On Aug. 3, nine senators belonging to the Democratic Party wrote to the Commodity Futures Trading Commission (CFTC) to ban wildfire betting because they claim it creates dangerous incentives
On Aug. 3, nine senators belonging to the Democratic Party wrote to the Commodity Futures Trading Commission (CFTC) to ban wildfire betting because they claim it creates dangerous incentives to profit from natural disaster-related bets on prediction markets.
Senators Jeff Merkley (D-OR), Alex Padilla (D-CA), Jeanne Shaheen (D-NH), Adam Schiff (D-CA), Jacky Rosen (D-NV), Catherine Cortez Masto (D-NV), Martin Heinrich (D-NM), Ron Wyden (D-OR), and Amy Klobuchar (D-MN) pressed the CFTC Chair Michael Selig on the regulatory body's plans to crack down on prediction markets offering event contracts for individuals to bet on wildfires.
The letter also referred to a news report that Polymarket accepted more than $1.2 million in bets surrounding the Palisades and Eaton fires in January 2025. One of the most destructive wildfires ever in the history of Los Angeles, California, it claimed 31 lives and destroyed more than 16,000 structures.
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Launched in 2020, the New York City-headquartered Polymarket is the world’s largest prediction market. It lets traders predict events like future Bitcoin (BTC) prices, election results, government shutdowns, etc., by paying with cryptocurrency.
Users can deposit Circle's USDC stablecoin, a type of digital dollar, and trade shares that represent the likelihood of specific future outcomes.
In April, Polymarket announced plans to migrate from USDC to Polymarket USD, a new collateral token backed 1:1 by USDC.
Polymarket faced legal scrutiny over election-related contracts during the 2024 U.S. presidential race, though Donald Trump eased the norms for the industry once he took office.
Several instances of insider trading on Polymarket have also come to light so far, such as a Google employee using confidential information available only at the company to bet a series of profitable Google-related trades.
There are several wildfire-related contracts on Polymarket such as how long a wildfire would last, how much a wildfire would destroy, and how much a wildfire would grow by.
The senators urged the CFTC to introduce guardrails to prevent "gamblers" from making a profit as wildfires threaten communities nationwide.
They warned that though these wildfire bets appear to be offered only on the offshore Polymarket website so far, other U.S.-based prediction market platforms could try offering them.
“Offering bets on destructive wildfires threatens to minimize communities’ suffering all so the rich and powerful can profit,” the senators wrote in a letter to CFTC Chair Michael Selig. “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. 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.”
In the letter, the senators asked the CFTC to respond by Aug. 14 if and how it plans to curb such dangerous wildfire bets in the U.S. and offshore.
TheStreet Roundtable reached out to Polymarket for a comment on the matter and did not receive a comment by the time of publishing this report. We will update it as soon as we have a response.
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