The biggest risk to Vail Resorts’ business is the weather. So you might think it would be an active participant in the prediction markets around snowfall. You would be wrong.
“For us, the storm has to be exactly right,” CEO Rob Katz said on the latest episode of Semafor’s Compound Interest. “It’s when the snowfall comes or the temperature before and after the snowfall. Trying to come up with a clear weather pattern that we could truly hedge in the markets is not as simple as it might look.”
When CFTC Chairman Michael Selig defended betting sites like Kalshi and Polymarket, he noted their usefulness to big companies looking to protect themselves against specific risks like weather. A dismal snow season in the Rockies resulted in a 15% drop in skier visits at Vail’s mountains this year, and 12% drops in ski-school and dining revenue.
But even if companies like Vail decide not to hedge the weather, their customers might do so to protect themselves in case their all-you-can-ski passes — a model pioneered by Katz at Vail — turn out to be duds. This winter, traders bet more than $6 million on Kalshi on a single New York City blizzard.
Katz is a boomerang CEO, back after a handoff to a successor in 2021 went poorly. The number of season-long passes sold has fallen the past two years. A labor strike at Park City infuriated skiers — one in particular. Local billionaire and Cloudflare CEO Matthew Prince has needled Katz to sell him the mountain, saying that Vail’s roll-up model has led to a worse experience. “That’s not on the table,” Katz said. Neither are robot ski instructors.