AIBRIEF
Nine Democrats tell the federal commodities regulator that wildfire contracts create arson and insider trading risks as Spokane arrests an arson suspect and evacuates a quarter of the city.
A group of nine US senators asked the Commodity Futures Trading Commission on August 3 to crack down on prediction-market contracts that let people bet on wildfires, citing arson risk and insider trading as blazes continue in the Pacific Northwest.
In a public letter, Senators Merkley, Padilla, Shaheen, Schiff, Rosen, Cortez Masto, Heinrich, Wyden, and Klobuchar argued that wildfire contracts create "perverse incentives": profiting from community suffering, rewarding arson, and letting insiders trade on fires already burning. The letter cited state and local fire officials' concerns about the arson effect.
The senators pointed to Polymarket's January 2025 market on the Los Angeles wildfires and a separate site that takes "simulated bets" exclusively on California wildfires. The CFTC has not publicly responded.
Kalshi, a CFTC-regulated exchange, told Ars Technica it does not host wildfire markets "because they create perverse incentives." The letter does not name an enforcement mechanism, and the agency's reach over event contracts has been litigated in Kalshi v. CFTC.
The day after the letter, the Spokane County Sheriff's Office announced an arson arrest tied to active Pacific Northwest fires that have destroyed several hundred structures and forced an evacuation order covering roughly a quarter of the city.