- Will unemployment be more than <percent>?
- Will the average price of gas in [area] be above/below/between [price] on <date>?
Economic markets have less hype, more utility
The economic markets may not get covered on ESPN talkshows, but they are one of the best use cases for prediction markets.
Event contracts aren’t just for entertainment. Traders can use the prices to forecast the likelihood of an event occurring. For example, at present, Kalshi traders give the United States a 59% chance of experiencing a recession in 2025. You can see in the chart below how those odds have fluctuated with events and new information over time. It’s a clear figure that cuts through whatever punditry individual traders may experience in their media bubbles.
Kalshi also has markets on the inflation rate, jobs reports, and Fed decisions, giving traders and analysts prediction tools as another data source to monitor the likelihoods of these events.
Hedge utility of economic markets
In addition to their utility as a source of information, Kalshi’s many economic contracts provide everyday people (and traders) with a chance to hedge on real-world events.
For example, markets on gas prices and unemployment rates allow people to hedge against economic pain. In other words, users can mitigate risk and offset real-world losses that come from rising fuel costs and market downturns.
For example, someone who is planning a summer road trip but fears that surging gas prices may cut into their travel budget could bet on gas prices in the US being above $3.10 at the end of the month. If prices do rise, the payout from the contract helps offset what they’ll be paying at the pump.
Economic event contracts have well-established utility for traders, which is likely why so many prediction markets platforms offer them. Sports contracts, on the other hand, are still not widely available across prediction market platforms, though Kalshi and Robinhood are working to change that.
Jury still out on sports contracts
Kalshi’s aggressive push into popular events like sports is in line with its stated objective to let people trade on anything in the news. And so far, it appears to be succeeding on that mission.
While the use case or utility as a financial tool may be a harder sell for every sports contract on offer, cases can certainly be made for real-world economic impact of many game outcomes.
Regardless, Kalshi will continue fighting for its right to offer contracts on sporting events unless the CFTC or the courts definitively prohibit them from doing so.
