Hegseth Cracks Down on Insider Bets in Military Outcomes

The U.S. Department of Defense has issued a strict directive forbidding military personnel from leveraging nonpublic information to place wagers on prediction markets, a move intended to prevent enemy intelligence agencies from tracking American strategic intentions.

The directive, dated October 20, was distributed to senior Pentagon officials, Combatant Command leaders, and directors of Defense Department field activities. It was reported by CBS News on October 22, bringing the internal policy to public attention just days after its release.

The memo targets all financial platforms, explicitly naming both traditional betting services and emerging prediction market venues such as Polymarket and Kalshi. The rule prohibits any financial transaction made with the aid of nonpublic information, regardless of whether that data is formally classified or merely unclassified.

Defense Secretary Pete Hegseth argued that these wagers create distinct signals that hostile foreign intelligence services can aggregate and exploit. By analyzing market movements, adversaries may anticipate U.S. movements, targets, and timing, thereby compromising the element of surprise that is critical to military success.

Hegseth emphasized that the lives of service members often depend on the enemy remaining unaware of upcoming operations. He stated that troops deserve a force that protects them rather than one that exposes them to risk for the personal financial gain of individuals within the department.

The memo’s subject line, “Do Not Compromise Military Operations for Personal Financial Gain,” underscores the severity of the issue. Hegseth noted that when an American service member, intelligence professional, or civilian engages in a financial transaction based on military outcomes, they generate a signal that can be correlated and exploited by hostile actors.

Recent incidents have highlighted the tangible risks of this practice. In April, a U.S. Army soldier was arrested and charged with using confidential information to place bets on Polymarket regarding the timing of the military’s capture of Venezuelan President Nicolás Maduro. The soldier reportedly made $410,000 through these wagers.

Further scrutiny came in August, when the Anti-Corruption Data Collective released a report identifying 152 suspicious wallets. According to the group, these wallets placed longshot bets on military and defense markets and collectively won $8 million, suggesting a pattern of informed betting that aligns with the concerns raised in the new memo.

By formalizing this prohibition, the Pentagon aims to ensure that judgment remains clear and that personal financial interests do not interfere with operational secrecy. The directive serves as a clear signal to all defense personnel that the line between private investment and public duty is now strictly defined.