Pentagon Chief Forbids Betting on Prediction Markets Using Inside Information
Secretary Hegseth issues a directive barring Defense Department staff from using nonpublic details to place wagers on military outcomes.
By Tyler Khalil ·
Defense Secretary Pete Hegseth has moved to block military personnel from profiting off operations they know about before the public does. He issued a directive on October 20 telling Pentagon leaders and field directors to cease placing wagers on prediction markets using nonpublic information. The memo's subject line was blunt: "Do Not Compromise Military Operations for Personal Financial Gain." CBS News released the document yesterday.
The core concern is operational security. According to Hegseth, foreign adversaries monitor market activity closely. When American service members, intelligence staff, or Defense Department civilians trade on a military outcome, they generate a signal. Hostile intelligence services can aggregate those signals to anticipate movement, targeting, and timing. "The lives of our Service members often depend on the enemy not knowing what is coming," Hegseth wrote.
The directive reaches beyond classified secrets. Hegseth stated that Defense Department personnel cannot execute any financial transaction informed by nonpublic data, regardless of whether that information is classified or unclassified. The prohibition covers all financial platforms, explicitly naming traditional betting services and prediction markets like Polymarket and Kalshi.
Recent incidents show why the Pentagon is tightening its grip on this issue. In April, a U.S. Army soldier faced arrest and charges for using confidential intelligence to earn $410,000. The soldier bet on Polymarket regarding when the military would capture Venezuelan President Nicolás Maduro. Wagers of this type create a direct link between inside knowledge and personal profit.
The scale of potential manipulation is significant. An August report from the Anti-Corruption Data Collective examined suspicious activity. The group identified 152 wallets that placed longshot bets on military and defense markets. Those accounts collectively won $8 million. Such activity can also distort how outsiders perceive military readiness and strategy.
Hegseth warned that betting on outcomes can warp judgment itself. Financial stakes in a specific result might influence how a person evaluates a mission. The directive aims to separate personal financial interest from national security decisions. It applies to senior Pentagon leadership, Combatant Command leaders, and Defense Department field activity directors.
This new rule follows other actions regarding prediction markets. The Trump administration has previously taken steps concerning these platforms. The Pentagon is now enforcing strict boundaries on how its people interact with them. It remains unclear how the department will monitor compliance across global operations. No details were provided on enforcement mechanisms or penalties for violations. The specific methods for detecting unauthorized trades were not outlined in the memo.
