Congressman Moves to Ban Wildfire Prediction Markets Over Arson Fears

Legislation introduced by U.S. Rep. Michael Baumgartner would ban federally regulated prediction markets from offering event contracts on wildfires amid growing concerns over perverse arson incentives.

Some areas of U.S. Rep. Michael Baumgartner’s (R-Wash. 5th Dist.) constituency, which includes Spokane County, were ravaged by fires in July and August.

While Baumgartner says there’s no evidence any were started by a prediction-market trader, he wants to remove the possibility that it could happen in the future.

“We’ve already had enough problems with arsonists causing wildfires in Eastern Washington, we don’t need betting markets giving potential big financial incentives to start fires,” Baumgartner said in a statement.

“When a wildfire threatens a community, every effort should be focused on protecting families, homes, and first responders,” he added. “Congress should draw a clear line and make sure federally regulated markets cannot facilitate wagers on the devastation of American communities.”

‘Perverse Incentives’

Earlier this month, nine Democratic senators wrote to the Commodity Futures Trading Commission (CFTC) urging the federal body to reject wildfire-related event contracts over concerns they could create “perverse incentives, undermine public trust, and commodify human suffering in ways that warrant careful scrutiny.”

The letter notes that Polymarket accepted more than $1.2 million in trades on contracts related to the Palisades and Eaton fires in January 2025, which devastated parts of the Los Angeles area, causing the deaths of 31 people.  

Currently, no CFTC-regulated prediction market exchange offers wildfire event contracts to U.S. users.

However, wildfire markets have previously been available on Polymarket’s offshore crypto platform, covering metrics such as where and how far fires would spread, containment timelines, and total acreage burned.

These have included markets on where and how far fires would spread, when they would be contained, and how many acres they would burn.

A trader could theoretically profit by taking a position that pays out if a fire grows larger, lasts longer, or reaches a particular location, potentially creating a financial incentive to start or worsen one.

Market Information

“While we recognize the risks associated with these markets, removing them does not prevent a tragedy,” Polymarket said in a statement earlier this month. “It only makes timely, market-based information less accessible to those seeking to understand what may happen next.”

Since August 1, authorities have arrested five people on suspicion of arson in Spokane County, according to The Spokesman Review. These include 37-year-old Aaron Farinacci, who is suspected of starting the Old Trails fire because he feels “fire is powerful and beautiful,” according to police.

None of those arrested have been linked to prediction market trading.