Here's what I STILL don't understand about this LSU/Kalshi/insurance story

Good morning, and thank you for spending part of your day with Extra Points.

A quick note before today’s story: We are looking to hire freelancers to help us file open records requests in Alabama and Tennessee. Both states have residency requirements in order to file, so you must have a current mailing address and government ID in those states. We are happy to write the requests and pay for any fees, but we need someone to send them under their name, follow-up under their name, etc. We would pay for this service, as well as trade for free Extra Points Premium or Extra Points Library access.

If interested, please email [email protected] with the subject line {STATE} FOIA FREELANCER.

I understand there’s a completely different off-the-field story involving LSU that everybody wants to talk about right now. But I’m still thinking about the last one … and I hope that by leveling with all of you about exactly what I am thinking and hearing, maybe we can all learn something new.

In case you missed it: Daniel O'Boyle, writing for gaming industry publication InGame, reported that LSU had purchased an insurance policy with a third-party company called Game Point Capital, a company that helps athletic departments and sports teams manage financial risks. That firm then made big trades on Kalshi, a popular prediction market platform, against LSU winning a national title. (CBS Sports and other outlets later backed up O’Boyle’s reporting.) From the InGame story:

❝

A third party helping Louisiana State University hedge against potential bonus payments to football coach Lane Kiffin used bets on the team’s performance on Kalshi to offset exposure. Similar trades were placed last month on South Carolina’s football team, again from a third party rather than the university, though the exact risk being hedged for those trades is less clear.

Two weeks ago, five “block” trades — trades negotiated off exchange — were placed on LSU to have a successful college football season, worth a combined $3 million.

In July, there were also block trades in two markets concerning the University of South Carolina.

The trades were not placed by the schools. In fact, Kalshi’s trading prohibitions for the market would ban employees of teams involved.

So LSU didn’t place any trades. But it did pay another company as a hedge, just in case it needs to pay out millions of dollars in bonuses to Kiffin in the event of a national championship. That company then used the same platform that regular ol’ fans use to make bets about who will win or lose on a typical college football Saturday.

So this isn’t exactly a conventional insurance package, and I can understand why it might rub some folks the wrong way, especially given the NCAA’s tense relationship with gaming interests.

I want to dig in a little bit more about why all of this seems strange to me…not just because of the prediction market angle, but because of what is being hedged against and why. But before we can do that, we need to talk a little bit about what kind of company Kalshi is trying to be.