Finance04 August, 20262 min read
Nine Democratic Senators Urge CFTC Crackdown on Polymarket Wildfire Bets
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Nine Democratic senators urge CFTC to ban wildfire prediction market contracts on duration, spread, destruction. Senators warn the practice creates perverse incentives and could incentivize arson, risking public safety.
9 outlets told this the same way.
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Senators press CFTC
Nine Democratic senators urged the Commodity Futures Trading Commission to crack down on prediction markets that offer “contracts for individuals to bet on wildfires,” warning that the practice creates “perverse incentives.” In a letter to CFTC Chair Michael Selig, the senators cited public reporting that Polymarket accepted more than $1.2 million in bets surrounding the Palisades and Eaton fires in January 2025, which the letter said claimed the lives of 31 people and destroyed more than 16,000 structures.
The senators also warned that “individuals could be tempted to commit arson in order to make sure their bets are successful,” framing the risk as both public safety and insider trading concerns. KPTV reported the pushback includes alarms over a newly launched prediction platform with the slogan “You can’t predict fire, but you can trade on it.”
Arson and ethics
The letter’s argument, as quoted by multiple outlets, ties wildfire betting to the possibility that traders might try to influence fires that have already started, with the senators warning that “By offering contracts on fires, prediction market sites run the risk of encouraging people to influence fires that have already started.” Ars Technica reported that the CFTC did not immediately respond to its request for comment, while Kalshi spokesperson Elisabeth Diana told Ars by email that the company does not allow such wildfire markets “because they create perverse incentives.”
In the same Ars account, the letter said Polymarket hosted bets in January 2025 on wildfires in Los Angeles and also pointed to another website that accepts “simulated bets” exclusively on California wildfires. The KPTV report added that critics and fire officials warn that allowing financial stakes on active disasters could incentivize bad actors to commit arson to ensure bets succeed or to influence containment efforts of ongoing fires.
CFTC answers due
The senators asked the CFTC to provide answers by August 14, 2026, including whether the agency has guidance or planned enforcement related to wildfire event contracts. Central Oregon Daily published the letter’s request that the CFTC explain whether it plans to curb wildfire betting on prediction markets and whether it has strategies to address offshore platforms offering these contracts.
The letter also warned that “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 try to offer similar wildfire contracts. In response, Polymarket told Claims Journal that “removing them does not prevent a tragedy,” arguing that it would only make “timely, market-based information less accessible” to people seeking to understand what may happen next.