LSU, already embroiled in controversy for embracing former professional athletes as college athletes, is using prediction markets to hedge its season.
A third-party insurance company placed five trades at Kalshi that would pay $3 million if LSU wins the College Football Playoff (CFP) this season, a Kalshi spokesperson told CBS Sports on Tuesday following an InGame report. That sum is the exact same as the bonus that head coach Lane Kiffin would be owed if his team won the national title.
LSU minimizes risk with prediction markets
Kalshi, America’s leader in prediction market activity, confirmed the trading history without naming the company responsible.
According to Kalshi, the company purchased a series of contracts from five different college football prediction markets on Aug. 13. Those trades were all centered on LSU reaching different stages of the CFP, including $343,375 on them qualifying for the CFP, $106,575 on them reaching the quarterfinals, $84,600 on them reaching the semifinals, $64,500 on them playing for a national championship, and $63,000 on them winning the CFP.
| Position | Price | Size | Payout |
| Make the CFP | $.41 | $343,375 | $837,500 |
| Reach quarterfinals | $.29 | $106,575 | $367,500 |
| Reach semifinals | $.18 | $84,600 | $470,000 |
| Reach national championship | $.12 | $64,500 | $537,500 |
| Win CFP | $.08 | $63,000 | $787,500 |
| Total | - | $662,050 | $3,000,000 |
It is not uncommon for athletic departments at preeminent schools and universities to insure bonuses in coaches’ contracts through third parties. However, that process has changed in recent times — not specifically at LSU, but with the rise of prediction markets.
Part of the norm?
The New York Times reported on Feb. 10 that Kalshi had entered a working relationship with Game Point Capital, which was described as an insurance company that helped sports teams, athletic departments, and sponsors handle risks tied to performance-based contact bonuses. For a player, that could be reaching 50 catches in a season. In Kiffin’s case, it is advancing through the rounds of the college football postseason.
Game Point Capital had previously used Lloyd’s of London, a global insurance and reinsurance marketplace, to lay risk. It told the Times that it expected to hedge about $30 million in college football and other prediction markets at Kalshi annually.
To entice insurance hedgers to use its platform, Kalshi submitted a rebate program with the Commodity Futures Trading Commission (CFTC), the federal body in charge of regulating prediction markets, in January that allowed approved members to offset risk from sports results-based incentives.
It was never confirmed that Game Point Capital was responsible for the LSU-focused trades.
“The only thing I can confirm is that it is the third-party insurance company,” Jack Such, a Kalshi spokesperson, told CBS Sports.
Similar trading activity
LSU wasn’t the only college football team — much less, the only SEC team — with strong interest in prediction markets. Kalshi told CBS Sports that similar trades tied to South Carolina’s football team were submitted on July 15.
The holder of the contracts paid $14,300 to win $130,000 if South Carolina makes the CFP and $27,000 to win $100,000 if it wins at least eight games.
Despite that, a South Carolina representative asserted that the university did not use third-party insurance companies to hedge its risk.
"The University of South Carolina does not have agreements with Game Point Capital or any other third-party insurer related to coaching bonuses, nor is aware of any arrangements to use trading markets to hedge against future bonus payments," a university spokesperson told CBS Sports.
The Trade Handle Prediction Markets Take
Kiffin’s arrival in Baton Rouge has not been without headlines. He already found himself involved in situations involving a cease-and-desist from former Heisman winner Jayden Daniels, the natural pushback to welcoming former professional athletes back to his college-level program, and a supposed “bug sweep” by an FBI employee after he departed from Ole Miss. The latest news that an insurance company is using prediction markets to hedge risk possessed by LSU is just another stepping stone in the transformation of college sports from a family-oriented environment into a mega-business.