Hegseth warns troops against using military information for gambling, prediction market bets
Defense Secretary Pete Hegseth issued a memorandum this week barring Pentagon and military personnel from placing financial wagers — specifically “including traditional betting platforms and prediction markets such as ‘Polymarket’ or ‘Kalshi’” — using non-public, government information.
The directive, dated Oct. 20, was obtained by DefenseScoop on Thursday. A source confirmed its authenticity. It comes as the U.S. government and federal law enforcement officials are responding to a rise in insider trading tied to sensitive military operations.
“This prohibition applies whether the transaction is informed by classified or unclassified information,” Hegseth wrote in the memo, which was addressed to Pentagon leadership, combatant commanders, and Defense agency and field activity directors. “Violations may result in administrative, disciplinary, and, where appropriate, criminal action under the Uniform Code of Military Justice and/or applicable federal law.”
The issue of Defense Department personnel potentially using sensitive insider information to bet on military operations emerged publicly in April, when the Department of Justice charged a senior enlisted soldier assigned to U.S. Army Special Operations Command for allegedly using insider knowledge to bet on the capture of Venezuelan leader Nicolas Maduro via a prediction market site before the raid was made public.
Officials alleged that the accused soldier, Master Sgt. Gannon Ken Van Dyke, profited nearly $410,000 from his bets and then sent money to a foreign cryptocurrency vault before dumping the funds into a newly made brokerage account. He pleaded not guilty and was released on bond.
More recently, CNN reported in August that more than 150 “wallets” on Polymarket may have traded on insider information from the military, citing research by the nonprofit Anti-Corruption Data Collective.
That same month, Reuters reported that Polymarket had referred “dozens” of potential military insider trading cases to the Justice Department.
In the new memo, Hegseth warned that when military personnel, intelligence professionals and DOD civilians participate in financial transactions associated with operational outcomes, they generate indicators that can be exploited by adversaries against U.S. forces and assets.
“Make no mistake why this matters. Our enemies watch movements in these markets,” Hegseth wrote.
He added that, beyond operational security risks, such financial stakes can “warp” defense officials’ judgement.
“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,” Hegseth said. “That is precisely the kind of dilution of the warrior ethos this Department has strived to eradicate under this administration.”
