People are using prediction markets like Polymarket and Kalshi to bet real money on wildfire outcomes, and experts worry this creates financial incentives for arson — though no actual cases have been documented yet. Users spent over $1 million betting on the 2025 Palisades wildfires alone, and as these platforms grow, regulators are asking whether the perverse incentives outweigh any forecasting benefits. Kalshi has already restricted contracts tied to violent events, but enforcement remains unclear as prediction markets operate in a regulatory gray zone.