Nine U.S. Senators Urge CFTC to Ban Crypto Prediction Markets on Wildfires

Nine Democratic senators are pressing the Commodity Futures Trading Commission to shut down prediction-market contracts that let users wager on wildfires, warning the bets create dangerous incentives to profit from natural disasters. In a letter this week to CFTC Chair Michael Selig, senators including Jeff Merkley (D‑Ore.), Alex Padilla (D‑Calif.) and Adam Schiff (D‑Calif.) asked the agency to ban wildfire-related event contracts. The lawmakers say such markets 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 letter reads, adding that state and local fire officials fear people could be tempted to set fires to make their wagers pay off. The senators singled out Polymarket, citing reports that the platform accepted more than $1.2 million in wagers tied to California’s Palisades and Eaton fires in 2025, and flagged newer services that similarly let users bet on blazes. They warned it’s only a matter of time before U.S. regulated exchanges—so‑called Designated Contract Markets (DCMs)—try to list comparable contracts, and urged the CFTC to act now, before the next wildfire season, to establish “common‑sense guardrails” both domestically and offshore. Why it matters to crypto: prediction markets—platforms where users buy and sell contracts betting on whether future events will occur—have surged in popularity in recent years. On‑chain and crypto-native markets such as Myriad (launched by Dastan, the parent company of Decrypt) let users speculate on everything from crypto price moves to geopolitical outcomes, and institutional interest appears to be growing. That growth has drawn regulatory and political scrutiny. Investment bank Bernstein projected in April that annual trading volume in prediction markets could reach $1 trillion by 2030 as institutional players enter. The same month, President Donald Trump tempered earlier criticism of prediction markets, calling them less clearly a “casino.” At the state and federal level, however, the legal landscape is contested: Minnesota moved to ban prediction markets (prompting a CFTC and DOJ lawsuit arguing federal preemption), Kentucky sued Kalshi and Polymarket alleging illegal sports betting, and a federal judge in Michigan recently ruled that sports prediction markets are not regulated by the CFTC—adding to uncertainty over who should oversee the industry. The senators’ letter underscores a flashpoint for regulators and the crypto sector: how to balance a rapidly evolving market’s innovation and liquidity against public‑safety risks and potential criminal incentives when real‑world disasters become tradable events.