Nine U.S. Senators Urge CFTC to Ban Wildfire Prediction Markets Over Arson Risk

Nine Democratic senators have asked the Commodity Futures Trading Commission to crack down on prediction markets that accept bets tied to wildfires, saying the contracts create perverse incentives to profit from disaster and could put lives at risk. 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.) urged the agency to ban wildfire-related event contracts. The letter warns such markets could encourage arson, enable insider trading, and “minimize communities’ suffering all so the rich and powerful can profit.” It also cites concerns from state and local fire officials that people might be tempted to start fires to make their wagers pay off. The senators point to real-dollar activity as evidence of the problem: Polymarket reportedly accepted more than $1.2 million in bets tied to California’s Palisades and Eaton fires in 2025. They also flag newer prediction platforms—some crypto-native, some offshore—that have begun offering wildfire contracts and argue those products normalize speculation on destructive events. Prediction markets let users buy and sell contracts that pay out if a specified event occurs. In crypto circles these markets have exploded in both web2 and web3 forms, with platforms like Myriad (launched by Decrypt’s parent company, Dastan) enabling wagers on everything from token prices to geopolitical and disaster outcomes. The senators warned that without preemptive action, U.S. designated contract markets (DCMs) could follow suit and start listing wildfire contracts domestically. The letter asks the CFTC to act before next year’s wildfire season and to coordinate with offshore regulators to “put in place common‑sense guardrails” preventing people from profiting as blazes threaten communities. The push comes amid growing regulatory scrutiny of prediction markets more broadly. Investment bank Bernstein has projected annual trading volumes could hit $1 trillion by 2030 as institutional players enter the space. At the same time, the sector’s legal landscape is unsettled: Minnesota moved to ban prediction markets in May and was promptly sued by the CFTC and Department of Justice for allegedly conflicting with federal authority; in June Kentucky sued Kalshi and Polymarket over claims they operated 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. For the crypto ecosystem, the senators’ letter highlights a thorny policy question: how to balance innovation in decentralized and crypto-native prediction markets with the need to prevent incentives that could spark criminal behavior or undermine public safety. The CFTC’s response—and whether it moves to prohibit wildfire contracts or seeks narrower guardrails—could set important precedents for how disaster-linked markets are treated going forward.