How NWS CLI Reports Determine Kalshi Weather Market Settlements

Kalshi weather markets settle exclusively using the National Weather Service's Daily Climatological Report, known as the CLI product. These reports are generated by individual Weather Forecast Offices (WFOs) for designated primary climate sites, typically major airports with continuous observation records. Unlike real-time METAR observations that update hourly, CLI reports compile the official daily totals for temperature extremes and precipitation after local midnight, usually published between 12:30 AM and 2:00 AM local time. For precipitation contracts, the CLI reports the calendar day total from midnight to midnight local standard time, regardless of daylight saving time adjustments.

Each Kalshi weather market specifies a single NWS station using its four-letter identifier in the contract terms. For example, contracts for New York precipitation use KNYC (Central Park), Chicago uses KORD (O'Hare International Airport), and Los Angeles uses KLAX (Los Angeles International Airport). These stations are not arbitrary—they represent the official climate observation point for each city as designated by the National Centers for Environmental Information (NCEI). The CLI report from that specific station is the sole determinant of settlement, even if nearby airports or cooperative observer stations record different values. This creates situations where downtown rainfall may differ substantially from the settlement station, particularly in cities with complex topography or significant urban heat island effects.

The CLI product follows a standardized format across all WFOs, but human observers at each office manually compile and transmit the report. This introduces potential for delayed publication during severe weather events, power outages, or staffing issues. Kalshi contracts specify that if a CLI report is not available within 48 hours of the observation date, the contract will settle based on preliminary data from the observing station or, in rare cases, be voided. Traders should verify that the CLI for their target station published normally on the settlement date, as retroactive corrections to CLI data after initial publication do not trigger re-settlement of resolved contracts.

Kalshi assigns each city-specific weather market to a single NWS primary climate site, and these assignments are permanent for the life of the contract series. Understanding which station settles your market is non-negotiable due diligence. New York contracts settle on KNYC (Central Park), a station operated since 1869 that sits in Manhattan's urban core. Chicago markets use KORD (O'Hare), located 17 miles northwest of downtown and exposed to Lake Michigan influences. Miami contracts settle on KMIA (Miami International Airport), while Miami Beach—just 10 miles away—often records meaningfully different precipitation due to sea breeze boundaries. Phoenix uses KPHX (Sky Harbor International Airport), Dallas uses KDFW (Dallas/Fort Worth International), and San Francisco uses KSFO (San Francisco International Airport), positioned on the bay's western shore where marine layer dynamics differ from downtown.

These station choices create exploitable geographic discrepancies. Seattle contracts settle on KSEA (Seattle-Tacoma International Airport), located south of the city proper in a modest rain shadow compared to neighborhoods north of the Ship Canal. During Puget Sound convergence zone events, north Seattle can receive 0.50 inches while KSEA records a trace, yet the contract settles on KSEA's zero. Similarly, Denver contracts use KDEN (Denver International Airport), situated 25 miles northeast of downtown on the plains, where upslope snow events often produce less accumulation than in the foothills or central city. Traders who assume the settlement station matches their lived weather experience in these cities will systematically misprice contracts.

For markets covering smaller cities or those without dedicated contracts, Kalshi uses the primary airport serving that metropolitan area. Atlanta uses KATL (Hartsfield-Jackson), Boston uses KBOS (Logan International), and Las Vegas uses KLAS (Harry Reid International). Each station's microclimate, elevation, and exposure must be researched individually. The CLI archive for any station can be accessed through the Iowa Environmental Mesonet or directly from the issuing WFO's website, allowing traders to build station-specific precipitation climatologies that account for observational quirks like wind-driven gauge undercatch or trace precipitation reporting thresholds.

Kalshi weather contracts settle on the official daily total reported in the CLI, which strictly adheres to a local midnight-to-midnight observation window. This creates critical timing considerations for precipitation events that span the midnight boundary. A thunderstorm complex that produces 0.80 inches from 11:00 PM Tuesday through 1:00 AM Wednesday will split across two calendar days in the CLI report—perhaps 0.35 inches credited to Tuesday and 0.45 inches to Wednesday, depending on the exact intensity distribution. Traders pricing Tuesday contracts based on forecast rainfall totals must account for this temporal partitioning, as forecast products typically show event totals without regard to daily boundaries.

The CLI report is typically published between 12:30 AM and 2:00 AM local time for the preceding calendar day, but this timing varies by WFO staffing practices and workload. During high-impact weather events affecting multiple states, some offices prioritize warning operations and delay CLI issuance by several hours. The NWS does not guarantee CLI publication within any specific timeframe, though contracts rarely settle later than 6:00 AM local time on the day following observation. Kalshi monitors CLI publication in real-time and marks contracts for settlement as soon as the authoritative report appears in the NWS text product stream. This means markets can resolve at 12:45 AM Eastern for KNYC while still pending at 4:00 AM Pacific for KSFO due to differing WFO operational schedules.

