Lawmakers want this new betting trend shut down before it’s too late
As wildfires rip through the Pacific Northwest, a group of lawmakers is calling on federal regulators to intervene to stop some very grim gambling activity that poses dangers of its own. Oregon Sen. Jeff Merkley led a group of lawmakers this week in asking for the Commodity Futures Trading Commission (which regulates U.S. derivatives markets) to crack down on wildfire-related betting by putting…
As the Pacific Northwest battles devastating wildfires, a coalition of lawmakers is urging federal regulators to halt a concerning betting trend linked to these disasters. Oregon Senator Jeff Merkley spearheaded the effort to have the Commodity Futures Trading Commission intervene and impose stricter regulations on prediction markets dealing with wildfire-related events.
Oregon has been grappling with some of the worst air quality problems in recent history, thanks to an unusually early and intense fire season. The lawmakers argue that prediction markets have grown rapidly and are inviting speculation on dire issues such as war, political violence, disasters, and public emergencies. These markets risk creating perverse incentives, eroding public trust, and commoditizing human suffering, necessitating a closer examination.
The gamble extended to real-world events, with over a million dollars changing hands during last year's destructive fires in Los Angeles on Polymarket. Users placed specific bets on how the fires would impact the city and how long they would burn. As the 2023 wildfire season kicks off early, lawmakers fear that these markets might motivate desperate gamblers to actively participate in creating the very outcomes they wager on, potentially leading to catastrophic results.
Senators from various states, including California, New Hampshire, Nevada, New Mexico, Utah, New York, and Minnesota, joined Merkley in pleading with the CFTC to take action. The dark side of betting markets has long been a concern, but gamblers have already placed shocking wagers for millions, some risking lengthy prison sentences in the process.
In 2023, a U.S. soldier was arrested for using classified government intel to place a $400,000 winning bet on Polymarket. The Army Special Forces master sergeant, Gannon Ken Van Dyke, played a role in the operation that captured Venezuelan President Nicolás Maduro in January. Concerns also exist that some risk-seeking gamblers might be tempted to commit arson to ensure their bets come true, adding another layer of public safety risks.
The senators warned that prediction markets by offering contracts on fires risk encouraging people to influence ongoing fires, raising concerns around public safety and insider trading. As prediction markets continue to expand unchecked, states are beginning to implement safeguards. In March, lawmakers from California and Utah proposed legislation to prohibit betting on terrorism, assassination, war, gaming, or illegal activity, deeming prediction markets a serious threat to national security.
Utah Attorney General Derek Brown recently ruled that the state can enforce existing anti-gambling laws to tackle prediction markets like Kalshi and Polymarket.
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