Securities Regulation Daily Wrap Up, EXCHANGES AND MARKET REGULATION—Nine Democratic Senators ask CFTC to crack down on prediction market wildfire bets, (Aug 5, 2026)
The Senators believe the bets commodify human suffering and increase the risk that individuals may start fires to ensure their bets are successful.
Led by Senator Jeff Merkley (D-OR), seven U.S. senators have written to the CFTC to ask it to take action against prediction markets that are offering event contracts for individuals to bet on wildfires. With fires burning in Oregon, Washington, and elsewhere across the U.S., the Senators urged the CFTC to put guardrails in place to prevent gamblers from making a profit as wildfires threaten communities.
The Senators believe that prediction markets, which have already been criticized for inviting speculation on war, political violence, and public emergencies, raise ethical and public policy concerns. “These markets risk creating perverse incentives, undermining public trust and commodifying human suffering in ways that warrant careful scrutiny,” they wrote.
Perverse incentives. Among the perverse incentives, they claim, is the heightened risk cited by state and local fire officials that individuals could be tempted to start fires in order to ensure their bets are successful. By offering contracts on fires, the Senators argued, prediction markets risk encouraging people to influence fires that have already started, creating additional concerns around public safety.
The Senators acknowledged that the wildfire bets currently appear to be offered only on the offshore Polymarket site, but they believe it is only a matter of time before other U.S.-based designated contract markets (DCMs) try to offer them.
Seeking answers. In their letter, they asked that the CFTC provide answers to the following questions by August 14, 2026:
Is the CFTC considering prohibiting DCMs from offering event contracts on wildfires as part of the rulemaking process currently underway?
Does the CFTC have any plans to curb bets on wildfires on prediction markets in the U.S., and does it plan to address the contracts being offered on offshore markets?
Does the CFTC believe that event contracts offered on how long a wildfire would last, how much a fire would destroy, and how much a fire would grow by, are in the public interest?
Along with Sen. Merkley, the letter was signed by Sen. Alex Padilla (D-CA), Sen. Jeanne Shaheen (D-NH), Sen. Adam Schiff (D-CA), Sen. Jacky Rosen (D-NV), Sen. Catherine Cortez Masto (D-NV), Sen. Martin Heinrich (D-NM), Sen. Ron Wyden (D-OR), and Sen. Amy Klobuchar (D-MN).
The letter is the latest of several actions taken by Sen. Merkley to encourage the CFTC to address insider trading and betting on elections, war, and government actions. He wrote the STOP Corrupt Bets Act to ban betting through prediction markets on issues that are against the public interest, and introduced the End Prediction Market Corruption Act to prevent the President, Vice President, Members of Congress, and other public officials from trading event contracts.
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