Are Heatwave Bets a Mass-Death Market Proxy?
On the prediction market Kalshi, you can wager on how long heatwaves will last and the maximum temperature some cities will record on a given day. Is this just an indirect way of betting on mass death and suffering?
It’s a fair question because phenomena linked to large-scale death can become entertainment or speculation products. Everyone with a smartphone can track the temperature like a sports score. One recent Los Angeles high-temperature event showed roughly $482,000 in trading volume.
In some ways the answer is yes: people are wagering on the severity and duration of something that predictably kills thousands of people. Still, these markets are not the same as the classic death market proxy — when a political leader, who may be gravely ill or the target in a war, will leave office. Kalshi has distanced itself from those markets following public scrutiny and backlash.
Heatwave Deaths Rising
In the U.S., heat-related deaths are now averaging around 9,000 per year, according to an analysis by NPR and Boston University published today, Aug. 31. Meanwhile, the Centers for Disease Control and Prevention (CDC) reports a fraction of that estimate as the official number.
The new report highlights how significantly heat-related deaths are undercounted as heatwaves become more frequent, longer, and hotter. This suggests heatwaves, one part of the climate crisis, may become one of the most pressing political and social issues this century. Some people argue they very much already are.
The NPR/BU report noted that its 9,000-per-year average may also be a significant underestimate “because of some limitations in the data and the conservative nature of our analysis.” For one thing, heat can contribute to deaths attributed primarily to other causes.
Kalshi does not have a market on the number of heat-related deaths reported by the CDC or any other source. Still, it has a “public health” category that includes the number of cases for communicable and potentially fatal diseases. Counting heat-related deaths would not be conceptually far removed from outcomes the platform already lists.
For now, people can just bet on the deadly heat.
Dark Rationale
Proponents of these markets argue that there’s an underlying economic rationale behind them and that they are far from bets on human death or suffering.
Earlier this month, the risk-management startup Discrete used Kalshi to bet on the Houston heat. It wagered $6,500 that the city would reach 103 degrees by the end of this month, with a potential payout of $25,000. The firm used a “block trade,” a privately negotiated transaction that can function as prediction-market industry PR.
Kalshi is desperate for use cases for its platform, as it recently suffered a major blow at the Ninth Circuit over its sports-event contracts. To date, Kalshi is mostly a sports betting platform.
If these heat markets had enough liquidity from retail traders, more companies or organizations could hedge risk. For example, an organizer of an outdoor concert could hedge against cancellations due to extreme heat.
Even so, the backdrop of this rationale remains extremely dark and dystopian. A market that, in theory, may have a hedging function would still turn an increasingly lethal public-health and climate-change threat into something some bettors may feel ambivalent towards or root for.
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