CRUCIAL featured in Bloomberg article

In an article published in Bloomberg, Mary Hui, Eric Roston, and Joe Wertz feature CRUCIAL in the article subtitled ‘From Kalshi and Polymarket to niche scientific platforms, traders are predicting the weather — and climate experts are debating the results.’

Beyond the open-access platforms of Kalshi and Polymarket, scientists are building bespoke trading platforms that they hope will draw out societally useful information. There, weather experts with little or no betting or professional investing experience are stepping into betting pools designed to discover insurance-relevant risk — and infusing their slow-moving research with adrenaline.

Mark Roulston is a Ph.D. planetary scientist who spent a decade at investment firm Winton Group, incorporating weather and climate information into quantitative trading strategies. He developed a passion for prediction markets as a way to help institutions extract hidden information from diverse groups of researchers, who are invited to bet on their expertise using other people’s money.

That’s the first and biggest difference between Roulston’s effort and conventional markets: A sponsor supplies the betting money, rather than the losers funding the market. The sponsor always “loses,” in the sense that it’s giving away money without placing a bet. But it “wins” by cultivating the intelligence expressed by the participants, who keep whatever money they win.

“We create markets not because we think, ‘Oh, this is something lots of people will want to bet on,’” Roulston said. “We create a market because there’s an end user — like a reinsurance company — that says ‘We would like better predictions of this.’” He says this approach is closer to the vision for prediction markets advocated by economic luminaries such as Nobel Prize winner Kenneth Arrow.

Winton Group backed Roulston’s first formal prediction effort in 2018, which aimed to forecast UK spring and summer temperature and precipitation.

“It was very addictive, actually,” said Kristian Strommen, a climate science and weather forecasting researcher at the University of Oxford. Making live forecasts is “very different from what you do in academia — writing a paper, and there’s no immediate application of anything.”

That experience also taught participants about the mutable shape of expertise in a betting market. Strommen’s team of half a dozen or so ended up placing second in the competition of 24 teams, behind a one-man operation.

After registering solo, “I actually ended up winning the competition, much to the annoyance of those guys,” said Andrew McRae, at the time a fellow Oxford researcher.

McRae, who still participates in Roulston’s markets, now on a team with Strommen, said he won in part because his solitary position made him hyperconscious of how he was spending his time. He knew his colleagues’ strength and combined size meant their model was probably more nuanced. So he looked for small bits of leverage, making improvements on the margins by writing programs that allowed him to trade faster than other teams and by betting on underpriced outcomes, rather than on likeliest outcomes.

“It felt a lot more like a real financial market where there’s lots of other participants on there, and the market is sort of correct,” he said. “And it’s just like, I’ve got a little bit of information on top of that.”

The Scor Foundation for Science, the philanthropic arm of a French reinsurer, announced in late 2024 it would support Roulston’s group, known by its acronym, CRUCIAL, and housed at Lancaster University. Scor is interested in the approach because it can draw diverse insights out of researchers more efficiently than if it were to hire dozens of them at once, said Philippe Trainar, CEO of the Scor Foundation and chief economist of Scor SE.

Roulston runs annual competitions on the number of Atlantic and Pacific cyclones and has four live markets to gauge when the next El Niño will hit — likely bringing record global temperatures with it.

Link to full article at Bloomberg.