Pentagon bans troops from betting using insider information

Defense Secretary Pete Hegseth is banning troops and Defense Department personnel from using “nonpublic information” to bet on online prediction markets. His directive, which warns of criminal prosecution if caught, said that such bets could give other nations or groups “a signal.”

Hegseth announced the ban this past week in a memo titled “Do Not Compromise Military Operations for Personal Financial Gain.” The directive bars department members — civilian staff or uniformed troops — from using insider information from the military to make bets on predictive markets such as Kalshi and Polymarket, no matter if the information is classified or unclassified. It is not an outright ban on betting on predictive markets, but specifically warns of security risks tied to using military information in these cases.

“Our enemies watch movements in these markets. When an American Service member, intelligence professional, or other Department civilian engages in a financial transaction on a military outcome, they create a signal,” Hegseth wrote in the memo. “That signal can be aggregated, correlated, and exploited by hostile foreign intelligence services to anticipate our movements, targets, and timing.”

The Oct. 20 memo was first reported on by CBS News. According to the memo, violating the order could result in disciplinary action, either under the Uniform Code of Military Justice or federal law.

The memo notes that having specific financial stakes in the outcome of military operations can “warp” someone’s judgement.

It’s not clear what prompted Hegseth to give the directive now, but it comes after several high-stakes bets around U.S. military operations earlier this year. In April, a Special Forces soldier was arrested and indicted by federal authorities for allegedly betting on when U.S. forces would attack Venezuela. Master Sgt. Gannon Ken Van Dyke was accused of using his knowledge in the planning of the raid to place roughly $33,000 in bets on the timing of the attack on a prediction market, which resulted in more than $400,000 in winnings.

In August, the Anti-Corruption Data Collective released a report noting that dozens of accounts made $8 million in military-related bets on Polymarket. The collective noted similar security concerns to what Hegseth cited, saying that “Because every Polymarket trade is visible on a public blockchain in real time, an insider betting on confidential military information is effectively broadcasting that information to foreign adversaries.”

Source: Task & Purpose