{"status":"ok","message-type":"work","message-version":"1.0.0","message":{"indexed":{"date-parts":[[2026,10,2]],"date-time":"2026-10-02T17:55:45Z","timestamp":1790963745611,"version":"4.1.0"},"posted":{"date-parts":[[2026]]},"group-title":"SSRN","reference-count":0,"publisher":"Elsevier BV","license":[{"start":{"date-parts":[[2026,1,1]],"date-time":"2026-01-01T00:00:00Z","timestamp":1767225600000},"content-version":"unspecified","delay-in-days":0,"URL":"https:\/\/www.uspto.gov\/ip-policy\/copyright-policy\/copyright-basics"}],"content-domain":{"domain":[],"crossmark-restriction":false},"short-container-title":[],"abstract":"<jats:p>Kalshi markets its daily rain contract to small businesses as a weather hedge. I test this claim on New York rooftop bars, the case where it should work best, using 355 season days of settlement data, hourly Central Park rainfall and reconstructed profiles of ten venues, with the core definitions time-stamped before data collection. The contract is well calibrated (Brier score 0.143, against 0.146 for the National Weather Service) but pays on the wrong index: 69% of payouts (95% CI 62-75) fall on evenings that were not lost, and the buyer pays $2.75 of premium per dollar of useful payout. Hedging gains are small and disappear under realistic execution, and a better-informed buyer does not fix the problem. A counterfactual contract that pays only on the lost evening, on the same market and with the same fees, raises the worst-of-twenty season by 1 to 3 percent of revenue at all ten venues. The timing mismatch is firmly established; the dollar gains rest on reconstructed revenues. The binding constraint is contract design, not price or buyer sophistication.<\/jats:p>","DOI":"10.2139\/ssrn.7552699","type":"posted-content","created":{"date-parts":[[2026,10,2]],"date-time":"2026-10-02T17:46:51Z","timestamp":1790963211000},"source":"Crossref","is-referenced-by-count":0,"title":["Basis Risk in Prediction Markets: Can a Rain Contract Hedge New York Rooftop Bars?"],"prefix":"10.2139","author":[{"ORCID":"https:\/\/orcid.org\/0009-0007-7017-673X","authenticated-orcid":true,"given":"Paul","family":"Iturbide","sequence":"first","affiliation":[],"role":[{"vocabulary":"crossref","role":"author"}]}],"member":"78","container-title":[],"original-title":[],"deposited":{"date-parts":[[2026,10,2]],"date-time":"2026-10-02T17:46:51Z","timestamp":1790963211000},"score":1,"resource":{"primary":{"URL":"https:\/\/www.ssrn.com\/abstract=7552699"}},"subtitle":[],"short-title":[],"issued":{"date-parts":[[2026]]},"references-count":0,"URL":"https:\/\/doi.org\/10.2139\/ssrn.7552699","relation":{},"subject":[],"published":{"date-parts":[[2026]]},"subtype":"preprint"}}