Democratic senators push CFTC to crack down on wildfire prediction markets over arson fears

A group of Democratic senators is asking the Commodity Futures Trading Commission to either restrict or outright ban prediction market contracts tied to wildfires. Their argument: letting people profit from fires burning longer and hotter creates a financial incentive for arson. The push, led by Sen. Jeff Merkley of Oregon, landed on the CFTC’s desk on August 3, 2026. The senators describe the current period as another “record-breaking fire season,” and they want regulators to act before speculation and real-world destruction become any more intertwined.

During the devastating Los Angeles wildfires in January 2025, offshore betting platforms saw over $1.2 million in wagers placed on fire-related outcomes. Traders were betting on metrics like total acreage burned and how long it would take to contain specific blazes, including the Palisades and Eaton fires.

No confirmed incidents of arson have been linked to prediction market activity. The senators’ concern is theoretical, rooted in the idea that financial incentives could eventually push someone to strike a match.

CFTC-regulated platforms are already steering clear of the fire. Kalshi doesn’t list wildfire-specific contracts. Neither does Polymarket’s US-facing operations. The actual wildfire betting activity the senators are concerned about happened on offshore platforms, which sit largely outside the CFTC’s direct jurisdiction.

Meanwhile, a play-money platform called Wyldfyre has launched with a focus on California wildfire predictions. No real money changes hands — it’s designed to aggregate crowd-sourced forecasts without actual financial stakes.

Kalshi successfully fought the CFTC in court for the right to offer election contracts. Polymarket became a household name during the 2024 presidential race and operates on the Polygon blockchain. The wildfire debate highlights a tension at the heart of prediction markets: they work best when they cover events with real consequences, but that’s also when they’re most ethically fraught.

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