Nine Democratic senators want the Commodity Futures Trading Commission (CFTC) to block wildfire-related event contracts, fearing they could incentivize arson. Last year, Polymarket offered contracts on wildfires near Los Angeles, and the decision hasn’t sat well with some lawmakers.
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Concerns Over Financial Incentives for Arson
The senators’ letter, dated August 3, was aimed at CFTC chair Michael Selig. It highlighted that more than $1.2 million was traded on contracts related to the Palisades and Eaton fires in January 2025. These wildfires devastated Los Angeles, resulting in 31 deaths. Led by Sen. Jeff Merkley (D-Ore.), the group emphasized these contracts could foster “perverse incentives” and undermine public trust by commodifying suffering. The senators didn’t just stop at Polymarket. They also noted the existence of Wyldfyre, a California-based platform using simulated trading to predict wildfires. And wyldfyre’s slogan, “You can’t predict fire, but you can trade on it,” was cited as part of their concerns about trivializing disaster.
Regulators Yet to Crack Down
No regulated prediction market under the CFTC currently offers contracts on wildfire events. Polymarket’s main crypto marketplace, which is offshore, continues to operate without such restrictions, prompting ongoing questions about oversight gaps. The senators pushed the CFTC for clear answers on whether prohibiting wildfire contracts is on the agenda and what measures could address these offshore markets. But “What measures, if any,” the letter queried, “does the CFTC intend to take regarding these contracts offered in the United States or similar markets operating offshore?”
Polymarket Defends Its Position
In response to the controversy, Polymarket stood by its offerings. In a comment to Bloomberg, the company likened its service to a news outlet, providing market-based forecasting information during tragedies. “Removing these markets doesn’t prevent tragedy,” the company stated, implying that their presence could assist in understanding potential developments. Yet, concerns remain. Offering such contracts could, as state and local fire officials have noted, entice individuals to commit arson to ensure profitable outcomes—a risk too great to ignore.
Next Steps for the CFTC
The CFTC now faces pressure to clarify its stance on these contentious contracts. The commission is expected to address the issue in its upcoming rulemaking sessions. Whether it will issue guidance or enforcement measures remains to be seen, but with growing scrutiny, the CFTC’s actions will be closely watched by both industry players and lawmakers.
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