Nine US senators have urged the Commodity Futures Trading Commission (CFTC) to restrict prediction market contracts tied to wildfires, citing concerns that financial incentives could encourage manipulation of active fires or the misuse of non-public information.
Jeff Merkley led the letter alongside Alex Padilla, Jeanne Shaheen, Adam Schiff, Jacky Rosen, Catherine Cortez Masto, Martin Heinrich, Ron Wyden and Amy Klobuchar.
The senators requested answers from CFTC Chair Michael Selig by August 14 on whether the regulator is considering prohibiting wildfire contracts on designated contract markets.
The letter follows reporting that Polymarket accepted more than $1.2m in wagers across almost 20 questions concerning the Palisades and Eaton fires in January 2025.
Contracts covered the fires’ containment dates, geographic spread and total damage. The two fires killed 31 people and destroyed more than 16,000 structures in the Los Angeles area.
The senators wrote: “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.”
Polymarket’s contracts were offered offshore. The letter asks how the CFTC intends to address offshore activity and whether US-registered exchanges should be prevented from introducing similar markets.
The request arrives during a wider review of event contract regulation. In June, the CFTC proposed a framework for determining whether contracts involving gaming, war, terrorism, assassination or unlawful conduct are contrary to the public interest.
The proposal would establish a 90-day review process and assess contracts individually rather than imposing a category-wide prohibition.
That approach followed Selig’s February withdrawal of a 2024 proposal that would have prohibited certain political and sports contracts.
The CFTC said the replacement framework would support responsible market development while applying the Commodity Exchange Act’s public-interest restrictions.
Wildfire markets also raise questions about whether their prices provide information useful to emergency services.
The US Forest Service and Cal Fire have said they do not use prediction market data, relying instead on scientific fire-behavior models, weather information and operational data.
The federal debate is developing alongside litigation over whether event contracts fall exclusively under CFTC jurisdiction or remain subject to state gambling laws. A Minnesota federal judge temporarily blocked the state’s prediction market ban after the CFTC, Kalshi and Polymarket argued that federal law preempts state restrictions.
The senators also asked whether contracts measuring how long a fire lasts, how far it spreads or how much it destroys can satisfy the Commodity Exchange Act’s public-interest standard
