Nine senators press the CFTC to rein in wildfire bets

Nine senators have asked the Commodity Futures Trading Commission to move against prediction-market contracts tied to wildfires, warning that the wagers could turn disaster into a profit centre and create public-safety risks. In a letter dated 3 August, they gave the agency until 14 August to answer a set of questions about how it plans to handle the contracts.

Led by Jeff Merkley, the group also included Alex Padilla, Jeanne Shaheen, Adam Schiff, Jacky Rosen, Catherine Cortez Masto, Martin Heinrich, Ron Wyden and Amy Klobuchar. They asked whether the CFTC is considering prohibiting designated contract markets from offering wildfire event contracts as part of its rulemaking, whether it intends to curb wildfire bets in the United States and on offshore venues, and whether contracts about how long a fire lasts, how much it destroys or how much it grows would be deemed in the public interest.

The senators argued that betting on destructive wildfires could “minimize communities’ suffering” so “the rich and powerful can profit.” They also said state and local fire officials had identified a heightened risk that people could be tempted to commit arson to make their bets succeed, or otherwise try to influence fires that had already started.

The letter pointed to more than $1.2 million in bets surrounding the Palisades and Eaton fires in January 2025. It said those fires killed 31 people and destroyed more than 16,000 structures, and it cited another report about a platform that accepts only simulated wildfire bets in California and uses the slogan, “You can’t predict fire, but you can trade on it.”

The CFTC has also said its enforcement division has full authority to police illegal trading practices on designated contract markets, after cases involving misuse of nonpublic information and fraud on prediction markets traded on KalshiEX.

Industry responses have been mixed. Kalshi has said it does not allow wildfire markets because they create perverse incentives. Polymarket’s spokesperson said the company does not profit from outcomes and that people come to Polymarket for information, while arguing that removing such markets would make the most accurate information less accessible.

Outside commentators echoed the senators’ alarm. Michael Gollner of UC Berkeley’s Fire Research Lab said wildfire prediction markets could create a perverse incentive for arson or other destructive activity, while Riva Duncan of Grassroots Wildland Firefighters said the idea of people hoping to make money off tragedy was “beyond comprehension.”