decrypt.co
In brief
- Nine Democratic senators urged the CFTC to prohibit prediction market contracts tied to wildfires.
- Lawmakers said the markets could create incentives for arson, insider trading, and profiting from natural disasters.
- The request comes as prediction markets face growing legal and political scrutiny across the U.S.
Nine Democratic senators are urging the Commodity Futures Trading Commission to crack down on prediction markets that let users bet on wildfires, arguing the contracts create dangerous incentives to profit from natural disasters.
In a letter earlier this week to CFTC Chair Michael Selig, Sen. Jeff Merkley (D-Ore.), Sen. Alex Padilla (D-Calif.), Sen. Adam Schiff (D-Calif.), and six other Democratic senators asked the agency to ban wildfire-related event contracts, warning they could encourage arson, enable insider trading, and put public safety at risk.
“Offering bets on destructive wildfires threatens to minimize communities’ suffering all so the rich and powerful can profit,” the Senators wrote. “There’s also the heightened risk—according to state and local fire officials—that individuals could be tempted to commit arson in order to make sure their bets are successful.”
The senators pointed to reports that Polymarket accepted more than $1.2 million in bets tied to California's Palisades and Eaton fires in 2025. They also cited newer platforms that let users bet on wildfires, arguing the markets encourage people to speculate on destructive events.
“By offering contracts on fires, prediction market sites run the risk of encouraging people to influence fires that have already started, creating additional concerns around public safety and insider trading,” they wrote.
Prediction markets let users buy and sell contracts and bet on whether future events will happen. Prediction markets such as Myriad, launched by Decrypt's parent company Dastan, have rapidly gained traction in recent years, enabling users to predict the outcomes of everything from crypto market movements to geopolitical events.
The senators argued the CFTC should rein in wildfire betting before the start of next year's wildfire season.
“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 (DCMs) try to offer these,” the letter said. “The CFTC must lead the charge to rein in these contracts in the U.S. and offshore and put in place common-sense guardrails to prevent people from profiting as wildfires threaten communities.”
The letter comes as prediction markets face increasing scrutiny from lawmakers and regulators. In April, investment bank Bernstein said annual trading volume could reach $1 trillion by 2030 as more institutional investors enter the market. That same month, President Donald Trump softened his criticism of prediction markets after previously saying they had turned the world into "a casino."
The fight over how prediction markets should be regulated has grown in recent months. In May, Minnesota became the first state to ban prediction markets before the CFTC and Department of Justice sued the state, arguing the law conflicted with federal authority.
In June, Kentucky sued Kalshi and Polymarket over claims they were operating illegal sports betting platforms, and a federal judge in Michigan ruled that sports prediction markets are not regulated by the CFTC, adding to the uncertainty over who should oversee the industry.