Nine US senators have called on the Commodity Futures Trading Commission (CFTC) to prohibit prediction contracts linked to the duration, spread and destruction caused by wildfires, saying such markets could create an incentive for arson.
The lawmakers want answers from CFTC chairman Michael Selig by 14 August on whether the regulator intends to stop designated contract markets offering wildfire-related event contracts.
The letter, dated 3 August, was led by Senator Jeff Merkley of Oregon and signed by Alex Padilla, Jeanne Shaheen, Adam Schiff, Jacky Rosen, Catherine Cortez Masto, Martin Heinrich, Ron Wyden and Amy Klobuchar, the ranking Democrat on the Senate Agriculture Committee, which oversees the CFTC.
All nine senators represent states affected by wildfires this season. About 1.7 million acres had burned in Oregon alone by late July.
The senators asked whether the CFTC was considering a ban as part of its current rule-making process, arguing that the contracts were “against the public’s interest”. They also asked whether the commission had plans to restrict wildfire betting on prediction markets operating in the United States.
They said their concerns followed reports that Polymarket generated more than $1.2m in trading linked to the Palisades and Eaton fires, which affected the Los Angeles area in January 2025.
One market on when the Palisades fire would be fully contained recorded $711,587 in trading volume. Other contracts were linked to the acreage burned and whether the fire would reach Beverly Hills.
“Offering bets on destructive wildfires threatens to minimize communities’ suffering all so the rich and powerful can profit,” the senators wrote.
They also warned of “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.”
There is no confirmed case linking arson to prediction-market activity. The letter does not claim that any trader started a fire or disrupted emergency operations.
However, the senators said the concern was comparable to the insider-access issue at the centre of a federal case involving an Army master sergeant who turned $33,000 into more than $404,000 on Polymarket before the Maduro raid.
Polymarket rejected the senators’ characterisation of its markets.
“When tragedy unfolds, people turn to the news for commentary and to Polymarket for information,” the company said in a statement to Bloomberg. “While we recognize the risks associated with these markets, removing them does not prevent a tragedy. It only makes timely, market-based information less accessible to those seeking to understand what may happen next.”
Regulatory powers
The Commodity Exchange Act gives the CFTC authority to prohibit event contracts involving terrorism, assassination, war, gaming, unlawful activity or another similar activity that the commission determines through rule-making to be contrary to the public interest.
Wildfires are not specifically named in the legislation.
Merkley previously led an April letter calling on the CFTC to prohibit contracts linked to elections, war, military action, sports and government decisions where they did not serve an economic hedging purpose.
The commission did not adopt that approach in its June proposal. Instead, it accepted that sports contracts involve gaming while proposing that almost all such contracts should be considered through a case-by-case review lasting 90 days, rather than being prohibited by category.
Under that process, the regulator would assess each contract individually, considering its economic utility, demand for hedging, the risk of manipulation, protections for participants and whether reliable settlement information was available.
The senators acknowledged that the wildfire contracts they identified appeared to have been offered only through Polymarket’s international platform. Market pages on that platform state that it operates independently from Polymarket US, which is regulated by the CFTC.
Their request is therefore partly intended to anticipate future activity. The senators wrote that “it is only a matter of time before other U.S. based Designated Contract Markets try to offer these.”
The CFTC did not immediately respond to Bloomberg’s request for comment.
