A Los Angeles ice cream shop is using an online prediction market to hedge against potential losses caused by unfavorable weather. Jason Jiang, owner of the independent parlor 28 Wishes, has been placing bets on cold snaps and rainy days through the app Kalshi, aiming to offset revenue dips.
Jiang, who previously worked in corporate banking, explained that ice cream sales are highly dependent on weather. When temperatures drop below 70 degrees Fahrenheit or during rain, the shop experiences a roughly 20 percent decrease in business. By betting on these conditions on Kalshi, Jiang aims to recuperate some of the lost profits.
He and his brother, James, who co-owns the shop, started placing $20 daily bets on Kalshi's climate prediction market in April. They utilize meteorological forecasts, climate news, and social media to inform their predictions. Jiang stated that their predictions have been "scarily accurate" and that the daily stake of $20, or $600 per month, represents a risk they are willing to take.
With a monthly rent of approximately $3,500, Jiang estimates that his winnings from the app cover about 43 percent of his lease. He noted that his wife was initially skeptical but became convinced when she saw they could earn up to $800 in a single day from a weather prediction.
Kalshi, launched in 2021 by former MIT graduates, allows users to bet on a variety of outcomes, from political elections to celebrity events. The platform has over 5 million monthly active users and has received approval from the Commodity Futures Trading Commission, although some states have sought to restrict its operation. Jiang acknowledged that using weather predictions to generate income is unconventional but compared it to other financial ventures where risk is inherent.
The brothers are reportedly considering creating a special ice cream flavor inspired by Kalshi, possibly using matcha powder to achieve a "money green" color, similar to their Matcha Cookies & Cream flavor.