Weather Prediction Markets Are Booming. But Do They Work?

A few days before Christmas, Howard Qin was scrutinizing weather forecasts on two laptops at home in Shanghai when he noticed prices of contracts for New York City snowfall creeping higher on the prediction market Kalshi. He checked the Times Square webcam for specks of white — affirmative.

The recent Stanford math graduate and lifelong weather buff had spent about $200 on predictions that total NYC snowfall that month would top various thresholds — for example, more than 2 inches. Now the value of his shares was rising.

There was just one wrinkle: Qin had a classical guitar recital to ...