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Senators urge CFTC to curb wildfire prediction markets

Senators urge CFTC to curb wildfire prediction markets

Democratic lawmakers want the agency to block wildfire-linked event contracts, arguing they could reward destructive behavior even as the identified trading took place offshore.

Fact Check
Two official U.S. Senate press releases dated August 3, 2026 (Merkley and Cortez Masto) directly confirm every core element of the claim: Democratic lawmakers led by Sen. Jeff Merkley formally urged the CFTC (Chair Michael Selig) to restrict or ban wildfire-linked event contracts, explicitly citing arson incentives as a public safety risk. The Cortez Masto release specifies the concern about 'offshore prediction markets,' consistent with the claim that most identified betting activity occurred offshore. Cryptobriefing and Bloomberg corroborate the arson framing and the Polymarket wildfire markets during the 2025 LA fires. The evidence is authoritative and mutually consistent.
Summary

Democratic senators have asked the Commodity Futures Trading Commission to restrict or ban prediction market contracts tied to wildfire outcomes, arguing that bets on containment timing, acreage burned and similar measures could create incentives for arson or other misuse. The effort, led by Oregon Senator Jeff Merkley, follows trading during the January 2025 Los Angeles fires that lawmakers said totaled about $1.2 million across wildfire-related wagers. One Palisades Fire market tied to when the blaze would be fully extinguished drew $711,587 in volume, and the largest single wager in that market was $274,797 on the latest available date, which lawmakers cited as evidence that money was positioned for slower firefighting progress. The senators framed the request in a letter to CFTC Chairman Michael Selig and pointed to the agency's June 10 proposal for contract-by-contract review of terrorism, assassination, war, gaming and illegal-activity markets, noting that wildfire contracts were not included. No confirmed arson case has been linked to prediction markets, and the concern remains theoretical. The identified trading took place on offshore platforms, while CFTC-regulated venues such as Kalshi and Polymarket's US-facing operations do not list wildfire-specific contracts. A play-money platform, Wyldfyre, has also launched to aggregate California wildfire forecasts without real-money stakes.

Terms & Concepts
  • prediction market contracts: Contracts whose value depends on the outcome of future real-world events.
  • event contracts: Financial contracts that pay out based on whether a specific event or outcome occurs.
  • offshore platforms: Trading or betting venues operating outside a domestic regulator's main jurisdiction.