NEXTPredict Paid $12,000 to Hedge Its Conference on a Prediction Market

The organizers of a prediction markets conference have hedged the conference on a prediction market, paying a $12,000 premium for contracts that would return around $3 million if New York's airports seize up the day before it opens.

The trade, executed through Kalshi with Susquehanna as market maker, settles on whether more than half of flights scheduled to land at John F. Kennedy International Airport are canceled on October 21, the main travel day before NEXTPredict's October 22-23 summit at Convene in Hudson Yards. The $3 million represents the organizer's total investment in the event.

The threshold was chosen as a proxy, Pierre Lindh, co-founder and managing director of NEXT.io, told Decrypt. “We had a conversation with Kalshi and Susquehanna, and we said, ‘Why don’t we use airport disruption as the vector?’ Because if there is 50% flight cancellation from JFK on the 21st of October, it means that something has happened in the world."

The risk is all too real. Lindh opened a thread on the trade with an image of himself announcing a conference in 2020 that never took place. "A few months later the entire world locked down and we lost 100% of our revenue for the entire year," he wrote.

Across 13 years and around 800 events the exposure has recurred. A blizzard hit New York weeks before the company's March show there, and conflict in the Middle East escalated shortly before it opened, leaving delegates unable to travel and the company processing refunds, he said. By May, with its flagship Malta event approaching, the worry was European airports running short of fuel.

"Event insurance is focused around what happens inside the venue," Lindh told Decrypt, describing cover for fires, rigging failures and injuries. Standard force majeure cover typically only pays out when an event is canceled. If a hurricane closes the airport, he said, "it doesn't mean that we have to cancel our conference. It probably means that we will need to organize it but short-handed." The costs are already sunk and the revenue is already lost, but the policy may never trigger, he told trade publication G3 Newswire. "The material financial damage has already happened, but standard event insurance might not trigger because the conference itself went ahead."

Force majeure has historically "just been accepted as part of the deal," he said. "You commit millions, you cross your fingers."

Lindh's second objection is the claim itself: insurance is slow to arrange and, he says, "when the moment comes, the insurer's incentive is to find the reason not to pay."

A market settles differently. Claiming on a policy means a potential argument with the insurer over whether the circumstances qualify, Lindh told the trade publication G3 Newswire, whereas on a prediction market, "Kalshi is in the middle determining whether the conditions of the contract have been met."

Kalshi self-certified the flight cancellation contracts with the Commodity Futures Trading Commission on July 14 and built this market to order after NEXT.io approached it as an institutional customer. Retail traders cannot access it. Certain causes of disruption, including drone incidents and bomb threats, do not trigger payment.

The contracts drew criticism when they appeared, on the grounds that someone could profit by disrupting flights. Lindh addressed it directly, calling the worry fair and arguing that the hedge is the other face of the same instrument: "A business with real exposure, buying protection, on a regulated venue, with an institutional market maker taking the other side."

Both counterparties see a larger market behind it. Kalshi chief executive Tarek Mansour called it "prediction markets moving beyond forecasting and becoming practical business infrastructure." Joe Grubb, who heads prediction markets business development at Susquehanna, said the structure allows the transfer of institutional risk "that historically had no path for execution."

Lindh expects company. "Our whole industry has been carrying this risk on the chin for decades because there was no instrument for it," he wrote. "Now there is one."