US Senators Urge CFTC to Ban Prediction Market Bets on Wildfires
Lawmakers warn that allowing financial speculation on natural disasters creates perverse incentives for arson.
A group of Democratic US Senators, led by Adam Schiff and Alex Padilla, is demanding that the Commodity Futures Trading Commission (CFTC) crack down on prediction markets that allow users to bet on the scale and duration of wildfires. The lawmakers argue that such financial instruments transform natural disasters into profit opportunities, creating dangerous incentives for individuals to manipulate outcomes.
In a letter addressed to CFTC Chair Michael Selig, the senators—including Jeff Merkley—expressed grave concern over contracts that speculate on fire growth rates and destruction levels. The lawmakers warned that these markets create "perverse incentives," noting that state and local fire officials believe individuals could be tempted to commit arson to ensure their bets are successful. The senators further stated that offering bets on destructive wildfires "threatens to minimize communities’ suffering all so the rich and powerful can profit.
A Growing Regulatory Push
This demand is part of a broader legislative effort by Senator Schiff to curb the rapid expansion of prediction markets. In March 2026, Schiff introduced the "DEATH BETS Act" to ban contracts involving terrorism, assassination, and death. Additionally, the "Prediction Markets Are Gambling Act" was introduced by Schiff and Senator John Curtis to prohibit casino-style betting on these platforms.
While some regulated platforms have already taken a stand—Kalshi, a major US-based prediction market, stated it prohibits wildfire markets specifically because of the perverse incentives they create—offshore platforms continue to attract US users. The urgency of the request is underscored by current events; as of early August 2026, Oregon's fire season has already topped 2 million acres.
Public Safety Risks
Industry analysts and lawmakers suggest that the intersection of high-stakes speculation and natural disasters introduces a critical public safety risk. When financial gain is tied to the severity of a disaster, the theoretical "efficient market" of a prediction platform clashes with the physical safety of citizens and first responders. The potential for intentional interference with firefighting efforts or the ignition of new fires represents a tangible threat to life and property.
What's Next
The senators are seeking a formal response from the CFTC regarding plans to prohibit these contracts domestically and a strategy to address the influence of offshore platforms. While the core demand for a crackdown is clear, the specific regulatory mechanisms the CFTC will use to police offshore entities remain a key point of contention and a primary focus for the lawmakers moving forward.