If we bet on where fires will occur and I have empty pockets and a book of matches that's a little different than options trading.

As with most terrible behaviors when a few people do it the results to society aren't so bad. When it gains potential for mass application of the same behavior it becomes a crisis.

Biotech stocks for premarket drugs are functionally binary bets on the drug trial itself and have existed for a long time.

Wildfire prediction markets would be incredibly reckless and dangerous.

The two situations are not even close to being the same.

Unfortunately your example gets a little foggier once you consider options and futures during a period like the one the US is currently in with Iran.