👋 Welcome to Predicted, the newsletter covering the business of prediction markets.

Not subscribed yet? You know what to do 👇

Discussed in this piece:

This piece was written by Omar El Safy and edited by Pet Berisha.

On 27 August 2026, Kalshi signed The Weather Company to run quality checks on the station readings that its weather contracts settle on before a market resolves.

As we previously covered on Predicted, institutions have started to flirt with prediction markets, and weather is one of the markets they have their eyes on.

As recently as last month, Cantor opened block trading in Kalshi contracts to roughly 3,000 institutional clients. Those funds told the Wall Street Journal what they wanted, and one of those areas was weather.

Susquehanna's Joe Grubb has said the next area of material growth is large institutional risk transfer, tailored contracts for hedging bespoke industry risk that traditional insurance does not serve.

CME ($CME) have been the place to trade weather since it listed weather futures in September 1999, and on 2 September 2026 alone $453M of notional volume went through their weather futures and options. Those contracts are built around a longer risk period, covering heating demand, cooling demand and seasonal temperature exposure.

Prediction-market weather is clustered at the other end, in one-day contracts on a single city's temperature.

Below is a look at the four prediction-market venues that trade weather.

A weather contract has two uses: (1) as a forecast and (2) as a hedge.

(1) As a forecast. Used by forecasting firms like WindBorne and Jua, who trade their own models to prove and monetise them.

A weather market gives more than a yes-or-no answer. Before settlement, its price offers a real-time estimate of the chance of an outcome.

A market trading at 70 cents on a Chicago temperature outcome means the outcome has roughly a 70% chance of happening.

For that signal to be useful, market prices need to be well calibrated. Outcomes priced at 70% should occur about 70% of the time.

Kalshi says its daily weather markets are 83.3% accurate one day before settlement, rising to 98.7% at close. Its Brier score fell from 0.115 to 0.010 across roughly 69,600 to 73,300 resolved markets at each horizon, per Kalshi Research.

The Brier score measures how close market probabilities came to the outcomes that occurred, where zero is perfect. These are Kalshi’s own figures and cover daily weather markets, not prediction markets broadly.

Calibration is what makes the hedge fair, because if contracts priced at 70% only landed half the time, hedgers would be overpaying for cover every time they bought it.

A well-calibrated market breaks even before costs and loses slowly after them, which is how insurance works. A forecasting firm uses the same number as the bar its own model has to beat.

(2) As a hedge. Bought by corporates and SMEs with weather-exposed revenue.

A business whose revenue moves with the weather buys a payout when the weather hurts it.

As we previously covered on Predicted, a Los Angeles ice cream shop uses $20-a-day contracts to cover part of its rent.

The hard part is basis risk. The contract pays out on a reading at a weather station, and the business loses money on the weather, and those two are not always the same.

The Jiangs (ice cream shop owners) lose about 20% of business when it drops below 70 degrees on their street in downtown LA, and the contract settles on the reading at LAX, 15 miles away.

Every city contract in this piece settles on a reading at one named weather station, usually an airport rather than the city centre.

And you cannot size a position until you know how much your revenue moves per degree. The Jiangs read meteorology feeds and follow climate scientists on social media to time their entries.

Weather trading has gone from roughly $3M to $10M a week through 2025 to roughly $25M to $35M a week during 2026.

These figures cover the period from 2025 to 2026 when all four venues were trading weather at the same time.

By 24 August 2026, Kalshi held 79.7% of the four-venue total, compared to ForecastEx's 14.3%, Polymarket US's 4.6% and Polymarket International's 1.4%.

The lead changed hands twice before that, with Polymarket International ahead through parts of early 2025 and ForecastEx briefly the largest after launching daily city-temperature markets in late 2025.

Daily city temperature accounts for 99.8% of ForecastEx's weather activity and 94.1% of Polymarket US's, compared to Kalshi's 89.4%. Polymarket International is the exception at 27.6%. What is evident is how similarly the US CFTC venues behave, all clustering around daily city temperature markets.

Polymarket International.

Polymarket International's biggest product is a monthly global temperature index at 30.3%, then annual climate markets at 19.2% and hurricanes at 9.7%.

Another 10.8% of that book is earthquakes, volcanoes and meteors, which are not weather at all.

Polymarket International relaunched daily city-temperature markets and traded $30.7M in the week ending 13 April 2026, far above its normal run rate.

We can't pin that volume on a single source. But the timing lines up with two things: the relaunch of a market type that suits automated forecast-versus-price trading, and an unusual Paris settlement episode.

On the 6th of April 2026, the Météo-France station at Charles de Gaulle recorded a 4°C spike that no nearby station picked up, and another of 5°C on the 15th. Investigators suspect someone pointed a heat source at the sensor, such as a hairdryer. Traders positioned for the spikes made roughly $34,000, and Météo-France filed a criminal complaint.