One critical edge case involves retroactive corrections to CLI data. If a WFO identifies an observation error—such as incorrect precipitation gauge reading or data entry mistake—and issues a corrected CLI within 24 hours of original publication, that correction is binding for NCEI's official climate record. However, Kalshi contracts settle on the first published CLI value and do not re-settle based on subsequent corrections. This policy creates rare situations where the official climate record disagrees with the Kalshi settlement value. Traders should note that CLI corrections are uncommon but do occur, particularly during equipment malfunctions or observer errors. The most frequent corrections involve temperature extremes rather than precipitation, but rain gauge tipping bucket malfunctions have produced corrected precipitation reports for stations like KORD and KATL in past years.

The CLI report uses a "trace" designation (denoted as 'T') for precipitation events that produce measurable moisture but less than 0.01 inches in the official rain gauge. For Kalshi settlement purposes, trace precipitation is treated as zero—contracts asking whether precipitation will occur settle as "No" if the CLI reports only a trace. This threshold is operationally significant because many light drizzle events, brief snow showers, and virga with minimal ground accumulation register as traces. At stations like KLAS (Las Vegas) and KPHX (Phoenix), where annual precipitation totals are low, trace events constitute a substantial fraction of days with any moisture—KLAS averages 12 days per year with trace precipitation versus 26 days with measurable amounts.

The 0.01-inch measurement threshold creates a sharp binary outcome for contracts structured around precipitation occurrence. A convective microburst that deposits 0.009 inches settles identically to a completely dry day, while 0.01 inches settles as precipitation. Traders must understand that NWS precipitation gauges have inherent measurement uncertainty of approximately ±0.005 inches at these low totals, meaning values reported near the 0.01-inch threshold have observational ambiguity. The tipping-bucket rain gauges used at most automated stations measure in 0.01-inch increments, so the smallest reportable non-trace value is exactly 0.01 inches. This creates a clustering effect in CLI data where 0.01 inches is disproportionately common compared to a true continuous distribution.

Snow presents additional complexity because the CLI reports both snowfall and liquid equivalent. Kalshi precipitation contracts settle on liquid equivalent only, meaning 0.5 inches of snow might settle as 0.03 inches of precipitation using the standard 15:1 snow-to-liquid ratio, though actual ratios vary from 5:1 for wet snow to 30:1 for powder. Stations with heated tipping-bucket gauges automatically convert snow to liquid equivalent, but some cooperative observer stations still use manual measurement with snowboards. The CLI will explicitly state liquid equivalent values for snow events, and this is the settlement value regardless of snowfall depth. Cities like Minneapolis (KMSP), Denver (KDEN), and Chicago (KORD) frequently have winter days where substantial snowfall produces less liquid equivalent than appears visually impressive, creating opportunities for traders who price contracts based on snowfall forecasts rather than liquid equivalent forecasts.

Equipment malfunctions, power outages, and communication failures occasionally prevent normal CLI publication, creating settlement ambiguity that Kalshi addresses through hierarchical backup procedures. If the primary rain gauge at the designated station fails but the site has redundant instrumentation, the WFO will use backup measurements to compile the CLI. Most major airports maintain multiple precipitation sensors, with the Automated Surface Observing System (ASOS) primary sensor backed by at least one additional gauge. When all automated systems fail, trained observers can provide manual measurements using traditional stick gauges, though these are less common at modern airport stations. The CLI report will typically include a remark indicating the data source if non-standard instrumentation was used.

When no CLI report is published within 48 hours of the observation date, Kalshi's contract rules specify settlement using preliminary data from the observing station, typically extracted from METAR hourly summaries or direct communication with the WFO. In extremely rare cases where no authoritative data exists—such as during Hurricane Maria in 2017 when Puerto Rico stations went offline for weeks—contracts may be voided and all positions refunded. This has occurred fewer than five times in Kalshi's weather market history, most recently during the February 2021 Texas grid failure when several Texas airport stations temporarily lost reporting capability. Traders should monitor station status through the NWS Observation Status page, particularly when positioning around severe weather events that might compromise station infrastructure.

Retrospective data corrections beyond the 48-hour window do not trigger re-settlement, but they do affect historical analysis for traders building statistical models. The NCEI maintains the official climate database of record and applies quality control procedures that sometimes flag erroneous CLI values months or years after publication. For example, KORD's precipitation record includes several corrected values from 2018-2020 where gauge malfunctions were identified post-hoc. These corrections appear in NCEI's archive but did not exist when Kalshi contracts originally settled. Traders using historical CLI data for backtesting should be aware that the current NCEI archive may differ slightly from what was reported in real-time CLI products, potentially introducing lookahead bias into model training if corrections are not properly handled.