Democratic senators are pushing the Commodity Futures Trading Commission to clamp down on prediction market trading tied to wildfires. In a letter addressed to CFTC Chair Michael Selig, lawmakers led by mercurynews.com urged the agency to implement safeguards to prevent traders from making a profit on natural disasters and human suffering.
Democratic Senators Press CFTC for Wildfire Prediction Market Ban
The lawmakers specifically questioned whether the agency plans to curb prediction market wildfire bets across both domestic and offshore platforms. According to the letter, the Polymarket prediction platform accepted more than $1.2 million in bets in 2025 surrounding the Eaton and Palisades fires in California through an offshore site.
Arson Risks and Perverse Incentives
At the center of the lawmakers’ demands is concern over the potential dangers created by disaster betting. The senators warned of a heightened risk that individuals could be tempted to commit arson to ensure their financial wagers pay off successfully.
Wildfire experts have expressed strong opposition to the existence of these trading options. Michael Gollner, an associate professor at the University of California, Berkeley, noted that the vast majority of wildfires in California are human-caused. While most ignitions are accidental, Gollner stated that arson can play a role and that such markets could create a perverse incentive for destructive activities.
Riva Duncan, president of arstechnica.com—a nonprofit organization representing current and former federal wildland firefighters—said her community is disgusted by the betting markets. Duncan suggested that proponents of these markets should speak with residents in Spokane who recently lost their homes.
Industry Response and Regulatory Review
Prediction markets have grown significantly in popularity over the prior 18 months, allowing users to wager on topics ranging from sports and award shows to geopolitical events. The CFTC is currently reviewing public input on a proposal designed to place additional guardrails around these platforms, which the agency treats as derivatives exchanges. This review includes evaluating whether certain contracts are against the public interest and should be prohibited.
Different platforms have adopted varied stances regarding disaster-related contracts:
- Polymarket: A spokesperson stated that the company does not profit from outcomes and that people use the platform for information. The spokesperson also stated that the company does not currently feature any markets on wildfires and has not for some time.
- Kalshi: Federally-regulated platforms such as Kalshi and Polymarket US do not offer wildfire-specific contracts. Kalshi noted in a statement that it prohibits them because they create perverse incentives, though the firm does allow trading on other natural disasters like earthquakes and hurricanes.
- Wyldfyre: A platform named Wyldfyre recently emerged specifically for trading on California wildfires with the slogan, “You can’t predict fire, but you can trade on it.” The platform utilizes play money only and states in its terms of service that it is not subject to financial-services or gambling regulations because it involves no purchases, deposits, or payouts.
The regulatory scrutiny arrives amid severe fire conditions across North America. Washington state fires have destroyed hundreds of structures and forced residents near Spokane to evacuate. Meanwhile, blazes in Canada have sent smoke into dense United States population centers and degraded air quality, and Merkley’s home state of Oregon faced approximately 1.7 million burned acres through late July.
