already started testing more specialised event markets in biopharma. The weather tie-up extends that effort into a field where settling contracts depends on precise measurements, and where the company wants market-implied probabilities to become another source of weather information.

Under the arrangement, The Weather Company will run observations through a quality-control system before they are used to settle Kalshi contracts. The system compares readings with nearby stations and weather-model analysis to screen out values that are physically implausible, and it draws on government observations and readings from more than 400,000 personal weather stations.

The need for trusted measurements has become more visible this year. Insurance Journal said suspected tampering at a weather station at Paris’s Charles de Gaulle airport highlighted how vulnerable these contracts can be, because winners and losers depend on official measurements. Météo-France referred the case to police and prosecutors, and the investigation was still ongoing.

Trading volume in Kalshi’s weather category has risen 500% so far this year from a year earlier. The report said the category is tracking toward an annualised $1.1 billion. Sports accounted for about half of Kalshi’s trading volume over the past year, according to DeFi Rate data cited in the report.

Will Brackett, Kalshi’s head of partnerships, said the new signal could help people understand what they collectively think will happen when it comes to weather. James Belanger, The Weather Company’s vice president of meteorology, said the firm screens readings to make sure they pass "a meteorological smell test." Eric Zitzewitz, an economics professor at Dartmouth, said growing short-term weather contracts could help build liquidity and interest in longer-term climate markets, which remain far less developed.