Prediction markets are now ‘bespoke insurance’ for businesses, and a Los Angeles restaurant group’s $60,000 hedge on Kalshi is the latest example

One Los Angeles restaurant group traded $60,000 on Kalshi to hedge against the Dodgers’ abbreviated playoff run, and it’s just one example of how prediction markets are transforming how companies, particularly small businesses, are calculating and responding to risks.

Kalshi told Fortune that the hospitality group, which was unnamed but operates 25 bars, including several near Dodger Stadium, made the trade on the platform if the city’s MLB team did not advance to the World Series.

The Dodgers lost in the NLCS to the Milwaukee Brewers last week, and the position returned almost twice the original bet.

The stake helped the business make up for the revenue it would have gotten had the Dodgers played more playoff games.

The use of prediction markets as a financial hedge is likely to grow, a sign that these platforms are not just alternatives to online sportsbooks or prop bet forums, but a financial and decision-making tool.

“You could imagine that there are other risks that businesses face that if there were a market available which functions similarly to the insurance market, then those businesses might want to participate in that kind of a market,” Joshua Mitts, a law professor at Columbia University who studies prediction markets and securities law, told Fortune .

The example of the restaurant group making a trade as a hedge for the Dodgers’ playoff performance “is functionally quite similar to a form of bespoke insurance,” he added.

Prediction markets are surging in popularity: Trading volume on the platforms doubled between May and July of this year, according to Pew Research Center data , topping $58 billion on Kalshi and nearly $22 billion on Polymarket, driven primarily by sports.

Some of the appeal of prediction markets is their looser regulations and fewer restrictions, a result of the sites being classified as financial exchanges, rather than gambling platforms.

The evolving use of prediction markets Small businesses in search of an unconventional risk management tool appear to be among the markets’ growing usership.

In June, a New York City bar, The Jeffrey, promised patrons that the bar would cover every person’s tab up to $100 if the Knicks won an NBA finals game.

The bar then placed a $5,000 bet on Kalshi that the then-underdog Knicks would win, and a $13,500 payout meant the bar not only paid off its patrons’ tabs, but also reaped a $8,500 profit.

Last month, an unnamed third-party insurance company placed five trades on Kalshi that could pay out $3 million should Louisiana State University win this season’s national championship, matching what the college’s football program would owe coach Lane Kiffin in bonuses.