California senators Alex Padilla and Adam Schiff have joined a call to demand financial regulators restrict prediction market activity on wildfires, citing concerns that the bets could incentivize arson or other destructive interventions.
“Offering bets on destructive wildfires threatens to minimize communities’ suffering all so the rich and powerful can profit,” reads a letter sent by nine senators to Michael Selig, chair of the Commodity Futures Trading Commission.
“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.”
California fires have torn through over 250,000 acres during the first eight months of 2026 — one year after prediction market users placed more than $1.2 million in bets on the 2025 Eaton fire in Los Angeles. There was another $260,000 in bets on Polymarket last year on how many acres the Palisades Fire would burn.
“The CFTC must lead the charge to rein in these contracts in the U.S. and offshore and put in place common-sense guardrails to prevent people from profiting as wildfires threaten communities,” the letter said.
The letter requested a response from Selig by Friday on how the CFTC will move forward with these kinds of bets and whether the bets “are in the public interest.”
The CFTC did not respond to a request for comment and any response to the letter was not made public.
But the senators’ demands follow the shaky launch of a new prediction market created specifically for betting on California fires. The website, Wyldfyre, was reported on by High Country News, which could not confirm the IP address or creators of the site; it now appears to be shut down. The archive of the website shows it offered simulation trading on wildfire risks.
The website’s landing page touted the slogan, “You can’t predict fire. But you can trade on it.”
Politicians and gambling experts worry that without proper guidelines and restrictions for prediction markets, people could try to take the fate of their bets into their own hands.
Debbie Rull, a licensed therapist in San Diego who treats gambling addiction, said she’s concerned about the easy access to prediction markets for people with gambling addictions.
“The addiction of gambling is fueled by easy access, increased speed and multiple bets,” she said. “Prediction markets fit all these criteria.”
Rull, who also manages the state-funded intensive outpatient program for gambling disorders at the Union of Pan Asian Communities, said it’s a reasonable concern that someone could try to manipulate a market to win their bet.
“The possibility of profiting from a wildfire could motivate someone to start a fire, fuel an ongoing fire, or in the case of a firefighter, refrain from extinguishing it,” she said. “Sadly, when a problem gambler wins, their brain learns that it is possible to win, they develop an illusion of control, they feel good from their dopamine high and they are compelled to place more bets.”
The National Council on Problem Gambling found around 45% of Americans consider prediction markets to be a form of gambling — compared to 27% who said it’s more similar to investing.
Joshua Della Vedova, an associate professor of finance at the University of San Diego who studies prediction markets, said he sees the risk of individuals manipulating markets by taking the outcome into their own hands as relatively small.
“If you say, ‘Is there going to be a fire in West Pacific Beach in the next hour?’ … You can make that bet, but there’s probably no one willing to bet against that with you,” he said. “So the markets that are most vulnerable to outsider trading tend to be smaller, so it’s not this huge issue.”
Outsider trading occurs when someone makes a bet based on material that isn’t available to the public — like if someone knew an event would occur because they’re going to make it happen.
“This would be a form of fraud,” Della Vedova said. “And because with these prediction markets, who’s trading is known, if you make a bet and light a fire, we can find out who did that.”
The concern over people using prediction markets to profit from information or actions unavailable to the public is not merely hypothetical. In early July, insider trading drew headlines after a White House employee made trades on Kalshi “mention markets” — prompting San Diego County Supervisor Terra Lawson-Remer to push for a county-wide crackdown.
The Board of Supervisors will address the agenda item on Tuesday.
If the board approves the proposal, county officials would have 60 days to stop county officials and employees from trading prediction-market contracts connected to nonpublic information. It would also require the disclosure of prediction-market holdings and prohibit former officials from trading on issues they directly worked on during their employment with the county.
But Della Vedova, who tracks the weekly top 30 Polymarket markets, said there are limits to how lucrative — and therefore how widespread — such manipulation could be. He said it is relatively easy to detect when the likelihood of an event “far exceeds the expectation” and a large amount of trading follows.
“The reason I don’t think it’s that big of an issue is because there’s not enough money to be made. That’s it,” he said. “There’s not enough people that act as counter-parties.”
Padilla, Schiff and the seven other senators still warned, though, that such activity could spread among predictive markets.
“As the United States faces yet another record-breaking fire season this year, the Commodity Futures Trading Commission (CFTC) cannot allow these prediction markets to offer unrestricted betting on wildfires,” the letter said. “While these bets appear to be offered only on the offshore Polymarket site, it is only a matter of time before other U.S. based Designated Contract Markets (DCMs) try to offer these.”
