Kalshi's Sports Insurance Play - Hedging, Not Betting

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Hedging, not betting.

Kalshi CEO Tarek Mansour took to X to announce a partnership with Game Point Capital, a specialist sports insurance broker.

They name MLS, CAA, Olympics, NHL, PGA and others as clients they service.

In short, the partnership means the prediction market giant can offer cheaper, more transparent hedging for sports insurance businesses looking to manage their exposure to performance-based bonus payouts.

It is a genuinely interesting development.

One that deserves proper context — because the numbers tell a more nuanced story than the headline suggests.

The Deal 🤝 

Game Point Capital issues hundreds of millions of dollars in sports insurance annually.

Their bread and butter is performance bonus coverage — the type of policies that protect teams from large, sudden payouts triggered when players or coaches hit contractual milestones like making the playoffs, advancing in the postseason, or winning a championship.

Traditionally, insurers like Game Point offload this risk to reinsurance providers such as Lloyd's of London. These are over-the-counter (OTC) deals: opaque pricing, limited counterparties, and little transparency.

Kalshi argues that an exchange model — where multiple participants compete to provide pricing in an open marketplace — can do this more cheaply.

In his post on X, Mansour points to two examples:

Game Point executed basketball-related hedges on Kalshi for NBA teams.

One covered a bonus tied to a team reaching the postseason, priced at 6% on Kalshi versus 12-13% in the OTC reinsurance market. A second contract, covering advancement to the second round, came in at 2% on Kalshi versus 7-8% OTC.

Those are significant cost savings.

If they hold across a broader range of contracts, it is a compelling proposition.

The way it works is that companies like Game Point Capital can use Kalshi’s “request for quotation,” a system for soliciting bids for particular contracts. Market makers on the platform can then find counterparties, helping build up volume.

Mansour pointed to Kalshi's growing liquidity as the enabler. During Super Bowl LX, the exchange reportedly could have processed a $22 million trade without meaningfully moving the market price. Kalshi expects to facilitate tens of millions of dollars in hedging from Game Point alone in the coming months.

Will Hall, Game Point Capital's co-founder and CEO, told the New York Times' ($$$) that they “want to offer the most efficient pricing for teams and other clients”

Kalshi wants to expand this business. It has been building up a team to focus on sports hedging, according to posts on LinkedIn.

The $9 Billion Market — In Context 🌐 

Mansour framed sports insurance and reinsurance as a $9 billion annual market, projected to double by 2030.

That covers a range of products: brand sponsorship guarantees, event cancellations, player compensation structures, and performance-based bonuses.

Those are real numbers. But it is worth putting them alongside the other markets that prediction platforms are eyeing — and the ones they are already competing in.

The global sports betting market is valued at roughly $100-112 billion in 2024/2025, depending on which research firm you ask, and is projected to reach $187-258 billion by 2030-2033. Prediction market trading volume across all platforms reached approximately $63.5 billion in 2025, up from $15.8 billion in 2024, according to blockchain security firm CertiK.

January 2026 alone, Kalshi recorded $9.6 billion in trading volume.

Even the sports memorabilia and collectibles market — physical jerseys, trading cards, signed equipment — is estimated at $27-39 billion depending on scope, and growing at double-digit rates.

So, while meaningful in absolute terms, the $9 billion sports insurance market is a fraction of the addressable opportunities available to these platforms.

Even doubling to $18 billion by 2030 would make it a niche within the broader prediction market ecosystem.

That is not necessarily a problem. But it does frame the announcement for what it is: an interesting proof of concept for institutional hedging utility, not a market-defining revenue opportunity.

But what do these numbers actually mean?

Market, volume, and handle — these are not the same.

In fact, Jason Robins, CEO of DraftKings in their recent earnings that they had $54bn wagers handled in 2025.

Handle is the number of wagers actually placed. $100 bet = $100 increase in handle.

But Robins did something very interesting. He framed another figure, to make things more comparable to prediction markets.

He said:

"Our total potential payouts across all open wagers, or capital at risk, was $2.5 trillion due to the multiplicative nature of parlays."

To me, this is another metric that doesn’t tell us much.

Let’s break this down step by step.

