As wildfires rip through the Pacific Northwest, a group of lawmakers is calling on federal regulators to intervene to stop some very grim gambling activity that poses dangers of its own.
Oregon Sen. Jeff Merkley led a group of lawmakers this week in asking for the Commodity Futures Trading Commission (which regulates U.S. derivatives markets) to crack down on wildfire-related betting by putting “common-sense guardrails” in place. In Oregon, Portland topped global charts for dangerous air quality this week during what is shaping up to be one of the worst fire seasons of all time.
“Prediction markets have been enabled to expand rapidly, increasingly inviting speculation on war, political violence, disasters, and public emergencies that raise ethical and public policy concerns,” the senators wrote in the letter. “These markets risk creating perverse incentives, undermining public trust, and commodifying human suffering in ways that warrant careful scrutiny.”
It’s not just a hypothetical. During the Eaton and Palisades fires that destroyed parts of Los Angeles last year, more than a million dollars circulated on prediction markets as gamblers raced to cash in. On Polymarket, users made alarmingly specific bets on wildfire behavior—such as how much of the city the fires would destroy and how long they would burn—abstracting the tragedy for the sake of profit.
With a severe wildfire season unfolding unsettlingly early this year, lawmakers are worried that prediction markets like Kalshi and Polymarket may incentivize desperate gamblers to make their own bets come true, resulting in devastating consequences. Sen. Merkley was joined by Sens. Alex Padilla (D-CA), Jeanne Shaheen (D-NH), Adam Schiff (D-CA), Jacky Rosen (D-NV), Catherine Cortez Masto (D-NV), Martin Heinrich (D-NM), Ron Wyden (D-OR), and Amy Klobuchar (D-MN) in pressing the CFTC for action.
Prediction markets spiral out of control
The dark reality of betting markets might have once seemed unimaginable, but gamblers have already illegally taken shocking bets to make hundreds of thousands of dollars, some risking decades in prison in the process. In a world where you can bet on everything from an NBA point spread to the invasion of Iran, prediction markets are the Wild West right now—and some people are reasonably starting to worry.
Earlier this year, a U.S. soldier was arrested for leveraging classified government intel into a bet that won him $400,000 on Polymarket. The Army Special Forces master sergeant, Gannon Ken Van Dyke, “was involved in the planning and execution of Operation Absolute Resolve”—the clandestine mission that captured Venezuelan President Nicolás Maduro in January.
Gamblers with a high appetite for risk might be tempted to trade on their inside knowledge or even instigate the circumstances they’re betting on for a shot at life-changing money that’s powered the prediction market boom.
“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 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.”
As prediction markets run wild, states are starting to figure out how to get some safeguards in place. In March, lawmakers from California and Utah proposed legislation to outlaw betting on “terrorism, assassination, war, gaming, or illegal activity,” criticizing prediction markets as a very real threat to national security.
In Utah, a federal judge just ruled that the state can crack down on prediction markets like Kalshi and Polymarket using existing anti-gambling laws. “Gambling is gambling, no matter what any company calls it,” Utah Attorney General Derek Brown said.
