Hegseth bans Pentagon personnel from betting on military outcomes using nonpublic information

Defense Secretary Pete Hegseth has barred Defense Department personnel from using nonpublic information to place bets on U.S. military operations, warning that trades on prediction markets can give foreign adversaries clues about sensitive missions.

The Oct. 20 memorandum applies to both classified and unclassified information and specifically identifies Polymarket and Kalshi. Personnel who violate it could face administrative discipline or criminal action under federal law or the Uniform Code of Military Justice.

Hegseth said a financial transaction on a military outcome by a service member, intelligence professional or civilian employee creates a signal that hostile intelligence services can analyze. He warned that such activity could reveal the movements, targets or timing of American operations and put troops at risk. “Our enemies watch movements in these markets,” he wrote.

The directive followed heightened scrutiny of military-related prediction trading. In April, federal authorities arrested Master Sgt. Gannon Ken Van Dyke, a Special Forces soldier involved in the operation that captured Nicolás Maduro, after he was accused of betting on Maduro’s removal before the raid was public. Investigators alleged that Van Dyke placed more than $33,000 in Polymarket bets shortly after President Trump’s January announcement of Maduro’s capture and made more than $409,000 in winnings. He pleaded not guilty in New York federal court.

Polymarket had earlier referred dozens of accounts showing possible military insider trading to the Justice Department, according to CNN. The Anti-Corruption Data Collective identified 152 accounts that it said generated about $8 million in profits on war markets, with a 97% win rate. Many of the accounts were newly created wallets that made unusually well-timed longshot bets.

The risks cited by Hegseth extend beyond the disclosure of an individual tip. The Bulletin of the Atomic Scientists reported that a bet based on classified information can be copied by other traders and become a visible indication of approaching military action. Its analysis of more than 400,000 settled Polymarket markets found that high-value, low-probability bets paid out 52% of the time in military and defense markets, compared with 14% across the platform.

Prediction-market activity has expanded rapidly. Combined monthly trading volume on Kalshi and Polymarket reached $24 billion in April, up from $2 billion in August 2025. Separately, the Commodity Futures Trading Commission said trading volume across CFTC-registered prediction markets exceeded $25 billion in 2025.

The CFTC proposed rules in June that would address event contracts involving unlawful activity, terrorism, assassination, war and gaming if they are contrary to the public interest. Polymarket, meanwhile, announced enhanced market-integrity rules in March, barring trades based on insider tips and prohibiting people with authority to affect an event from trading on related markets.