When someone refers to ‘the size of a market’ they are referring to one of three things:

1) Revenue (XYZ company sector ABC made $100bn in revenue this year, which is what the market size is)
2) Market cap (The market cap of crypto assets is $2 trillion)
3) Market Size and Volume (This market has $100bn in volume, making the market, both sides trading, worth this much)

So let’s get down to basics.

Statista define a $77.18 billion figure for 2025 as Gross Gambling Revenue (GGR) for the global sports betting market. That is how much money gambling companies kept in 2025 versus payouts. That is their revenue from sports bets, essentially.

DraftKings Revenue was $6.05 billion in 2025, vs. their $54 billion handle number, and their $2.5 trillion liability position.

If we do this for Kalshi, their revenue was $263.5 million in 2025, vs. their $23.8 billion in volume in 2025. The delta in revenue here is about 100x, compared to DraftKings,’ which is ~9.5x. But wait, it’s a 415x multiple to their ‘liabilities’ of $2.5 trillion.

Let’s get back to the insurance market that Kalshi have started playing in.

What does this mean, principally, when a market is $9bn in size?

In my estimation, this is the market size, or the volume of the OTC deals being done in this market. So this is best tracked against the $23.8 billion in volume Kalshi had in 2025, or the $9 billion + in volume they’ve already seen in Jan 2026.

What I’m getting at here is that this market is

1) Significant considering Kalshi’s current volumes
2) Insignificant compared to the total gambling market
3) Quite niche

Why It Matters Beyond the Numbers 🔢 

The significance of this partnership is less about the TAM, volume or revenue and more about the narrative.

Kalshi and the broader prediction market industry are locked in a multi-state regulatory battle over whether sports event contracts constitute unlicensed sports betting.

Courts in Massachusetts, Nevada, and Connecticut have all recently given state regulators room to pursue temporary bans.

Polymarket filed a federal lawsuit against Massachusetts this week, arguing that federal commodities regulation preempts state gambling law.

Kalshi is appealing a Nevada ruling and fighting a cease-and-desist in Tennessee.

It’s a messy backdrop, and a difficult situation that won’t end any time soon.

The more interesting question to me is about liquidity and how deep these markets can go. It’s a great use case, but one that will ultimately still be facilitated by sports bettors and secondly, not always be used by insurers and reinsurers.

Insurance hedging requires someone to take the other side of the trade. In an OTC market, that counterparty is a reinsurer who has evaluated the risk and priced it accordingly.

On an exchange, you need sufficient liquidity from participants willing to hold that exposure. The bids and asks are there; it’s whether people want to take those prices and can they move them in size?

Traditional OTC markets have a feature that exchanges sometimes lack: the willingness of specialist reinsurers to take on bespoke, illiquid risk at a price.

Exchanges work brilliantly when there is broad interest in both sides of a trade.

They struggle when one side is much more motivated than the other.

Furthermore, OTC deals are often done at a discount precisely because the insurer is bulk-transferring risk in one go, especially in illiquid markets.

Mansour's Super Bowl liquidity stat — a $22 million trade processed without meaningful price impact — is encouraging. But the Super Bowl is the single most liquid event on any sports platform. The real test will be whether that depth exists for the kinds of contracts Game Point is actually trying to hedge.

Concluding Thoughts 💬 

(1) The hedging use case is real, but the market is small. A $9 billion sports insurance market is legitimate, and Kalshi's exchange-based pricing is demonstrably cheaper than OTC alternatives for the contracts tested so far. But in the context of the broader prediction market industry — now doing over $13 billion in monthly volume — and the $100+ billion sports betting market, sports insurance hedging is a rounding error in terms of revenue potential. Even Kalshi's own expectation of "tens of millions" from Game Point confirms this is an additive feature, not a core business driver.

(2) The real value is regulatory. At a time when multiple states are arguing that sports event contracts are simply unlicensed gambling, Kalshi can now point to an institutional client using its platform for genuine risk management. See recent Sporting Crypto podcast guest Samir Patel’s recent tweet thread for more information on this.

(3) Liquidity will determine whether this scales or stays niche. The initial pricing advantage is great: 6% versus 12-13%, 2% versus 7-8%. But those savings only matter if the exchange consistently has the depth to absorb institutional-sized hedging positions across a wide range of sporting outcomes, not just the Super Bowl or NBA Finals, but mid-tier scenarios where the OTC market currently has the advantage of bespoke risk appetite.

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General ‘Stuff’ that Could Impact You

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