Senators Push for Crackdown on Wildfire Prediction Markets

Senators from Oregon, California, Nevada, Minnesota, and New Hampshire have written to the Commodity Futures Trading Commission (CFTC), urging action against prediction markets that allow individuals to bet on wildfires. The letter highlights concerns that such platforms could incentivize arson and other destructive activities, potentially undermining public safety and community resilience. The senators argue that offering bets on destructive wildfires threatens to minimize communities’ suffering for the benefit of the wealthy and powerful. The letter comes amid ongoing wildfires in the Pacific Northwest, with several hundred buildings already destroyed and a quarter of Spokane’s population evacuated.

Risks of Monetizing Natural Disasters

Wildfire prediction markets, such as Polymarket and Kalshi, have drawn criticism from fire experts and local officials. Michael Gollner, a professor at the UC Berkeley Fire Research Lab, warned that these markets could create a perverse incentive for arson or other destructive activities. “We should not focus our energy on monetizing the outcome of devastating natural disasters,” he said. Instead, he emphasized the need to invest in preventing such events before they occur. The senators’ letter specifically cited Polymarket, which hosted bets on wildfires in Los Angeles in January 2025, and another platform that accepts simulated bets exclusively on California wildfires.

Wildfire experts say the mere existence of such markets is alarming. They argue that allowing bets on disasters could encourage harmful behavior and reduce the focus on prevention. Riva Duncan, president of Grassroots Wildland Firefighters, said her community is “pretty disgusted” by these betting markets. “To think there are people hoping to make money off tragedy is beyond comprehension,” she said. “They should ask some of the folks in Spokane who just lost their homes how they feel about it.”

Industry Responses and Regulatory Uncertainty

Kalshi, one of the major prediction markets, has taken a firm stance against offering wildfire betting, stating that such markets create perverse incentives. A spokesperson for Kalshi told Ars by email that the company does not allow wildfire markets “because they create perverse incentives.” Polymarket, however, has defended its approach, asserting that it does not profit from outcomes and that people come to the platform for information. A spokesperson for Polymarket noted that the company does not currently offer any markets on wildfires and has not for some time. Despite this, the company declined to answer follow-up questions about whether it claims to provide the most accurate information to people experiencing wildfires.

Wildfire experts and community leaders are deeply concerned about the ethical implications. They argue that monetizing disaster outcomes could shift focus away from prevention and resilience. The CFTC has not yet responded to the senators’ inquiry, but the letter has sparked a broader debate about the role of prediction markets in public safety. As wildfires continue to burn across the Pacific Northwest, the call for regulation of these markets grows stronger, with concerns over both public safety and the ethical implications of monetizing disaster outcomes.

The senators’ letter underscores a growing concern about the ethical and regulatory implications of prediction markets. While these platforms are designed to aggregate information and offer insights, critics argue that they can inadvertently encourage harmful behavior. The letter also highlights the need for clearer guidelines on how such markets operate, particularly in areas where the consequences of betting on disasters could be severe. As the debate continues, the CFTC faces pressure to clarify its stance on the regulation of these markets, balancing innovation with public safety and ethical responsibility.