Democratic senators are pushing the Commodity Futures Trading Commission to ban betting on natural disasters like California wildfires, warning that such markets could incentivize arson. The letter, led by Oregon Senator Jeff Merkley and addressed to CFTC Chairman Michael Selig, argues that event contracts tied to wildfire outcomes pose a direct threat to public safety. The push comes after Polymarket saw $1.2 million wagered on wildfire bets while the Palisades and Eaton fires burned in January 2025.
The case against disaster betting
The senators' letter contends that allowing financial speculation on wildfires creates a dangerous incentive structure. A US Forest Service spokesperson stated that systems tying financial gain to wildfire outcomes risk encouraging misuse, including arson. The concern isn't hypothetical: prosecutors have charged a 29-year-old man with starting the Palisades Fire, which killed 31 people and destroyed 16,246 buildings. He faces up to 45 years and has pleaded not guilty.
History shows that weather betting can lead to fraud. In 1950, St. Louis police shut down a weather betting ring worth $2.6 million a year that involved bribing officials to fake temperature records. More recently, in April 2026, a Polymarket trader bet $119 on Paris weather and won $21,398 after a sensor at Charles de Gaulle Airport spiked. Météo-France called in police over that incident.
Polymarket's wildfire markets
Polymarket opened its first wildfire bet on January 8, 2025 — one day after the Palisades and Eaton fires started. One bet on the Palisades Fire containment date took $711,587, with the largest pool ($274,797) betting on the latest date. That implied traders expected slow containment. The bet was settled using data from fire.ca.gov (CAL FIRE), which refuses to take anything back from these markets.
Polymarket founder Shayne Coplan defended the wildfire markets, saying they carry the least risk and give the most information. The platform added an on-chain detection system in May, but the senators argue that's not enough.
Regulatory gaps and next steps
The CFTC proposed a new rule on June 10 that checks each contract for terrorism, assassination, war, gaming, and illegal activity. Comments closed July 27, but wildfire was not included in the rule. The senators' letter explicitly asks the CFTC to treat disaster betting as a form of gaming or illegal activity under the Commodity Exchange Act.
Meanwhile, Wyldfyre — a play-money site for California fire risk — went offline last month. The senators want the CFTC to act before real-money disaster markets become entrenched. The agency has not yet responded to the letter.
