Osasuna were on the verge of relegation in Spain’s premier LaLiga football league, so the club from Pamplona–where they run the bulls down the streets–took out insurance for €1.2 million (£1.03m) to offset losses if it went down to the Second Division.
Relegation insurance is a tool used for years by clubs to cover risk.
But what was different this time was that the broker who insured CA Osasuna then reinsured on prediction market Kalshi, via an intermediary. The insurance contract effectively became a sporting bet!
According to gaming consultant Ramiro Atucha, the problem does not lie with the club itself, that did not bet, but with how the risk was ultimately hedged.
Escaping Relegation By A Hair’s Breath
“Once the chain moves from an insurer to a risk broker, then to an intermediary, and eventually ends up as a position on Kalshi tied to Osasuna’s relegation, we are no longer talking about traditional insurance,” Atucha told iGamingFuture.
“We are talking about a financial position based on the sporting outcome of a football club, taken through a platform that is not licensed in Spain,” he affirmed.
The €1.2 million policy would have paid out €6 million (£5.17m) to support the club for losses and debts had they been relegated to the Second Division. This, by a hair, did not happen.
Controversy
The team did lose 1–0 to Getafe on the final matchday of LaLiga, but survived on goal difference and escaped relegation, meaning Osasuna lost the €1.2 million premium because the insurance was never triggered.
But the insurance contract has stirred up controversy over “the club that bet against itself” after U.S. economic news portal Semafor revealed the case in an article that shook the foundations of Spanish football.
The report did not name Osasuna but clearly pointed at the Spanish club on the brink of relegation.
Osasuna confirmed it had purchased a €1.2 million relegation insurance policy through the insurance broker Howden; although the club denies placing any direct bets with Kalshi, stating that it only purchased a standard insurance product from Howden.
Ethical Debate
The high-profile case has now sparked a debate on the ethics of betting on relegation against one’s own team, with club management defending its protective bid given the risk of going down due to the team’s poor performance in the final stretch of the season.
Osasuna fans, meanwhile, are unhappy that their club prioritized financial considerations over competitive spirit, which they saw as a lack of commitment to the team and its history.
For Atucha, the most concerning aspect about the case, though, is that betting operators would be doing something illegal if they did the same.
“In Spain, regulated betting operators pay taxes, certify their software, comply with advertising restrictions, carry out identity verification and meet a wide range of regulatory obligations,” Atucha argued.
No Licence Prediction Markets
Meanwhile, prediction markets can offer what is effectively the same product—positions on sporting events—without a licence, without tax contributions and without the same player protections. If a betting operator did this, it would be illegal,” he said.
And the question of integrity remains an open issue, he added.
“A position in a prediction market creates counterparties with a direct financial interest in the outcome of a match.
“In this instance, the entity on the other side reportedly made more than US$1 million because Osasuna avoided relegation. Everything may have worked out without incident, but it does not take much imagination to see the conflicts of interest that such structures could create in the future if clear rules are not established,” he warned..
Financial Risk
In a statement to iGamingFuture, LaLiga stressed that insurance policies to cover the risk of relegation are common instruments in professional football and are used by clubs to manage financial risks associated with sporting contingencies.
“Furthermore, in this specific case, LaLiga was informed by Osasuna that it has contracted coverage against the risk of relegation, through Howden, an entity that operates in the insurance sector for professional sport,” asserted the Spanish soccer league.
Countered Atucha: “Spain has already moved to provisionally block Kalshi and Polymarket, which is a first step.
“But the more fundamental debate—where exactly does legitimate financial hedging ends and betting begins—is only just getting started.”
