U.S. Senators Call for CFTC Crackdown on Wildfire Betting Amid Arson Fears

A group of nine Democratic senators sent a letter to the Commodity Futures Trading Commission this week demanding a crackdown on prediction markets that let users bet on wildfires, warning the practice could tempt people to commit arson just to cash in on a winning contract. The letter, addressed to CFTC Chair Michael Selig, comes as wildfires burn across parts of the Pacific Northwest and the country faces what lawmakers called another record-breaking fire season.

The letter was signed by Sens. Jeff Merkley and Ron Wyden of Oregon, Adam Schiff and Alex Padilla of California, Jeanne Shaheen of New Hampshire, Jacky Rosen and Catherine Cortez Masto of Nevada, Martin Heinrich of New Mexico and Amy Klobuchar of Minnesota. It gave the CFTC until August 14 to answer a list of questions about whether the agency plans to prohibit designated contract markets from offering wildfire event contracts and whether such wagers serve the public interest.

Why Wildfire Contracts Are Drawing Scrutiny

Prediction markets such as Polymarket and Kalshi let users buy and sell “yes” or “no” contracts tied to the outcome of future events, with prices shifting as new information comes in. That structure works fine for elections or economic data, but the senators argue it breaks down when the underlying event is a natural disaster that a single bad actor could influence.

“Offering bets on destructive wildfires threatens to minimize communities’ suffering all so the rich and powerful can profit,” the senators wrote, adding that state and local fire officials have warned “individuals could be tempted to commit arson in order to make sure their bets are successful.” The letter also raised insider-trading concerns, noting that “prediction market sites run the risk of encouraging people to influence fires that have already started.”

The senators pointed to reports that Polymarket accepted more than $1.2 million in bets tied to the January 2025 Palisades and Eaton fires in the Los Angeles area, disasters that killed 31 people and destroyed more than 16,000 structures. Users could wager on questions like how many acres would burn, when the fires would be contained, and whether flames would spread to specific neighborhoods. Michael Gollner, a fire researcher at the UC Berkeley Fire Research Lab, told reporters such markets “could create a perverse incentive for arson or other destructive activities.”

Kalshi and Polymarket Split on the Issue

The two largest prediction market platforms have taken opposite public positions. A Kalshi spokesperson said the company does not allow wildfire markets “because they create perverse incentives,” effectively siding with the senators’ concerns. Polymarket, meanwhile, defended the concept, telling reporters it does not “profit from outcomes” and arguing that pulling the markets “does not prevent a tragedy” but instead makes “timely, market-based information less accessible” to people trying to understand what might happen next. The company added that it currently has no active wildfire contracts and hasn’t for some time.

The debate lands at a messy moment for prediction market oversight more broadly. New York Attorney General Letitia James recently sued Kalshi, alleging the platform operates as an illegal gambling business under state law, while Kentucky has sued both Kalshi and Polymarket over similar claims tied to event contracts that mirror traditional sports betting. A federal judge in Michigan separately ruled that sports-related contracts fall outside the CFTC’s exclusive jurisdiction, leaving the regulatory lines around these products very much unsettled even as more states push back against platforms that argue federal law should preempt state gambling regulation entirely.

What Comes Next

With the CFTC’s August 14 deadline approaching, the agency’s response could shape how prediction markets are allowed to operate as wildfire season intensifies and as more states weigh legal action against Kalshi and Polymarket. For now, the split between the two biggest platforms — one voluntarily barring wildfire contracts, the other defending them as useful information tools — highlights just how unresolved the question of what belongs on a prediction market remains. Bettors who prefer wagering through licensed and regulated sportsbooks rather than unregulated event-contract platforms can compare current options through Hello Rookie’s coverage of legal, state-by-state betting markets.