Prediction market platform Kalshi has entered into a strategic partnership with sports insurance broker Game Point Capital, aiming to capture a share of the $9 billion sports insurance and reinsurance market. The deal, announced by Kalshi CEO Tarek Mansour, positions Kalshi's exchange as a cheaper and more transparent alternative to traditional reinsurers like Lloyd's of London.
The collaboration has already seen its first transactions. Last week, Game Point Capital executed two basketball performance bonus hedges on Kalshi's platform. One contract, covering a bonus tied to a team making the playoffs, was priced at 6% on Kalshi, compared to roughly 12–13% in the traditional over-the-counter (OTC) reinsurance market. A second hedge, linked to a team advancing to the second round, was priced at 2% versus approximately 7–8% OTC.
Mansour argues that the exchange model improves price discovery and lowers costs by expanding liquidity and allowing multiple counterparties to compete in an open market. He cited that during the recent Super Bowl, Kalshi could have processed a $22 million trade without significantly moving market prices. The company expects to handle tens of millions of dollars in similar hedging transactions from Game Point in the coming months.
This expansion comes as Kalshi faces significant regulatory headwinds. Sports markets constitute more than 80% of Kalshi's business, and state regulators in Massachusetts, Nevada, and Connecticut are moving to ban such event contracts, arguing they constitute unlicensed sports betting. Rival platform Polymarket has filed a federal lawsuit challenging Massachusetts' authority.
The regulatory battle is drawing in federal agencies. While the Commodity Futures Trading Commission (CFTC), under Chair Brian Selig, has been a key ally and plans to intervene in lawsuits to assert federal jurisdiction, SEC Chair Paul Atkins told the Senate Banking Committee that the SEC may also claim oversight, citing potential overlapping jurisdiction.
Despite the regulatory turbulence, institutional interest remains strong. Jump Trading recently took small equity stakes in both Kalshi and Polymarket in exchange for providing market-making liquidity. The two platforms are currently valued at $11 billion and $9 billion, respectively. The overall prediction market sector saw trading volume skyrocket from $15.8 billion in 2024 to about $63.5 billion in 2025.
