On September 30, Kalshi launched new event contracts on NFL broadcasting statistics. Users can trade on whether they think more people will watch NFL games this week than the previous week. Although this market is built for advertisers, sports bettors may enjoy speculating on these new event contracts, too.
However, introducing a sports market does not mean that Kalshi is turning into a sports betting platform. Viewership predictions have nothing to do with teams or players, so these predictions aren’t sports wagers. We spoke with Xavier Sottile, a member of Kalshi’s markets team, to understand the purpose of Kalshi’s NFL markets and how recreational bettors can enjoy them.
Kalshi’s NFL Broadcasting Markets
While Kalshi is designed for professional organizations and investors, anyone can create Kalshi accounts and begin trading. Kalshi’s event contracts are easy to understand. All the markets are yes or no questions priced between $0.01 and $0.99. If traders are right, they’re paid $1 per share. If traders are wrong, they’re paid nothing. It sounds like a prediction game, and sports bettors can treat it like one. But event contracts are new sophisticated financial instruments. Here’s how they’re meant to be used.
How Professionals Can Use Kalshi’s NFL Broadcasting Markets
Kalshi’s event contracts give companies ways to hedge against risks that aren’t directly accounted for in other financial instruments. If a hurricane rips through the northeast, there’s no stock that investors can buy to protect their money. But Kalshi’s event contracts can keep major companies from losing money to real-world events like this. Xavier Sottile explained who benefits from Kalshi’s NFL broadcasting markets.
“When we designed this market, we were thinking that it would be best for advertisers who really rely on viewership to make returns from their investments,” said Sottile. “So these are things [companies] like a local business that you might see on a local stream or newscast. But also major advertisers as well as other people who rely on NFL viewership, like sports bars.”
If advertisements don’t convert customers, then advertising companies lose revenue. So, if there are fewer customers watching ads, advertisers lose money. But if advertisers know that fewer people will watch an NFL game, then they can buy event contracts reflecting that prediction. When they predict correctly, they can profit from the difference between their purchase prices and the $1 payout. If advertisers, sports bars, or local businesses buy enough event contracts, they can cushion the loss incurred by low NFL viewership.
“This is really important, especially considering how last year during the pandemic, viewership was down significantly,” said Sottile. “There was competition from other sports. The NBA Finals was going on in late October 2020, and of course, the presidential election in November really competed for views.”
Big events cannibalize each other. In 2020, NFL and NBA viewership would’ve been down because the highly anticipated games split viewers between them. A lot of businesses could’ve benefitted from Kalshi’s broadcasting markets when sports made their post-shutdown returns.
How Local Governments Can Use Kalshi’s NFL Broadcasting Markets
Private companies aren’t the only ones who depend on NFL viewership. Local governments benefit from the wide shots of their cities on ESPN.
“For the stadium, they [local teams] talk about the benefits of it,” said Sottile. “They show really beautiful landscapes and other shots of the surrounding area and emphasize that team’s heritage when talking about their play.”
Flattering city shots are one thing. But a team’s history can romanticize those beauty shots and draw tourists. Stadiums and sports franchises don’t attract tourists by themselves. So, anything that makes the city itself look like a worthwhile destination is important for cities trying to increase tourism.
“Something like viewership of Green Bay,” said Sottile. “Not the largest municipality in America. However, everyone knows it because they watch the Packers. And if people stopped watching the Packers, people might stop visiting and ultimately that would be a major cost for the municipality. Having a contract like this can hedge those kinds of problems.”
NFL viewership isn’t the sole cause of tourism. It’s an indicator of where city tourism may go. Low NFL viewership is a potential warning sign for city governments, but it’s not a death sentence for local tourism. But if NFL viewership drops, a city government could buy Kalshi’s NFL broadcasting event contracts. That city could make some money on each event contract and lessen the impact of decreased tourism. The drop in tourism may not follow. But municipal governments can hedge against that risk with Kalshi’s event contracts.
How Recreational Investors Can Use NFL Broadcasting Markets
Even though these event contracts are designed for professionals, anyone can invest in Kalshi’s event contracts. Since many sports bettors substitute investing for gambling, they may be interested in Kalshi, too.
“To them [sports bettors], it’s an opportunity to look at how the NFL market is changing,” said Sottile. Strong opinions about teams and game performances are common among sports bettors. However, those opinions often go beyond team and player performances. It’s a small leap from fuming about a quarterback’s poor performance to judging the way NFL games are covered. So, Kalshi will probably always have a small contingent of sports bettors speculating on their platform.
Even though Kalshi isn’t a gambling platform, sports bettors will use it like one. However, that’s good for Kalshi. Everyone who makes trades pumps money into the exchange. So, it doesn’t matter to Kalshi whether bettors win or lose. They’ll take anyone who can make an account, and Kalshi’s revenue comes from commissions rather than investor losses.
However, if sports bettors decide to become Kalshi users, they should trade strategically. They should be open to new strategies optimized for investing in derivatives instead of betting on sports. These markets may be open to anyone, but sports bettors owe it to themselves to invest intelligently. Kalshi just provides the platform for event contract trading to occur. It’s up to users to learn how to use them.
Future Kalshi Broadcasting Markets
Currently, Kalshi only offers broadcasting markets on NFL games. Based on this market’s success, Kalshi will likely offer broadcasting lines on other major leagues, too. They’ll give more advertisers, businesses, and local governments ways to hedge against viewership fluctuations. But new broadcasting markets will also attract sports bettors looking to expand their predictive horizons. It’s common for online gamblers to oscillate between gambling to investing. New broadcasting markets will draw sports bettors in as much as they will sports advertisers and small businesses.
Kalshi will always have a small group of gamblers-turned-investors on the platform. These recreational investors pump money into the exchange and are welcome on Kalshi’s platform. However, bettors shouldn’t overestimate their predictive abilities. Kalshi isn’t a sportsbook. It’s an investment firm, and bettors must be prepared to learn new strategies for trading on Kalshi. But whatever Kalshi releases next, they’ll provide legitimate economic services to major companies and entertainment for speculators.
Kalshi may not have intended both investors and online gamblers. But as the prediction industry blurs the lines between gambling and investing, investment firms like Kalshi will always have customer segments made of gamblers.