Defense Secretary Pete Hegseth has issued a memo barring Pentagon personnel from using nonpublic information to place bets on prediction markets, warning that financial wagers tied to military operations can hand adversaries a window into American plans.
The October 20 memo, titled "Do Not Compromise Military Operations for Personal Financial Gain" and sent to senior Pentagon leadership, combatant command leaders and defense field activity directors, lays out the concern in stark terms. "Our enemies watch movements in these markets," Hegseth wrote. "When an American Service member, intelligence professional, or other Department civilian engages in a financial transaction on a military outcome, they create a signal. That signal can be aggregated, correlated, and exploited by hostile foreign intelligence services to anticipate our movements, targets, and timing."
A Pattern of Suspicious Bets
The warning follows real incidents that alarmed Pentagon leadership. In April, a U.S. Army soldier was arrested and charged with using confidential information to place roughly $410,000 in bets on Polymarket tied to the timing of the capture of Venezuelan President Nicolás Maduro. A separate August report from the Anti-Corruption Data Collective identified 152 suspicious betting wallets that placed longshot wagers on military and defense-related markets and collectively won about $8 million. The Associated Press also reported that a cluster of new Polymarket accounts placed unusually well-timed bets on a U.S.-Iran ceasefire shortly before President Trump announced one in April, generating hundreds of thousands of dollars in profit.
Hegseth's memo prohibits all Department of War personnel from financial transactions "using nonpublic information, either directly or indirectly through a third party," on any platform, including traditional sportsbooks as well as prediction markets such as Polymarket and Kalshi. Violations can trigger administrative, disciplinary or criminal action under the Uniform Code of Military Justice.
Beyond Leaks, a Judgment Problem
The memo goes further than simply warning against leaking classified or sensitive information, arguing that financial exposure itself can distort decision-making even when no secrets change hands. "Beyond operational security, financial stakes can warp judgment," Hegseth wrote. "A logistician with money riding on a strike date has an interest in that date. An analyst with a position on an outcome has an interest in that outcome."
Both Kalshi and Polymarket already prohibit insider trading on their platforms, but criminal exposure under military law is a considerably sharper deterrent than a platform ban. The memo is not the administration's first warning on the subject; the White House had previously flagged concerns internally after the suspicious Iran-ceasefire bets came to light. With prediction markets increasingly woven into mainstream financial and political speculation, the Pentagon's move signals that military leadership now views the sector as a live operational security risk rather than a curiosity confined to Wall Street and political junkies.