"The big picture: With a huge swath of America set to get pummeled by snow and ice, some people are studying weather models or simply putting a finger to the wind in hopes of pocketing some cash. On Kalshi, for example, there was over $170,000 wagered as of Friday afternoon on how many inches of snow New York will get this weekend. (27% of traders were betting on 15+ inches.) A similar market on Polymarket had nearly $80,000 in contracts. (31% say 14+ inches.)"
""Climate-related risk becoming more pronounced has created a paradigm shift in the way people view and model their weather risk, and the demand for these instruments has consequently surged," writes Tim Boyce, a weather markets expert, in a post for the Global Association of Risk Professionals. At brokerage firm Interactive Brokers - which offers prediction markets through its ForecastEx platform - "our most frequently traded contracts are temperature contracts," chairman Thomas Peterffy said Wednesday on an earnings call."
Large sums are being wagered on short-term weather outcomes on platforms like Kalshi and Polymarket, with six-figure amounts placed on expected snowfall in major U.S. cities. Weather betting also functions as commercial hedging: utilities and other firms use weather derivatives to protect revenue from mild winters. Investment banks structure those contracts and institutional traders take the opposing risk. Weather contracts traded over the counter before listed futures began on the Chicago Mercantile Exchange in 1999. The weather-derivatives market is estimated above $25 billion, and institutional activity has increased alongside rising climate-related risk, with ForecastEx temperature contracts seeing massive matched-trade growth in Q4.
Read at Axios
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