Pentagon Bans Insider Bets on Markets

Defense Secretary Pete Hegseth issued a directive on October 20 restricting military personnel from using nonpublic information to place bets on prediction markets.

The memo, titled 'Do Not Compromise Military Operations for Personal Financial Gain,' was distributed to senior Pentagon officials and Combatant Command heads. CBS News made the document public on October 22. The guidance prohibits any financial transaction based on classified or unclassified internal knowledge.

Hegseth stated that adversaries actively track activity in these financial venues. He wrote that when a service member or civilian executes a bet tied to a military outcome, 'they create a signal.' Hostile foreign intelligence services can then aggregate and correlate that data to predict American targets and timing.

The directive explicitly covers all financial platforms, including Polymarket and Kalshi. Hegseth argued that troops deserve a force that protects them rather than one that exposes them to the enemy for personal financial gain. The memo emphasized that the lives of service members depend on the enemy not knowing what is coming next.

This rule follows a criminal case from April 2026. A US Army soldier was arrested and charged with using confidential information to make $410,000 in bets on Polymarket. Those wagers targeted the timing of the military's capture of Venezuelan President Nicolás Maduro. The soldier’s actions demonstrated the specific risk Hegseth cited in his warning.

An August report from the Anti-Corruption Data Collective identified 152 suspicious wallets that placed longshot bets on military and defense markets. Those accounts won a combined $8 million. The data suggests that the practice of leveraging insider knowledge for profit is more widespread than the single arrest case indicated.

The memo frames personal financial stakes as a direct threat to operational judgment. Hegseth told commanders that betting on military outcomes can compromise operations. The guidance aims to prevent individual financial interests from influencing or revealing strategic military movements.