Summary
- A group of nine Democratic senators is requesting the CFTC to prohibit betting on wildfires in prediction markets.
- They warn that such markets could promote arson, insider trading, and exploitation of natural disasters.
- This appeal emerges amid increasing scrutiny of prediction markets in the U.S.
Nine Democratic senators are pressing the Commodity Futures Trading Commission to take action against prediction markets that allow users to wager on wildfires, asserting that these contracts pose risks by incentivizing profit from calamities.
In a letter sent earlier this week to CFTC Chair Michael Selig, Senator Jeff Merkley (D-Ore.) and colleagues, including Senator Alex Padilla (D-Calif.) and Senator Adam Schiff (D-Calif.), urged the agency to ban these contracts related to wildfires, citing concerns over potential encouragement of arson, insider trading, and threats to public safety.
The senators stated, “Offering bets on destructive wildfires threatens to minimize communities’ suffering all so the rich and powerful can profit. There’s also the heightened risk—according to state and local fire officials—that individuals could be tempted to commit arson in order to make sure their bets are successful.”
They referenced instances where the prediction market Polymarket had accepted over $1.2 million in bets linked to California's Palisades and Eaton fires in 2025, highlighting newer platforms that allow betting on wildfires and arguing that such markets promote speculation on catastrophic events.
“By offering contracts on fires, prediction market sites run the risk of encouraging people to influence fires that have already started, creating additional concerns around public safety and insider trading,” the letter continued.
Prediction markets enable users to buy and sell contracts based on the likelihood of future events occurring. Platforms like Myriad, launched by Decrypt's parent company Dastan, have seen significant growth recently, allowing predictions on various topics from cryptocurrency trends to political affairs.
The senators emphasized the need for the CFTC to restrict wildfire betting ahead of the upcoming wildfire season. They noted, “While these bets appear to be offered only on the offshore Polymarket site, it is only a matter of time before other U.S. based Designated Contract Markets (DCMs) try to offer these. The CFTC must lead the charge to rein in these contracts in the U.S. and offshore and put in place common-sense guardrails to prevent people from profiting as wildfires threaten communities.”
This letter coincides with increasing examination of prediction markets by lawmakers and regulators. In April, investment bank Bernstein projected that annual trading volume could hit $1 trillion by 2030 as institutional investors become more active in the market. Notably, former President Donald Trump softened his previous criticisms of prediction markets in April, after previously labeling them as having turned the world into "a casino."
The debate over the regulation of prediction markets has intensified recently. In May, Minnesota became the first state to ban prediction markets, prompting a lawsuit from the CFTC and Department of Justice, which argued that the state law conflicted with federal jurisdiction.
In June, Kentucky sued Kalshi and Polymarket, alleging they operated illegal sports betting platforms. Furthermore, a federal judge in Michigan ruled that sports prediction markets do not fall under CFTC regulation, adding to the ambiguity surrounding oversight of the sector.