Underdog Sports Preparing To Use Kalshi, Prediction Markets For Its Own Risk Management

The prediction market Kalshi says that Underdog will not be granted preferential trading rates or terms as the latter looks to use Kalshi for its own risk management. Scroll down for all the latest headlines from the world of gambling and sports as well as our top trending stories and searches.

Underdog is already where FanDuel was just a few years ago, a market leader in the Daily Fantasy Sports space. And Underdog is now looking to replicate FanDuel's success in the sports gambling sector as well....with a little help from the wildly successful Kalshi.

So what exactly does the Underdog-Kalshi arrangement entail? 

From InGame: 

This practice is known in the traditional sportsbook realm as a “layoff bet.” Suppose, for example, a sportsbook received an influx of one-way action on the Green Bay Packers against the Detroit Lions and wanted to limit some of that exposure. The sportsbook (through one of its agents) would place a bet at another sportsbook – on the Lions, in this case – to offload some of the risk.

“It’s a real tool for us that didn’t exist before, where we can hedge against volatility, particularly during major events that are drawing huge amounts of sports fan interest,” an Underdog spokesperson explained. “We are going to be offloading risk where appropriate across our sports betting and betting fantasy offerings by utilizing prediction markets like Kalshi, Crypto.com and others.”

For another example, suppose a social media tout caused an avalanche of bettors to pick Josh Jacobs to become that game’s first touchdown scorer at a number around 6/1. Underdog could let it ride and hope for a Lion to cross the goal line first, but the new arrangement would allow it to join the patrons and take some position on Jacobs at, say, Kalshi. 

Brett Smiley notes that any DFS site can hypothetically lay off risk now, but most sites lack the liquidity necessary to do so.

Long time industry observer Alfonso Saffon offered his take on the trend. 

Never forget peeps: a bookmaker is a market maker... there is no reason DKNG, FD, Bookmaker, the local bookie, etc. can't be on Kalshi, Polymarket, etc... competing against SIG, KalshiEX, or other 'institutional' MMs. Whether they use these platforms to layoff risk or take risk... that is going to be up to them (two sides of same coin). Of course competing against everyone and their mother making markets, including individuals, forces spreads tighter... which is the whole idea of an exchange. Moral of the story: don't believe it will only be for hedging purposes. Oh by the way... don't forget about OTC markets. Game on. Underdog Sports Preparing To Use Kalshi, Prediction Markets For Its Own Risk Management

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