WHAT COULD GO WRONG
Senators demand crackdown on wildfire “prediction markets”
Fire experts warn such markets could incentivize arson.
Credit:
Getty Images
Credit:
Getty Images
Several US senators have written a letter to the Commodity Futures Trading Commission (CFTC), inquiring about the agency’s “plans to crack down on prediction markets” that offer “contracts for individuals to bet on wildfires.”
“Offering bets on destructive wildfires threatens to minimize communities’ suffering, all so the rich and powerful can profit,” wrote the group of senators, who represent Oregon, California, Nevada, Minnesota, and New Hampshire.
The document specifically cites that Polymarket hosted bets in January 2025 on the wildfires in Los Angeles, and it mentions another website which specifically accepts “simulated bets” exclusively on California wildfires.
“There’s 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,” the letter continues. “By offering contracts on fires, prediction market sites run the risk of encouraging people to influence fires that have already started, creating additional concerns around public safety and insider trading.”
The public letter, which was issued Monday, comes as active wildfires continue to burn in significant parts of the Pacific Northwest. On Tuesday, the Spokane County Sheriff’s Office announced the arrest of an arson suspect who is believed to have started one of the blazes currently threatening Spokane, Washington, and the surrounding area. Several hundred buildings have already been destroyed, and approximately one quarter of the city’s population has recently been ordered to evacuate.
The CFTC did not immediately respond to Ars’ request for comment.
Kalshi is one of the major prediction markets. Kalshi spokesperson Elisabeth Diana told Ars by email that the company does not allow such wildfire markets “because they create perverse incentives.”
But its primary rival, Polymarket, has taken a different approach. A spokesperson for Polymarket told Ars in an emailed statement that the company does not “profit from outcomes,” adding that people “come to Polymarket for information.”
“While we are not blind to the risks, removing these markets does not prevent a tragedy but makes the most accurate information less accessible to the people who need it most,” he wrote.
In the same email, the spokesperson also noted “on background”—a condition to which Ars did not agree—that “Polymarket does not currently have any markets on wildfires and has not for some time.”
The spokesperson declined to respond to Ars’ follow-up questions about whether Polymarket was claiming that, by definition, it provides “the most accurate information” to people experiencing a wildfire.
Perverse incentives
For their part, wildfire experts say that they are appalled by the mere existence of prediction markets that allow for trading on these disasters.
“[Such markets] could create a perverse incentive for arson or other destructive activities,” Michael Gollner, a professor at the UC Berkeley Fire Research Lab, emailed Ars. “We should not focus our energy on monetizing the outcome of devastating natural disasters. Instead, we should focus our efforts on mitigating these events with targeting investments before they start so that our communities can become more resilient.”
Riva Duncan, the president of Grassroots Wildland Firefighters, a nonprofit organization made up of current and former federal 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 emailed Ars. “They should ask some of the folks in Spokane who just lost their homes how they feel about it.”