Dems Warn Prediction Markets Allowing Bets on Wildfires Threaten Public Safety

Several Democratic senators have sent a letter to Michael Selig, chair of the Commodity Futures Trading Commission (CFTC), expressing deep concern about online prediction gambling markets allowing bets on wildfires.

The letter, sent earlier this week, notes that Polymarket — an online prediction gambling website — allowed users to bet on several questions relating to the Palisades and Eaton Fires near Los Angeles, California, last year. Those questions included how long it would take for the fires to be contained, to what extent the fires would spread, and how many acres total would burn, totaling around $1.2 million in bets.

Future bets on these types of environmental events may not just violate ethical mores, but could lead to dangerous outcomes, critics have said.

“Somebody could place a bet and then be motivated to actually start a fire,” said Ann Skeet, senior director of leadership ethics at Santa Clara University’s Markkula Center for Applied Ethics, speaking to The Guardian. “There’s just the practical reality of what it is you might be motivating people to do.”

There’s also the concern of whether someone should gain financially at the expense of someone else’s misfortunes.

“Wow — My first take is that it’s morally reprehensible,” said Sylvie Andrews, a California resident who lost her home in the Eaton Fire, speaking to High Country News. “The fact that someone would feel OK doing that flabbergasts me.”

Nine Democratic senators representing six different states — including California Sens. Adam Schiff and Alex Padilla — signed on to the letter addressed to Selig.

“These markets risk creating perverse incentives, undermining public trust and commodifying human suffering in ways that warrant careful scrutiny,” the letter-writers stated, noting that the Los Angeles fires “claim[ed] the lives of 31 people and destroy[ed] more than 16,000 structures.”

They added:

Offering bets on destructive wildfires threatens to minimize communities’ suffering all so the rich and powerful can profit. 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.

“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 senators explained.

Recent polling suggests that Americans have mixed views when it comes to prediction markets, but want deeper regulation on individuals potentially manipulating them.

According to a Politico poll published in June, just 20 percent of respondents viewed such markets as positive for society, while 29 percent viewed them as negative. (Twenty eight percent said neither, and another 24 percent said they couldn’t form an opinion.)

A plurality of respondents, 33 percent, said “the government should make stricter requirements about who can place bets and what people can bet on,” with only 19 percent saying the current rate of restrictions is fine, and just 11 percent saying there should be fewer restrictions.

But when asked if markets should be regulated “to prevent insider trading,” a majority of respondents, 53 percent, said yes, while only 16 percent disagreed.