US Senators Target Wildfire Bets in New CFTC Rule Fight

Democratic Senators Want Wildfire Prediction Contracts Banned Over Arson Fears

Nine U.S. senators asked the Commodity Futures Trading Commission to restrict prediction contracts tied to wildfires, arguing that traders could profit from fires lasting longer, spreading farther or destroying more property. The Aug. 3 letter requests answers from CFTC Chairman Michael Selig by Aug. 14.

Sen. Jeff Merkley (D-OR) led the letter with Sens. Alex Padilla (D-CA), Jeanne Shaheen (D-NH), Adam Schiff (D-CA), Jacky Rosen (D-NV), Catherine Cortez Masto (D-NV), Martin Heinrich (D-NM), Ron Wyden (D-OR) and Amy Klobuchar (D-MN), the ranking Democrat on the Senate Agriculture Committee, which oversees the CFTC. All signatories represent states hit by fires this season, with roughly 1.7 million acres having burned in Oregon alone through late July.

The senators are asking whether the commission is considering prohibiting designated contract markets from offering wildfire event contracts as part of the rulemaking now underway, “given they are against the public’s interest,” and whether it has any plans to curb wildfire bets on prediction markets in the United States.

The lawmakers stated they wrote following public reporting on the markets and that Polymarket generated more than $1.2 million in trading tied to the Palisades and Eaton fires that struck the Los Angeles area in January 2025. One official market covering when the Palisades fire would be fully contained recorded $711,587 in volume, while other contracts covered 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, adding there is “also 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.”

As of writing, no confirmed incident of arson has been linked to prediction-market activity, and the letter does not allege that any trader started a fire or interfered with emergency operations – but the logic is the same insider-access concern behind the federal case against an Army master sergeant who turned $33,000 into more than $404,000 on Polymarket ahead of the Maduro raid.

Polymarket rejected the framing. “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.”

The Commodity Exchange Act allows the CFTC to prohibit event contracts involving terrorism, assassination, war, gaming, unlawful activity or another similar activity that the commission determines by rule to be contrary to the public interest. Wildfires are not expressly listed in the act. Merkley previously led an April letter asking the CFTC to prohibit contracts tied to elections, war, military action, sports and government decisions when they lack an economic hedging purpose. The commission did not take that route: its June proposal accepted that sports contracts involve gaming while proposing to permit nearly all of them through a case-by-case 90-day review process, rather than barring any category outright. In this process, the regulator would assess each contract separately using factors including economic utility, hedging demand, manipulation risk, participant protections and the availability of reliable settlement information.

The senators acknowledged in their letter that the wildfire contracts they identified appear to have been offered only through Polymarket’s international platform, which states on its own market pages that it operates independently from the CFTC-regulated Polymarket US. The request is therefore partly preemptive – as they put it, “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.