Pentagon bans troops from betting using insider information

The Pentagon is banning Defense Department personnel from using nonpublic military information to place bets on prediction markets. The information may be classified or unclassified. The concern is not ordinary participation in these markets, but using privileged knowledge about military outcomes for personal financial gain. The rule applies across the department.

Uniformed service members and civilian employees are both covered. The directive specifically mentions platforms such as Kalshi and Polymarket. It says a financial transaction tied to a military outcome can create a signal that enemies may study. Personal stakes could also warp a person’s judgment about an operation.

The order does not prohibit every prediction-market bet. Instead, it targets bets connected to nonpublic military information. Hegseth’s Oct. 20 memo warns that violations could bring disciplinary action under the Uniform Code of Military Justice or federal law. It also warns of possible criminal prosecution.

A prediction market is a platform where people make financial bets on possible future outcomes. In this case, the outcomes can involve military operations, such as whether an attack will happen or when it might occur. The article names Kalshi and Polymarket as examples. It does not describe every rule or feature of either platform.

Participants place money behind a prediction. If the market’s outcome matches their position, they may gain money; if it does not, they may lose money. The key issue here is that someone with military access could use nonpublic information to make a better-informed bet. That turns a market transaction into a possible security signal.

The Defense Department has not banned all prediction-market activity. Hegseth’s directive specifically bars department personnel from using nonpublic military information. The concern is heightened because Polymarket trades are visible on a public blockchain in real time, according to the Anti-Corruption Data Collective.

The Anti-Corruption Data Collective reported that dozens of accounts made $8 million in military-related bets on Polymarket. That figure shows the issue extends beyond one isolated transaction. The report raised concerns that visible betting activity could reveal confidential military information to foreign adversaries.

The most striking individual example involved Master Sgt. Gannon Ken Van Dyke. Federal authorities accused the Special Forces soldier of using knowledge from planning a raid to bet roughly $33,000 on when U.S. forces would attack Venezuela. The bets allegedly produced more than $400,000 in winnings.

Van Dyke was arrested and indicted in April. The article does not say that every military-related Polymarket bet used insider information. Hegseth’s later directive addresses the specific danger of department personnel using nonpublic information, whether classified or unclassified, to make such bets.

A bet based on nonpublic military information can reveal clues because the transaction points toward an expected military outcome. Someone betting on an attack’s timing, for example, may be signaling that the event is being planned or anticipated. The person may intend only to make money, but the wager can expose useful information.

Hegseth wrote that enemies watch movements in prediction markets. A bet connected to a military outcome can become a signal that hostile intelligence services aggregate, correlate, and exploit. The memo says those signals could help anticipate U.S. movements, targets, and timing. The Anti-Corruption Data Collective described public blockchain records as effectively broadcasting confidential information.

The risk exists even when the information is unclassified. The directive treats nonpublic military knowledge as sensitive because its financial use can reveal operational clues. It also warns that having a specific financial stake in an operation’s outcome could warp the bettor’s judgment.

Foreign intelligence services could study prediction-market activity as a collection of signals rather than relying on one account. A single wager may be ambiguous. Several accounts pointing toward the same military outcome could appear more meaningful, especially when the trades occur near one another or match other available information.

Hegseth’s memo says hostile services can aggregate and correlate signals. That means they could combine betting activity with the markets’ predicted outcomes and timing. The resulting pattern might help them anticipate where U.S. forces could move, what they might target, or when an operation could happen. The article does not describe a specific intelligence operation using this method.

Polymarket creates an especially visible record because every trade is shown on a public blockchain in real time, according to the Anti-Corruption Data Collective. The Defense Department’s rule therefore seeks to stop insiders from adding privileged information to a public stream that adversaries can monitor.

The directive carries both military and civilian consequences. Hegseth’s memo says violating the order could result in disciplinary action under the Uniform Code of Military Justice or federal law. It also warns that people caught using nonpublic military information for prediction-market bets could face criminal prosecution.

The rule applies to uniformed troops and civilian Defense Department personnel. That matters because the possible response depends on the person’s status and the law involved. A service member may face action through the military justice system, while federal law could apply more broadly. The article does not specify penalties, sentences, or fines.

The memo is titled “Do Not Compromise Military Operations for Personal Financial Gain.” It connects punishment to a wider security concern: financial stakes may warp judgment, while betting activity can signal information about military operations. The directive does not make all prediction-market betting illegal for department personnel.

Insider trading generally means using important nonpublic information to make a financial transaction before others know it. The article applies that basic concern to military prediction markets. A person with official access may know something about a planned operation that ordinary bettors cannot see. Using that information can create an unfair advantage and turn public responsibility into private profit.

The conflict is especially serious because the person’s job provides the information. The Defense Department memo says financial stakes in military outcomes can warp judgment. A bettor might favor personal winnings over operational security, or a trade might reveal clues even without deliberate disclosure. The article says those clues can be aggregated and exploited by hostile intelligence services.

Hegseth’s directive therefore bars department members from using nonpublic military information, whether classified or unclassified. It does not ban every prediction-market bet. The alleged Venezuela case illustrates the concern: a soldier was accused of using raid-planning knowledge to place bets.