Prediction Market Bets on Wildfires Draw Scrutiny From Senators

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(Bloomberg) — A group of Democratic senators urged the Commodity Futures Trading Commission to rein in prediction market trading on wildfires, expressing concern that individuals could be tempted to commit arson to make their bets pay off. 

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“As the United States faces yet another record-breaking fire season this year” the CFTC “cannot allow these prediction markets to offer unrestricted betting on wildfires,” Senator Jeff Merkley and others wrote in a letter to Chairman Michael Selig.

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The lawmakers asked whether the agency plans to curb prediction market wildfire bets on both domestic and offshore platforms. The letter pointed to offshore wagers on Polymarket that racked up more than $1.2 million in trades about the deadly Palisades and Eaton fires in California at the beginning of 2025.

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Devastating fires across Canada have blown smoke deep into dense US population centers in recent weeks and degraded air quality. Merkley’s home state has also faced multiple blazes, with about 1.7 million acres burned in Oregon through late July, according to the Statesman Journal of Salem.

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The CFTC and Polymarket didn’t immediately respond to a request for comment about the letter.

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Prediction markets have surged in popularity over the past 18 months and allow users to place bets on just about anything, from sports and award shows to geopolitical events. The CFTC is reviewing public input on a proposal that would place more guardrails around the platforms — which the agency views as derivatives exchanges — including whether certain contracts are against the public interest and should be prohibited.

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Another platform, Wyldfyre, has recently sprung up specifically for trading on California wildfires, touting: “You can’t predict fire, but you can trade on it.” That company doesn’t use real money to trade, emphasizing “play money only” on the current version of its website. 

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In its terms of service, Wyldfyre says it is “not operated under, or subject to, financial-services or gambling regulations” because there is no purchase, deposit or payout of any kind. The website doesn’t provide information about who created or maintains the platform.

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Wyldfyre didn’t immediately respond to a request for comment.

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Prediction markets overseen by the CFTC like Kalshi and Polymarket US, the federally-regulated arm of the firm, don’t offer wildfire-specific contracts. Many firms including Kalshi, however, do allow trading on natural disasters, such as earthquakes and hurricanes. 

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The difference, some observers say, is those are deemed acts of God while wildfires are often caused by people.  

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“The vast majority of wildfires in California specifically are human caused,” said Michael Gollner, an associate professor researching fire at the University of California, Berkeley. While most ignitions are accidental, arson can play a role, he said.

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There are a lot of people who work on “wildfire prediction,” not for betting but because they can be so destructive, Gollner said. He added there is a lot of focus on figuring out where the highest fire risk is and then taking steps to reduce that risk.

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When asked about prediction markets for wildfires, California Department of Forestry and Fire Protection spokesperson David Acuña said department personnel are not permitted to use sensitive government information for personal financial gain, including participation in prediction markets, or to help others profit.

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