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Pentagon and military personnel are barred from using non-public government information to place trades on political prediction markets, including on Polymarket and Kalshi.
A new memo warns that violations can bring disciplinary action and, where appropriate, criminal consequences.
Defense Secretary Pete Hegseth issued the directive in an Oct. 20 memorandum, according to DefenseScoop, which reported obtaining it Thursday and confirming its authenticity with a source. The memo explicitly includes both traditional betting platforms and prediction markets.
Betting Restriction Covers Unclassified Information, Too
The directive was addressed to Pentagon leadership, combatant commanders, and Defense agency and field activity directors. Its scope extends beyond the use of classified material.
“This prohibition applies whether the transaction is informed by classified or unclassified information,” Hegseth wrote.
That distinction is central to the restriction: the memo targets wagers made using non-public government information, not only information carrying a classified designation.
“Violations may result in administrative, disciplinary, and, where appropriate, criminal action under the Uniform Code of Military Justice and/or applicable federal law,” the memo states.
Naming Polymarket and Kalshi makes clear that the restriction includes prediction-market transactions.
Hegseth Cites Operational Security and Conflicts
Hegseth warned that financial transactions tied to operational outcomes can create indicators that adversaries could exploit against U.S. forces and assets.
“Make no mistake why this matters. Our enemies watch movements in these markets,” he wrote.
The memo also identifies a separate concern: personnel with money riding on an operational outcome may have a financial interest that conflicts with their responsibilities.
“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 wrote.
Soldier’s Case and Polymarket Referrals Provide Context
DefenseScoop reported that the issue became public in April, when the Justice Department charged Master Sgt. Gannon Ken Van Dyke, a senior enlisted soldier assigned to U.S. Army Special Operations Command.
Officials alleged that Van Dyke used insider knowledge to bet on the capture of Venezuelan leader Nicolas Maduro before the raid became public, earning nearly $410,000. Van Dyke pleaded not guilty and was released on bond. The allegations are not a finding of guilt.
DefenseScoop also cited August reporting by CNN that more than 150 Polymarket wallets may have traded on military insider information, based on research by the nonprofit Anti-Corruption Data Collective. Wallet counts do not establish how many individuals were involved or prove misconduct.
Separately, Reuters reported that month that Polymarket had referred dozens of potential military insider-trading cases to the Justice Department. Those referrals concern potential violations, not established offenses.
Source: As reported by DefenseScoop.
