Prediction marketplace Kalshi has entered the institutional sports risk hedging space, striking a partnership with broker Game Point Capital to allow teams to hedge performance bonus payouts. The deal was announced Thursday by CEO Tarek Mansour on X.

Mansour framed the partnership as an institutional alternative to the traditional over-the-counter reinsurance market, which he described as restrictive and opaque. The sports insurance and reinsurance industry represents an annual market of approximately $9 billion, Mansour said in the post, a figure the CEO stated is projected to double by 2030.

Game Point Capital, which Mansour characterized as issuing hundreds of millions in sports insurance annually, focuses on team and player performance bonus coverage. These policies allow sports franchises to smooth the financial impact of large contractual payouts triggered by milestones like playoff berths or championships.

According to Mansour’s post, Game Point executed its first hedges on Kalshi last week for two different NBA teams. One contract hedged a bonus tied to a team making the post-season, pricing at 6% on Kalshi compared to a 12% to 13% quote in the OTC market. A second contract, hedging a bonus for advancing to the second round, was priced at 2% on the exchange versus a 7% to 8% OTC quote.

“Exchanges are a better alternative because they expand liquidity and bring competition: multiple counterparties compete in an open marketplace to improve the price,” Mansour wrote on X. “We expect to process tens of millions in similar hedges from Game Point alone in the coming months.”

Sports driving volume amid wider prediction market expansion

While Kalshi allows users to trade contracts across financial, weather, and cultural events, sports have recently dominated both activity and revenue. The company experienced a surge in volume starting in September 2025, coinciding with the NFL season kickoff. Mansour reported that Kalshi recorded roughly $441 million in trading during the first four days following the NFL kickoff.

The platform’s growth intensified during Super Bowl Sunday, when more than $1 billion was traded, according to Mansour, who told CNBC that consumers are drawn by the availability of diverse trading options for a single event.

The spike in activity echoes broader trends in U.S. sports betting, where incumbents with dedicated event platforms like DraftKings are projecting elevated profits. DraftKings Predictions, launched in December in 38 states, is part of the company’s $6.5 billion to $6.9 billion 2026 revenue guidance, and CEO Jason Robins highlighted the platform’s potential for scaling customer engagement in states where traditional sports betting is restricted.

Record volumes meet regulatory friction

Prediction market platforms saw heightened activity in early 2026, alongside mounting legal scrutiny at the state level. Kalshi and rival Polymarket together logged more than $17 billion in January trading volume, an all-time monthly high, according to The Block’s data dashboard.

Kalshi recorded $9.6 billion in January, a 45% increase from $6.6 billion in December 2025. Polymarket posted approximately $7.7 billion in January, up 44% from $5.3 billion the prior month, marking the fifth consecutive month of rising activity across the sector.

The volume growth has unfolded as operators challenge state-level enforcement actions. Kalshi is appealing a Nevada ruling requiring compliance with state gaming rules and faces litigation in Massachusetts, where a judge ruled the platform cannot offer sports contracts without a state gaming license.

Polymarket also filed a federal lawsuit against Massachusetts on Monday, arguing that CFTC jurisdiction preempts state gambling laws. Meanwhile, a federal judge in Tennessee has temporarily blocked state regulators from enforcing a cease-and-desist order against Kalshi’s sports contracts.

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