Why Forme launched a World Cup promotion hedged on Kalshi
As prediction markets become increasingly mainstream, consumers may start to see mentions of them in their online shopping carts.
Last week, sportswear brand Forme ran a unique campaign; it claimed to be the first brand to launch an e-commerce promotion hedged on a prediction market, in partnership with prediction market platform Kalshi and promotions platform PlayAbly. Between June 26 and June 30, customers who purchased from Forme’s website using the “Team USA” promo code would get a 100% cash refund on their order if the U.S. Men’s National Team makes the World Cup final.
Unfortunately, the team lost its match against Belgium on Monday, dashing customers’ hopes for refunds. Still, the promotion generated an influx of interest. According to Forme, the brand saw a 4X increase in week-over-week traffic for its menswear products and nearly 20X traffic to its top men’s styles. To facilitate the promotion — and to limit the risk Forme took on — Kalshi partnered with PlayAbly to help process the payout.
According to Nicolas Hull, director of business development at Kalshi, these types of betting promotions show that prediction markets can function as a form of “business insurance” for retail brands. Hull said that by using Kalshi’s betting capabilities, Forme is testing how e-commerce retail brands can leverage prediction markets as an effective marketing and sales-driving tool.
Alan Chen, vp of finance at Forme, said that Kalshi sought out Forme for the experimental promo, and Forme quickly agreed to put the campaign together in time for the U.S. Men’s National Team’s match against Bosnia Herzegovina on July 1. He added that while the World Cup angle made for buzzy timing, Forme was primarily interested in using the opportunity to promote that its products are made in the United States.
“We have been made in the USA pretty much close to the beginning, and we always look for opportunities to really highlight that,” Chen said.
Forme is also trying to grow its men’s offerings through this sports betting promo. Chen said that while the brand has become known for its women’s products, such as a posture-correcting bra, it’s also building out a portfolio of men’s science-backed sportswear. The company sells a range patented posture-correcting apparel, including its Smart Tee, Smart Alignment Shorts and Arch Booster Sock.
The promotion was straightforward: Customers who made purchases during the allotted shopping window got 100% cashback, excluding taxes and shipping, if the U.S. advanced into the World Cup final.
Chen explained that Forme’s payout to PlayAbly is a predetermined percentage. Forme paid PlayAbly an underwriting fee for it to take on the risk on Kalshi. If Team USA won, PlayAbly would be the party to pay out to customers who purchased under this promotion.
Chen added that Forme wanted to cautiously test the concept with its own customer base first, promoting the Kalshi campaign through emails, SMS and its social media pages. “We were a bit cautious of how to promote it, as we’re basically the pioneer testing this concept. We wanted to be a bit measured in where we put it out,” Chen said.
There is precedent for the Forme campaign, as more brands and sports organizations test campaigns centered on sports predictions.
Most recently, a bar in New York City covered $100 of customers’ tabs after the Knicks won the first game of the NBA finals against the San Antonio Spurs. The owner was able to cover the prizes by hedging $5,000 on the Knicks through Kalshi.
Martin Conway, adjunct professor of sports marketing at Georgetown’s McDonough School of Business, echoed that this is not necessarily a breakthrough type of campaign. There’s a precedent of mattress companies and furniture companies offering to refund customers if some longshot sports outcome is achieved.
Earlier this year, Connecticut-based Jordan’s Furniture took on the risk of refunding customers for all purchases between between Jan. 20 and March 1 — which would have totaled $50 million — if both the men and women’s UConn basketball teams reached their respective national championship games.
“But now, what you have is a prediction market like Kalshi stepping in and adding another element to it,” Conway said.
Conway went on to say that, with the public’s increasing consciousness of the prediction market, it makes sense that companies like Kalshi are seeking out hedged bets from retail brands.
If the Forme promotion is successful in generating sales, Conway said this opens up the opportunity for Kalshi to run other national promotions around sports, such as the next Olympics or other professional league finals like hockey and basketball.
For brands, Conway said, the investment has to be weighed against the specific sports competition and predicted outcome. In this case, the U.S.’s chances of making it to the finals are relatively low. But that may not be the case for other teams or events, Conway said.
As for the customer targeting, Conway said Forme’s tight approach makes sense. “As a brand you’re going to be putting more dollars and more risk into the acquisition funnel,” he said. That type of payout can end up being hundreds of thousands of dollars if the prediction promo is not done in a controlled manner.
“It’s a strategic approach that is novel,” Conway said. “But brands have to ask themselves what exactly they are in the market for and what type of customer they are hoping to acquire via this type of promotion.”
As for the professional sports angle, Forme’s Chen said it’s a space that Forme is trying to further experiment with in its marketing efforts. The brand is the official posture and recovery sponsor of the MLB Players Association, for example.
“Ultimately, the promotion gave us a creative way to engage our existing customers while introducing Forme to Kalshi’s predominantly male audience,” Chen said. “Structuring it this way also allowed us to responsibly hedge the financial risk of offering such a meaningful promotion.”