CFTC targets prediction market pricing as senators warn of wildfire betting risks

The Commodity Futures Trading Commission (CFTC) is increasing oversight of prediction markets, specifically targeting how platforms present pricing to consumers. The regulator warned that using “American odds”—a format common in sportsbooks—could mislead users into treating financial derivatives as conventional gambling wagers. The CFTC emphasized that event contracts must be clearly identified as regulated financial products to ensure participants understand market depth and transaction impacts.

Simultaneously, a bipartisan group of U.S. senators, led by Senator Jeff Merkley, has urged the CFTC to restrict or prohibit markets that allow betting on wildfires. Lawmakers expressed concern that such wagers create “perverse incentives,” including the risk that individuals might commit arson to ensure successful bets. The senators cited instances where platforms like Polymarket saw millions of dollars wagered on destructive California fires.

While some platforms, such as Kalshi, stated they prohibit wildfire-related markets to avoid these ethical and safety risks, others continue to offer them to international users. The CFTC is currently considering proposed regulations that could include bans on markets deemed contrary to the public interest.