LearnPromotions
How do I run a “money back if the team wins” promotion without taking the risk?
Decide who pays the refunds if the team wins. Prize indemnity insurance reimburses your business under a policy, for a premium. Event contracts pay your business a fixed amount if the agreed outcome happens, for an upfront cost. You can also pay any refunds from your own cash. Whichever you choose, your business still honors the offer to customers, so the customer terms must state the dates, the exact trigger and how refunds are paid.
What are your options?
| Option | What it covers | How it pays | What you pay upfront | Main limit |
|---|---|---|---|---|
| Prize indemnity or contingency insurance | Refunds or prizes tied to an agreed event, under the policy’s terms and conditions. | The insurer reimburses your business after it confirms the event under the policy. | A premium set by the insurer. | The premium isn’t returned. The insurer’s conditions and checks apply before it pays. |
| Self-funding the refunds | Any offer you choose to make. | Your business pays every refund from its own cash. | Nothing, though you may need to hold cash in reserve. | If the team wins, the full refund cost falls on your business. |
| Event contracts set up by Crux | Offers tied to a clear, measurable outcome, such as a team winning a title. | If the agreed outcome happens, the contract pays your business under the agreed terms. | An upfront cost that you see before you approve anything. | Not every outcome can be covered. Tell us the offer and we’ll confirm what we can protect. |
| Buying event contracts yourself on an exchange | Outcomes that the exchange lists, on the exchange’s contract terms. | A contract pays a fixed amount if its stated outcome happens. | The contract price, plus any fees. | You choose, buy and manage the contracts yourself. Only listed outcomes are available. |
| Do nothing (run a normal discount instead) | No event risk. You know the cost of the offer in advance. | No payout. You give up part of the selling price on every eligible order. | Nothing. | The discount costs you on every sale, whatever happens. |
What is prize indemnity insurance and what does it cost?
Prize indemnity insurance covers a prize or refund that depends on an uncertain event, such as a fan making a half-court shot or a team result. Your business buys a policy, the insurer judges the risk and sets a premium, and if the event happens, the insurer pays out under the policy, a law firm that advises on promotions explains.
Premiums vary widely. The same firm reports that premiums may range from about 2% to 20% of the prize, depending mostly on how likely the event is and how large the prize is. It also notes that restrictions on who can win can keep the premium down, and that the insurer can set conditions for paying out.
You pay the premium whether or not the event happens. Before the 2026 Final Four, the retired president of Jordan’s Furniture told the Associated Press that the company had to pay for the insurance whether the teams won or lost.
What happened in the Jordan’s Furniture promotion?
The Associated Press reported that in 2026 Jordan’s Furniture, a New England furniture chain, offered to refund purchases if both the UConn men’s and women’s basketball teams reached their NCAA championship games. The offer covered furniture, mattresses and accessories bought during a purchase window that began on January 20, with some exceptions. About 20,000 customers could have been repaid for about $50 million of sales, and Jordan’s had insured the promotion.
The trigger was specific. Both teams had to reach their title games. They did not have to win them. The women’s team lost to South Carolina in the Final Four, while the men’s team reached its title game, Insurance Journal reported. So the trigger was not met, and no refunds were due.
Jordan’s had run this kind of offer before. In 2007 it insured a similar offer tied to the Boston Red Sox winning the World Series. The Red Sox won, and more than 24,000 customers were reimbursed about $35 million.
What must the customer terms say?
Your business makes the promise, so customers rely on the terms you publish. Clear terms state:
- Who is eligible. The purchase dates, the products that count and any exceptions.
- The exact trigger. The team, the game or round, and the result. “Reaches the title game” and “wins the title” are different promises.
- What is refunded. The purchase price only, or also tax and delivery fees.
- How and when refunds are paid. For example, by check or as store credit, and by what date.
The customer terms should also match the terms of whatever covers the refunds. A law firm that advises on promotions recommends putting every condition that the insurer requires into the official rules. If the customer terms promise more than the protection pays, your business pays the difference.
Rules for promotions differ from state to state. Check the rules that apply where you run the promotion before you launch it.
How do event contracts cover the refunds?
An event contract pays a fixed amount if a stated outcome happens, such as a team winning a title. Event contracts are bought and sold on exchanges regulated by the Commodity Futures Trading Commission (CFTC), which notes that they can be used to hedge real-world risks. For a refund promotion, the contract pays your business if the outcome that triggers the refunds happens. See What is an event contract?
With Crux, you tell us the offer you want to run. We set up the protection and show you the terms and price. You approve it through an account in your business’s name that we help you open. Your business honors the offer, as with any promotion. If the agreed outcome happens, the contract pays your business under the agreed terms. Crux sets up and brokers the contract.
A business can also buy event contracts itself on an exchange. Reuters reported in August 2026 that many small businesses that use prediction markets for business risks do so to manage the cost of a sports-linked promotion. Doing it yourself means choosing contracts from what the exchange lists and managing them through your own account. The same report noted a dispute over sports event contracts: the CFTC treats event contracts as regulated financial instruments, while some state governments say they are a form of sports betting.
A worked example
Make the offer that fills the store. Promise customers their money back if your team wins the title. A contract payout covers the refunds.
| If the team | Contract payout | What it means |
|---|---|---|
| Doesn’t win | $0 | No refunds are due. The $80,000 protection cost still applies. |
| Wins the title | $1,000,000 | The contract payout covers your customer refunds. |
Protection cost: $80,000 upfront
Illustrative example. Terms and pricing agreed upfront.
What are the limits?
- If the agreed event doesn’t happen, the contract doesn’t pay out, and the upfront cost isn’t returned.
- The agreed event may not match your actual loss. A contract pays on the measured outcome, not on your own costs or sales. This gap is called basis risk.
- The payout follows the contract terms and the agreed measurement source, such as a published price or a named weather station.
- Your business owes customers the refunds it promises, whatever the protection pays.
- If the customer terms and the protection terms differ, your business pays any gap.
- Promotion rules differ by state. Check the rules that apply before you launch.
When is Crux not a fit?
- Your offer depends on something that can’t be measured clearly, such as store traffic.
- The possible refunds are small enough to pay from your own cash.
- Your promotion is a contest, such as a hole-in-one or half-court shot prize. Prize indemnity insurance commonly covers these.
- You want a fixed, known cost on every sale. A normal discount may fit better.
Related guides
Sources
- A New England furniture store will refund customers if both UConn teams make the NCAA title games, The Associated Press, via ClickOnDetroit, April 2, 2026.
- March Sadness: 20,000 New Englanders Lose Out on $50 Million in Refunds, Insurance Journal, April 6, 2026.
- Time to Take Your Shot: Prize Indemnity Insurance Edition, Verrill, November 2, 2017.
- Understanding Prediction Markets and Event Contracts, Commodity Futures Trading Commission, October 2026.
- Prediction markets take a swing at hedging for US small businesses, Reuters, via KFGO, August 28, 2026.
This guide is general education. It is not an offer, and it is not financial, legal or tax advice. Terms, prices and availability depend on the contract.