That one week alone was close to a fifth of the $173.0M Polymarket International’s all-time weather market volume. So the 27.6% share for daily city temperature in the chart above is mostly that one burst.

It also makes Polymarket International a weaker comparison with Polymarket US and the other US books. Here, its daily-temperature share is inflated by a single relaunch week, whereas the US venues built their mix through recurring, week-by-week trading.

The three US venues sell close to the same thing, and daily city temperature contracts.

Kalshi.

Kalshi has traded $1.06B of weather notional across 236 market series since June 2021, and says the category is growing 500% year on year. Our own analysis puts growth at +548% over the past four weeks against the same weeks a year earlier. At that pace, the next twelve months would run at $1.105B, more than the book has traded in its whole history.

Most of Kalshi’s weather trading is a next-day question about whether the highest temperature in a given city will fall within a specified range. Daily high-temperature contracts account for 81.6% of the total, or in volume terms $865.3M.

The products that most resemble traditional weather-risk instruments are close to absent, with monthly and seasonal temperature contracts at $6.1M, or 0.56% of the whole book, and hurricanes at 0.7%.

CME sells that longer risk period. Kalshi lists a similarly shaped contract across 11 cities, and it has traded $645,376 all-time.

Compared to the venue institutions already use, the whole book is small.

CME moved $453M of weather notional on 2 September 2026 alone, so one day there is roughly 43% of everything Kalshi's weather markets have traded since June 2021.

Add the daily highs and lows together across 24 cities, and you get $948.0M, or 89% of everything Kalshi has traded in weather.

Los Angeles accounts for 18.3% and New York 17.4%, with Chicago, Miami and Austin behind them and a long tail after that.

Kalshi also lists daily temperature contracts for Paris, London, Amsterdam, Shanghai and Hong Kong, and all five have traded $0.

ForecastEx.

Daily city temperature is 99.8% of their weather book, the tightest of the three.

ForecastEx are owned by Interactive Brokers ($IBKR),they are both a designated contract market and a clearing organisation, so they list and clear markets that other brokers route into rather than only serving their own customers.

It likely that Robinhood sends its weather flow there.

Weather was absent from ForecastEx in 2024.

But it reached 28.7% of everything the venue traded in 2025 and 54.8% in 2026,

Los Angeles alone is 30.9% of ForecastEx's weather volume, or $94.3M, across 41 listed cities.

Polymarket US.

Daily city temperature is 94.1% of its weather book.

Polymarket US lists five cities, highs only, with Miami and Los Angeles at the top, and first traded weather on 28 April 2026.

Put them side by side on the five cities Polymarket US lists, across the four months from 1 May to 31 August 2026 when all of them were live, and ForecastEx ran 78.5% Los Angeles, Kalshi 42.1% Los Angeles, and Polymarket US was topped by Miami at 27.7%. ForecastEx and Polymarket US traded near-identical size over that window, $56.7M compared to $56.5M.

That window is narrower than the individual city charts above, which is why the proportions differ.

Polymarket International listed 44 of these markets inside the window, on 20 and 21 May 2026, and none of them traded.

This newsletter is for informational purposes only and is not financial, business or legal advice. These are the author's thoughts & opinions and do not represent the opinions of any other person, business, entity or sponsor. Any companies, platforms, markets or projects mentioned are for illustrative purposes unless specified.

The contents of this newsletter should not be used in any public or private domain without the express permission of the author.

The contents of this newsletter should not be used for any commercial activity, for example - research report, consultancy activity, or paywalled article without the express permission of the author.

Please note, the services and products advertised by our sponsors (by use of terminology such as but not limited to; supported by, sponsored by or brought to you by) in this newsletter carry inherent risks and should not be regarded as completely safe or risk-free. Third-party entities provide these services and products, and we do not control, endorse, or guarantee the accuracy, efficacy, or safety of their offerings.

It's crucial to provide our readers with clear information regarding the inherent nature of services and products that might be covered in this newsletter, including those advertised by our sponsors from time to time. When you trade on prediction markets (including event contracts, opinion markets and other speculative instruments) your capital is at risk. Risks associated with prediction markets include price volatility, loss of capital (the value of your position could drop to zero), illiquidity, complexity, evolving regulation and lack of protection. Many prediction market operators do not currently operate in a fully regulated industry, and availability varies by jurisdiction. Therefore, please be aware that when you place funds on prediction markets, you may not be protected under financial compensation schemes and protections typically afforded to investors when dealing with regulated and authorised entities to operate as financial services firm. Nothing in this newsletter constitutes a recommendation to place, hold, or close any position on any market.