A coalition of nine Democratic Senators has reached out to the federal Commodity Futures Trading Commission (CFTC), the regulatory body for prediction markets. They expressed concerns that event contracts associated with wildfires could unintentionally promote arson activities for financial gain.
The letter, led by Senator Jeff Merkley (D-Ore.), comes as Oregon and various regions in the Pacific Northwest are still dealing with weeks of wildfire outbreaks.
$1.2 Million in L.A. Fires Transactions
In a letter dated August 3rd, addressed to CFTC Chairman Michael Selig, the senators highlighted that Polymarket facilitated over $1.2 million in trades on contracts linked to the Palisades and Eaton fires in January 2025, which resulted in extensive damage in the Los Angeles area and the tragic loss of 31 lives.
The senators also mentioned Wyldfyre, a California-based prediction platform that revolves around wildfires and currently employs simulated trading instead of real-money betting, marketing itself with the tagline: “You can’t predict fire, but you can trade on it.”
The letter emphasized that such markets “risk creating misguided incentives, eroding public trust, and commodifying human suffering in ways that demand thorough examination,” they wrote.
“Offering bets on devastating wildfires risks trivializing the suffering of communities merely for the sake of profit for the affluent,” they added. “There’s also an increased risk – according to state and local fire authorities – that individuals may be incited to commit arson to ensure their bets succeed.”
At present, no CFTC-regulated prediction market provides contracts related to wildfires. This includes Polymarket’s regulated U.S. branch. However, this is not the case for its offshore counterpart, which operates as the platform’s primary crypto marketplace.
Senators Demand Clarifications
Despite this, the senators urged the CFTC to clarify whether it plans to ban wildfire-related event contracts as part of its ongoing rule review, stating that such markets could be against the public’s best interests.
Additionally, they inquired about the agency’s plans regarding wildfire-related contracts in the United States and how it will address similar markets operating from overseas.
Lastly, they requested information on whether the commission has issued or intends to issue guidance or enforcement actions concerning such markets.
Polymarket Stands Firm
When contacted by Bloomberg, Polymarket defended its stance on wildfire contracts, asserting they serve as a valuable tool for market-based forecasting.
“In the face of tragedy, individuals seek news for insights and turn to Polymarket for information,” the company stated in an email response. “While we acknowledge the inherent risks of these markets, discontinuing them would not avert tragedy. Instead, it would limit the accessibility of timely, market-driven information for those looking to comprehend potential outcomes.”