Hegseth bars Pentagon personnel from betting on military operations with inside information

By Calvin Strand

WASHINGTON — Defense Secretary Pete Hegseth has barred Defense Department personnel from using nonpublic information to bet on U.S. military operations, including on prediction markets such as Polymarket and Kalshi, according to an Oct. 20 memorandum first reported by CBS News.

The memo, titled “Do Not Compromise Military Operations for Personal Financial Gain,” went to senior Pentagon leaders, combatant commanders and Defense Department field activity directors, Ars Technica reported. CBS published an image of the memo.

Hegseth framed the rule as a matter of operational security and troop safety. “Our enemies watch movements in these markets,” he wrote. “When an American Service member, intelligence professional, or other Department civilian engages in a financial transaction on a military outcome, they create a signal. That signal can be aggregated, correlated, and exploited by hostile foreign intelligence services to anticipate our movements, targets, and timing.” He added that “the lives of our Service members often depend on the enemy not knowing what is coming,” according to the text quoted by Ars Technica.

The memo also argues that money on the line can distort decisions. “Beyond operational security, financial stakes can warp judgment,” Hegseth wrote. “A logistician with money riding on a strike date has an interest in that date. An analyst with a position on an outcome has an interest in that outcome.”

What the rule covers

The prohibition applies to “all financial platforms,” including traditional betting services as well as prediction markets, and covers transactions informed by nonpublic information whether it is classified or unclassified, Ars Technica reported. It reaches trades made “directly or indirectly through a third party.” Violations “may result in administrative, disciplinary, and, where appropriate, criminal action under the Uniform Code of Military Justice and/or applicable federal law,” the memo says.

It is not a blanket ban on prediction-market use by service members; it targets bets informed by inside information, Task & Purpose reported. Kalshi and Polymarket both already prohibit insider trading on their platforms, according to Ars Technica.

The Maduro case

The directive follows the April arrest of Army Master Sgt. Gannon Ken Van Dyke, a Special Forces soldier involved in the operation that captured Venezuelan leader Nicolás Maduro. Federal investigators allege he placed more than $33,000 in Polymarket bets tied to Maduro’s removal and won more than $409,000, CBS reported. He has pleaded not guilty in federal court in New York, and the allegations have not been proven.

An August report by the Anti-Corruption Data Collective said it identified 152 suspicious wallets that placed long-shot bets on military and defense markets and won a combined $8 million, Ars Technica reported.

The administration has issued similar warnings before. The White House cautioned staff against trading on private information after new Polymarket accounts made well-timed bets on a U.S.-Iran ceasefire shortly before Trump announced it in April, The Associated Press reported, according to Ars Technica.

The Pentagon said it had no information to share beyond the memo, according to an AP account summarized by the Times of India.

Broader regulatory fight

Prediction markets have grown under the administration’s light-touch approach, and the administration is arguing in court that state gambling laws are preempted by the Commodity Futures Trading Commission’s exclusive jurisdiction over the markets, Ars Technica reported. Courts have split on the question.

The Inquisitor is seeking comment from the Republican staff of the House Armed Services Committee and Polymarket. The Pentagon press office was already contacted by the Inquisitor today on another matter. The Inquisitor could not verify published press email addresses for Kalshi or the Anti-Corruption Data Collective. This story will be updated with any response.