Pentagon bans US forces from using military info to bet in prediction markets

The directive prohibits Department of War personnel from using nonpublic information for financial transactions. That includes placing wagers on prediction markets about upcoming military action. The information can be classified or unclassified, as long as it has not been made public.

The ban applies to bets on platforms such as Kalshi and Polymarket. Hegseth warned that adversaries watch movements in these markets. A wager based on advance knowledge of a strike, operation, or military outcome could therefore expose sensitive plans.

The rule also targets personal conflicts of interest. Hegseth said a logistician betting on a strike date might have an interest in that date, while an analyst betting on an outcome might favor that result. The directive follows allegations that a US Army soldier used classified operational information to earn more than $400,000 on Polymarket.

A prediction market is a platform where participants trade contracts linked to future events. The contracts pay according to whether a stated outcome occurs. Their prices reflect what traders collectively expect, so the market can function like a continuously changing forecast.

On platforms such as Kalshi and Polymarket, users can place money behind an outcome. Someone who expects an event to happen may buy a position supporting it. Someone expecting the opposite may take a contrary position. The article identifies these platforms as places where wagers about military events have been made.

That system creates a security risk when a participant has inside information. A sudden series of bets, or unusual movements in market prices, might signal that someone knows more than the public. Hegseth said enemies watch these movements, because they could reveal what is coming. The Pentagon therefore banned its personnel from using nonpublic information to wager.

Prosecutors allege that US Army soldier Gannon Ken Van Dyke made more than $400,000 from wagers based on classified information. The alleged profits came from bets connected to the removal of Venezuelan leader Nicolás Maduro. The figure is an allegation, not a conviction.

According to prosecutors, Van Dyke participated in planning and executing the operation to capture Maduro. He then allegedly used his advance knowledge to place wagers on Polymarket about outcomes related to Maduro’s removal. The key mechanism was converting secret operational knowledge into a financial position before the public knew the outcome.

Van Dyke was indicted in April and has pleaded not guilty to all charges. The case helped prompt the Pentagon’s directive against using nonpublic information for financial transactions. Hegseth also cited operational security concerns, saying adversaries monitor prediction markets and could learn from unusual betting activity.

Betting patterns can reveal information because people with advance knowledge may place unusually timed or unusually confident wagers. Even without seeing the bettor’s identity, adversaries could notice market movements that point toward a likely military action or result.

For example, someone who knows a strike date might place bets tied to that date. If similar positions appear or prices shift sharply, an enemy could infer that an event is approaching. The article does not claim that every market movement exposes a specific operation, but Hegseth warned that enemies watch these markets.

This creates an operational-security problem. Military plans depend partly on keeping future actions unknown. A financial transaction can become an indirect signal, especially when the bettor has access to sensitive information. The Pentagon’s ban aims to stop personnel from creating those signals and to prevent financial activity from compromising service members’ safety.

The directive covers both classified and unclassified nonpublic information because secrecy is not the only concern. Information may be officially unclassified yet still reveal a planned operation, expected timing, or likely outcome before the public knows it. Using that information for a wager could still create a security risk.

Hegseth’s memo prohibits Department of War personnel from financial transactions using nonpublic information. That wording is broader than a ban limited to classified material. It prevents personnel from arguing that a bet was acceptable simply because the information did not carry a classified label.

The broader rule also supports operational security. Hegseth said adversaries monitor prediction markets and that service members’ lives can depend on keeping plans secret. It addresses both information leakage and personal gain. The article does not describe separate penalties for classified and unclassified information, but it makes clear that both are covered by the directive.

A conflict of interest arises when personal financial gain depends on an official military decision or outcome. The person may be expected to analyze events, plan logistics, or support operations objectively. A wager can give that person a private reason to prefer one result.

Hegseth gave two examples. A logistician with money riding on a strike date might have an interest in that date. An analyst holding a position on an outcome might have an interest in that outcome. Those incentives could affect judgment, recommendations, or how information is handled, even if the person’s official duties remain unchanged.

The concern goes beyond fairness. A financially motivated action could expose plans to adversaries through prediction-market activity. Hegseth said enemies watch movements in these markets, and service members’ lives may depend on secrecy. The Pentagon’s ban therefore addresses both operational security and the risk that financial stakes distort official decisions.

Insider trading generally means using material, nonpublic information to make a financial transaction before others can access it. The advantage comes from confidential knowledge rather than public analysis. In this case, the transaction could be a prediction-market wager instead of a traditional stock purchase.

A government worker may receive sensitive information because of an official role. Using it to bet on a military event can misuse that access and create an unfair advantage. It may also compromise an operation. The article describes allegations that a soldier used classified information about the operation to capture Nicolás Maduro while wagering on related outcomes.

Whether conduct violates a particular law depends on the facts and the applicable rules. The article reports an indictment, not a final conviction. Separately, Hegseth’s directive expressly prohibits Department of War personnel from using classified or unclassified nonpublic information in financial transactions, making the conduct forbidden under the department’s policy.