Senators Push CFTC to Ban Wildfire Bets on Prediction Markets

In brief

• Nine Democratic senators urged the CFTC to prohibit prediction market contracts tied to wildfires.
• Lawmakers said the markets could create incentives for arson, insider trading, and profiting from natural disasters.
• The request comes as prediction markets face growing legal and political scrutiny across the U.S.

Nine Democratic senators are urging the Commodity Futures Trading Commission to crack down on prediction markets that let users bet on wildfires, arguing the contracts create dangerous incentives to profit from natural disasters.

In a letter earlier this week to CFTC Chair Michael Selig, Sen. Jeff Merkley (D-Ore.), Sen. Alex Padilla (D-Calif.), Sen. Adam Schiff (D-Calif.), and six other Democratic senators asked the agency to ban wildfire-related event contracts, warning they could encourage arson, enable insider trading, and put public safety at risk.

“Offering bets on destructive wildfires threatens to minimize communities’ suffering all so the rich and powerful can profit,” the Senators wrote. “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.”