A House proposal introduced Monday (August 17) seeks to stop federally regulated prediction markets from letting traders place bets on wildfires or the destruction they cause.

Rep. Michael Baumgartner filed H.R. 10109, called the “Wildfire Event Contract Prohibition Act.” After its introduction, the legislation went to the House Agriculture and Judiciary committees. The bill would change the Commodity Exchange Act so registered entities could not list, clear or trade a wide range of wildfire contracts.

Markets covered by the proposal would include bets on a wildfire starting, its location or its duration. Contracts based on a blaze’s size, intensity, spread or containment would also be barred, along with those involving evacuations, injuries, deaths or damaged property.

Its language reaches broadly, prohibiting any covered “agreement, contract, transaction, or swap” from being offered for clearing or trading through registered entities.

Lawmakers warn wildfire bets on prediction markets could reward arson and insider trading

Lawmakers say the concern goes beyond whether people should bet on disasters. According to the legislation, “wildfire event contracts create an improper financial incentive to profit from the ignition, spread, duration, and destructive effects of a wildfire.”

Eight Democratic senators, led by Adam Schiff and Alex Padilla, recently raised similar concerns with Commodity Futures Trading Commission Chair Michael Selig. Their letter cited more than $1.2 million wagered through Polymarket around the Palisades and Eaton fires in January 2025. It states: “By offering contracts on fires, prediction market sites run the risk of encouraging people to influence fires that have already started, creating additional concerns around public safety and insider trading.”

Questions about privileged information have also reached state governments. Arizona Gov. Katie Hobbs signed a July 9 executive order barring executive branch employees from using nonpublic government information for prediction-market profits.

“Arizonans deserve a state government that works for them, not one where insiders exploit public service for their own gain,” said Governor Katie Hobbs in an accompanying statement.

“I’m proud to set clear, commonsense ethical standards on prediction markets to hold our government accountable. Public service is a privilege, and we will not tolerate anybody abusing that privilege to line their own pockets.”

H.R. 10109 makes the same issue part of a proposed federal review. It also declares that “federally regulated markets should not facilitate gambling on the destruction of homes, businesses, natural resources, or communities.” State gambling and gaming laws would remain unaffected.

Within 180 days after enactment, the attorney general would review existing criminal and civil powers with the CFTC chairman, Agriculture and Interior secretaries and other officials. It would examine deliberate wildfire-setting for wagering profits, trading on nonpublic fire information, market manipulation, fraud, money laundering, forfeiture, illegal gambling and cross-border activity.

Officials would also study coordination gaps and whether new penalties, reporting rules or information-sharing powers are needed. Findings and legislative recommendations would be due to designated House and Senate committees within 30 days after the review ends.

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