Lawmakers Press Derivatives Regulator to Restrict Fire Wagering as Rule Review Advances

The Letter and the Fear Behind It

A group of Democratic senators wants to know if the federal government is about to crack down on wildfire bets.

In a letter to Michael Selig, the chairman of the U.S. Commodity Futures Trading Commission, Senator Jeff Merkley and others warned that the agency "cannot allow these prediction markets to offer unrestricted betting on wildfires." The senators wrote that "As the United States faces yet another record-breaking fire season this year," the CFTC needs to act.

Their worry is simple: if money is on the line, someone might decide to light a match. The letter also presses the commission on whether it will restrict wildfire wagers on exchanges in the U.S. and abroad.

The fear of arson is not hard to understand. "The vast majority of wildfires in California specifically are human caused," said Michael Gollner, a UC Berkeley associate professor who studies fire. He noted that although most ignitions are accidental, arson can be a factor.

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By late July, the Statesman Journal of Salem reported, roughly 1.7 million acres in Oregon had burned. Smoke from severe Canadian fires has also drifted into crowded U.S. metro areas over the past few weeks, worsening air quality.

What a Prediction Market Actually Is

These platforms, known as prediction markets, have grown rapidly over the last year and a half and let users wager on nearly any subject, from sports and entertainment to geopolitics. The CFTC classifies these venues as derivatives exchanges.

CFTC-regulated venues, including Kalshi and Polymarket US - the company's federally supervised U.S. arm - do not list wildfire-specific contracts. Kalshi and several other providers, however, permit wagers on events like earthquakes and hurricanes. Some observers see a key difference: those events are treated as acts of God, while wildfires are commonly traced to human actions.

A new site called Wyldfyre has emerged solely for wildfire wagering in California, declaring: "You can't predict fire, but you can trade on it." The site does not use real money; it currently says it is "play money only." Wyldfyre's terms say it is "not operated under, or subject to, financial-services or gambling regulations," adding that no purchases, deposits, or payouts exist. The site does not disclose who created or maintains it.

Gollner said many people study wildfire prediction, not for wagering but because fires can be so destructive. He added that much work goes into identifying the places at highest risk and then reducing that risk.

What Happens Next

Agency officials continue to consider comments submitted on the proposed rule. As of publication time, the CFTC had not responded. Neither had Polymarket or Wyldfyre.

The letter arrives while the CFTC's broader review of prediction contracts is underway. That review could add restrictions or prohibit some contracts as contrary to the public interest, and the senators want wildfire bets to fall within its scope.

Employees may not use confidential government data for their own financial gain - including wagering on prediction markets - or to help someone else profit, according to David Acuña, a spokesperson for the California fire agency.

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