Sports Bars Are Betting Against Their Own Teams to Protect Their Bottom Lines

Local bars and restaurants near stadiums across the country are turning to prediction markets like Kalshi to protect their bottom lines.

By betting against their hometown teams, venue owners are using sports trading as a modern-day risk-management strategy to offset potential losses in both game-day and postseason revenue.

The strategy helps businesses protect themselves when their teams don’t make it through the postseason, whether that be an early playoff exit, sweeps or missed postseason appearances entirely, which can mean fewer customers and, ultimately, lost revenue.

The Athletic spoke to Rizzo’s Bar & Inn owner Andrew Rizzo in Chicago, Illinois, near Wrigley Field, where the Chicago Cubs play, about how he began betting against its hometown team to help protect the family business, which has operated on the property for more than 80 years.

After previously losing out on significant revenue when the Cubs had an early postseason exit, Rizzo bet $7,500 on Kalshi that the Cubs would host two or fewer home playoff games. When the team was eliminated in the Wild Card Series, his bet paid out a few thousand dollars, helping offset the revenue he lost from the Cubs’ early postseason exit.

Describing prediction markets as “almost like a hedging insurance policy,” Rizzo compared the payouts to “filing a claim for lost business.” And he’s already considering hedging against a potential MLB lockout next season.

Rizzo isn’t the only business owner turning to prediction markets to protect against potential losses, however. According to The Athletic, One4One owners Justin Robinson and Rich Kim bet $1,250 on a New York Knicks NBA Finals sweep to offset the game-day income they lost from missing out on a longer series. The Manhattan bar owners also hedged on the Yankees missing the postseason.

An L.A. hospitality group also got in on the action this baseball season, placing a $60,000 trade on the Los Angeles Dodgers failing to make the World Series, softening the financial blow of losing out on the business that would’ve come should the Dodgers have made it to the championship for a third straight season.

While with any bet, there’s risk and reward, a growing industry is emerging around the strategy. Consulting firms like Crux are helping bar and restaurant owners place bets against their hometown teams to hedge against potential lost revenue, and Kalshi is hosting workshops on how prediction markets can be used to help these sports bars and restaurants protect their bottom lines, the outlet reported.

However, not every sports bar owner is willing to bet against their hometown team. Some are seeing money made in these kinds of bets as a bonus, rather than an insurance policy. And though this is a growing trend, as The Athletic reports, business hedging makes up just a small portion of betting activity on these platforms, with most trades coming from everyday sports fans.