Live updates from the NYC bar that promised to cover everyone’s tabs if the Knicks won, and used Kalshi to hedge their bets

A small bar on Manhattan’s Upper East Side is turning the NBA Finals into a masterclass in risk management—and a preview of what Wall Street hedging might look like for Main Street businesses.

The Jeffrey, a craft beer and cocktail bar on East 60th Street, made a splashy promise ahead of Game 1 of the NBA Finals on Wednesday: Customers who arrived before tip-off would get a free bar tab of up to $100, not counting tax and gratuity, if the Knicks beat the San Antonio Spurs. Owner Andy Freedman explained the thinking in a video posted to the bar’s social media: “I’m on a mission to give away a lot of free food and drinks this week.”

It was a lesson learned from a costly miscalculation. During the Eastern Conference Finals, the bar offered customers 1% off their tabs for every point the Knicks won by. “They won by a whopping 37%,” he said in the video. “Last time, we took a $4,000 hit.”

This time, Freedman has a plan.

“We’re hedging our risk on Kalshi,” he said, walking through the mechanics: If the Knicks win, he covers everyone’s tab but gets paid out by Kalshi—”that is a successful hedge.” If the Knicks lose, he’s out the $5,000 premium, but makes it back and then some from a packed house of paying customers.

With the Knicks given only a 37% chance of winning the series opener, a $5,000 trade on Kalshi would net $8,514 in...