MW NYC bar uses prediction markets to hedge against a new financial risk: A Knicks victory.

By Joseph Adinolfi

The bar is using Kalshi to hedge against the cost of free food and drinks if the Knicks win

One NYC bar is using Kalshi to hedge against the possibility of a Knicks victory on Wednesday.

Wall Street investors use financial derivatives to hedge against shifts in interest rates and exchange rates. Farmers use them to lock in the price of their crops.

Now, one New York City bar is using Kalshi, a CFTC-regulated prediction-markets platform, to hedge against another kind of risk: The possibility that the New York Knicks will prevail on Wednesday when they face off against the San Antonio Spurs in Game 1 of the 2026 NBA Finals.

If the Knicks win, Andrew Freedman, a Manhattan lawyer and owner of Upper East Side bar The Jeffrey, has promised to cover up to $100 of the bar tab for every patron at his establishment that night - including drinks and food.

Freedman told MarketWatch that he had estimated his promotion would cost in the ballpark of $13,000, based on his outlay from a previous one.

The idea for the hedge came after a promotion offered by Freedman in May caught the attention of Bloomberg News. During Game 4 of the Eastern Conference Finals between the Knicks and the Cleveland Cavaliers, Freedman promised he would knock 1% off patrons' tabs for every point in the Knicks' margin of victory. The Knicks ended up triumphing 130-93, a victory that sent the team to the NBA finals for the first time in 27 years. The promotion cost Freedman about $4,000, he told MarketWatch.

"Kalshi saw the Bloomberg article on our Cavs game promo and reached out and said this was an awesome idea and that next time we should hedge on Kalshi. I looked into it and thought it was a great idea. So we went with it and upped the ante," Freedman told MarketWatch via email.

Freedman said he is considering holding similar promotions for future games in the series.

A representative for Kalshi told MarketWatch that the bar's decision to manage its risk on its platform showed that sports-based event contracts have economic utility beyond simply allowing users to bet on the outcomes.

"This is exactly what Kalshi contracts are designed for, right? If you have risk tied to an event happening in the real world, this is what you can use prediction market contracts to help offset it," the Kalshi representative told MarketWatch.

Not everybody is as sanguine about the risks tied to prediction markets. Their rapid rise over the past 18 months has attracted a flurry of criticism from lawmakers who have questioned their economic utility. In March, Rep. Jamie Raskin of Maryland and Sen. Jeff Merkley of Oregon - both Democrats - introduced a bill called the "STOP Corrupt Bets Act," which aimed to ban prediction markets on elections, government actions, sports and military actions.

The bill has made little progress in the Republican-controlled Congress. Other Democratic lawmakers, including Sen. Elizabeth Warren of Massachusetts, have also criticized prediction markets.

Raskin's office directed MarketWatch to a letter penned jointly by Raskin and other Democratic lawmakers urging the CFTC to crack down on insider trading and corruption in prediction markets. In the letter, the lawmakers said that prediction markets tied to sports and other areas were against the public interest and offered little economic value.

Prediction markets

Prediction markets have seen volume explode over the past year, as investors have turned to them to place bets on everything from the Iran war to elections. But most of the prediction-market growth has been tied to betting on sporting events. Companies such as Kalshi claim this activity is not gambling in an effort to avoid state regulation. In the U.S., Kalshi is regulated by the federal Commodity Futures Trading Commission.

Across the two main prediction-market platforms - Kalshi and Polymarket - monthly trading volume has risen from less than $5 billion in September 2025 to about $24 billion in April 2026, according to a Pew Research Center analysis of data from The Block.

(Polymarket has a data partnership with Dow Jones, the publisher of MarketWatch.)

See: In 2024, prediction markets called the presidential election before the polls could. Now, they're mostly betting on sports.

Mattress Mack

After Kalshi CEO Tarek Mansour posted on X about the promotion, social-media users responded by pointing out that a small business hedging potential losses tied to a promotion wasn't exactly a new concept.

Jim McIngvale, owner of the Gallery Furniture chain in Houston, has repeatedly caught the attention of the national press for his bold bets, placed via Las Vegas sportsbooks, on local teams, including the Houston Astros. "Mattress Mack," as he is widely known, would place the bets to offset the cost of promotions he would run at his stores. MarketWatch was unable to reach McIngvale for comment.

A representative for Kalshi told MarketWatch that other organizations have used sports contracts to hedge financial risks. For example, a firm that offers these services to sports teams has used Kalshi to hedge against performance-based incentive payouts for players and coaches, according to a statement from Mansour shared on X.

-Joseph Adinolfi

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

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June 02, 2026 10:46 ET (14:46 GMT)

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