(CNN) — When the Eaton fire swept through the Los Angeles neighborhood of Altadena last year, it claimed 19 lives and incinerated thousands of buildings — one of which was the home of Kaitlyn Trudeau’s grandfather. His house burned to the ground; he lost everything. But while he grappled with trauma, others saw dollar signs in the disaster.
In January 2025, as the LA wildfires raged, people placed bets on Polymarket, one of the leading prediction market platforms. They waged money on how how many acres the fires would consume, which locations the flames would reach and when they would be contained.
It was “pretty dystopian,” said Trudeau, a California-based climate scientist, who works at the non-profit Climate Central. “It’s not just easy to start a fire — now there’s potentially a financial incentive,” she told CNN this week, as she traveled to Altadena to see her grandfather’s house for the first time since it burned down.
Polymarket is part of a booming, multibillion-dollar industry, which allows people to bet on the outcome of almost any future event, from the results of football games and elections, to the number of social media posts Elon Musk makes.
Some prediction markets also allow people to bet on wildfires, as well as other climate change-fueled extreme weather events, and experts are sounding the alarm. They fear it risks incentivizing arson and, more generally, that it will distance people from the suffering fires bring.
“I worry that it encourages people to think about these events like they are video games, not real-world disasters,” Trudeau said.
Polymarket says its platform is a valuable source of information during disasters. “People turn to the news for commentary and they come to Polymarket for information,” a spokesperson said. “While we are not blind to the risks, removing these markets does not prevent a tragedy but makes the most accurate information less accessible to the people who need it most.”
People have been betting on the weather long before the dawn of the internet, said Lauren Ducat, a clinical and forensic psychologist based in Australia who studies firesetting. But the accessibility of online platforms has the potential to make these wagers “more pervasive and open them to larger markets,’ she said.
Polymarket says what it does is distinct from gambling. The company doesn’t use the term “bets,” instead people “trade on future event outcomes,” and users compete against each other not against the “house.”
The Polymarket team creates markets, with input from users, by formulating questions to which the answer is usually “yes” or “no.” Users buy shares in an outcome for between $0 and $1. If “yes” shares are trading at $0.65 each, for example, that means the market thinks there’s a 65% chance of that outcome happening. Shares in the correct outcome are paid out at $1 each.
Polymarket may be one of the biggest platforms of its kind, but it’s not alone. Another site called WyldFyre focuses on California fires and has the tagline: “You can’t predict fire. But you can trade on it.” It doesn’t use any form of real-world currency yet, but experts are still worried about the signal these sites send.
The problem with wildfires — unlike hurricanes or earthquakes — is that humans can directly influence them. “Anybody can set a wildfire,” said Ed Nordskog, a retired Los Angeles County Sheriff’s arson investigator and profiler.
Nordskog said he would normally play something like this down, especially as only a tiny number of people ever commit arson. But through his work he has noticed a strong connection between obsessive gambling and fire setting. “A surprising number of (arsonists) set their fires near casinos that they frequent on a daily basis,” he said.
There is still little data on the topic, Nordskog added, but “this has some disturbing possibilities.”
Arson is not the sole concern. People could choose to influence fires that have already started. A firefighter, for example, could be incentivized to let a fire burn a little longer to win a bet on acres burned.
There have already been suggestions people may be going to some lengths to secure payouts. On April 6, evening temperatures at Charles de Gaulle airport in Paris suddenly spiked by several degrees Fahrenheit, according to sensors located on the site. It happened again on April 15.
This data was being used for Polymarket trades, and the unusual heat resulted in some big payouts for those who had bet on Paris reaching seemingly unlikely levels of heat. Speculation was rife; one unproven theory was that someone had heated the sensor with a hairdryer.
French national weather service Météo-France has filed a police complaint “for alteration of the operation of an automated data processing system,” a spokesperson said.
Polymarket said “we comprehensively surveil for illegal activity” and the transparency of its blockchain-based platform allows it to “efficiently identify and trace potential wrongdoers.”
There are also ethical questions at play. “Betting on someone’s potential death or harm devalues human life,” said Ann Skeet, senior director of leadership ethics at Santa Clara University.
It could also minimize the seriousness of fires, potentially even blocking community efforts to reduce them by “normalizing” fire and distancing people from its effects, said Theresa Gannon, a professor of forensic psychology at the University of Kent in the UK.
However, there can also be benefits to these markets, experts say. Research by Kim Kaivanto, an economist at Lancaster University Management School, found expert prediction markets can be valuable tools for climate forecasting — if they have guardrails.
Kaivanto is the director of CRUCIAL, a prediction market designed to forecast climate-related risks such as hurricanes. Its markets are made up of teams of experts who don’t pay to play, but are rewarded with “credits” in proportion to how much accurate information they bring in, Kaivanto said.
Whether prediction markets could aggregate useful data for forecasting wildfires remains an open question.
It’s unclear how betting could improve a forecast, said Craig B. Clements, director of the Wildfire Interdisciplinary Research Center based at San José State University, “there are many complexities to fire spread.”
A spokesperson for the California Department of Forestry and Fire Protection said its fire modeling is “not informed by markets, wagering systems, crowd predictions, or any other form of prediction‑market mechanism” and it is not currently considering using this kind of data.
The US Forest Service said the same. “We do not rely on any system that treats wildfire as an event for speculation,” a spokesperson said.
Some proponents suggest that prediction markets could be an alternative to insurance, especially as insurers pull out of regions at high-risk for wildfire. Trudeau senses danger, though. It “could so easily be used to prey on people who can’t insure their homes, to play off their fear and make money from it,” she said.
One other surprising benefit could be to shift people’s attitudes to climate change, according to recent research. Taking part in prediction markets “actually changes your brain on the topic,” said Moran Cerf, a neuroscientist at Columbia Business School, who co-authored the study.
If climate deniers make money betting on climate disasters happening, they “start to see that there’s truth out there, which otherwise you reject,” Cerf said. “Eventually it leaks into your psyche.”
That doesn’t mean he’s an unwavering proponent of the prediction market platforms in their current form, however. “It’s the Wild West,” he said. “They basically chase whatever makes money.”
There are attempts to apply some guardrails. In March, California Governor Gavin Newsom strengthened a ban on insider trading by state officials on prediction market platforms. And representatives from Utah and California introduced bipartisan legislation to prohibit trades on “terrorism, assassination, war, gaming… or illegal activity.”
But for now, the sector is booming and people continue to put their money on deadly climate disasters happening.
In the comments section of a trade last year on the Palisades fire, one Polymarket user wrote: “That was fun. Thanks everyone. Until the next time!”
The-CNN-Wire
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