Experts warn wildfire prediction markets could incentivize arson
Experts are warning that prediction markets allowing bets on wildfires could create financial incentives for arson. Several sources note that Polymarket users wagered on California wildfire outcomes in January 2025 as the blazes burned. Kaivanto, director of CRUCIAL, runs a prediction market designed to forecast climate-related risks such as hurricanes. The concerns center on whether disaster betting could lead to deliberate fire-setting for profit. Polymarket avoids classifying itself as gambling and does not call its contracts bets, according to one source.
The arson incentive risk lands hardest on platforms with retail scale and climate-adjacent markets. Polymarket, already fighting European gambling-classification blocks in France and the Czech Republic, now faces a reputational threat that could draw parallel restrictions in US states. Regulators from the CFTC to state attorneys general have shown appetite for product bans when public harm is alleged. A fire traced to market incentives would trigger immediate political pressure for platform liability, not just contract delisting.
For climate-focused operators like CRUCIAL, the contagion risk is different: their hurricane and disaster markets could be swept into any blanket restriction on catastrophe-linked contracts. The timeline is event-driven. No arson attribution is needed for regulation; the incentive structure alone is already generating expert warnings and media coverage. The first jurisdiction to act on that framing will set the precedent others copy.