Gambling on the Weather

Update: JD clears up some of my misconceptions in the comments. It turns out that you need to have a net worth of at least $5 million to get an account. Not quite as accessible as I thought…Thanks JD.

Have you ever wanted to bet on what the weather would be like next week? In the past you could through weather derivatives to hedge against drought, snow, rain, etc., but they aren’t easily accessible to the average person. Now you can, using a new website called WeatherBill.

All you need to do is select a date range, a ZIP code, and the terms of your hedge or bet. For example, If my quote for “pay me $100 for every day between January 19th and 23th where the maximum temperature is over 32 degrees F” is $57.32. If I’m a local business and want to do a sales gimmick where your purchase price will be refunded if Grand Forks gets more than 10 inches of snow on Saturday, January 20th, a $1000 payout contract will cost me $70.00.

WeatherBill is a very cool idea, and makes a previously high-end financial product available to anyone with a web browser and a credit card. If 70% of U.S. businesses are affected by weather as WeatherBill’s website says, this will provide a very easy way to reduce that risk.