Pentagon Memo Bars Insider Bets to Stop Adversaries From Reading Market Signals

Defense Secretary Pete Hegseth issued a directive on October 20 that prohibits 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 leaders and Combatant Command heads. CBS News released the document on October 22.

Hegseth argued that financial transactions tied to military events create detectable signals for hostile nations. He stated that foreign intelligence services can aggregate and correlate these wagers to anticipate American targets and timing. The memo asserts that enemy forces track activity in these markets to gain tactical advantages.

The directive covers all financial platforms, including traditional betting services and prediction markets like Polymarket and Kalshi. Personnel are barred from making any financial transaction informed by nonpublic data, whether that data is classified or unclassified. Hegseth warned that personal financial stakes in military outcomes can compromise operational judgment and put troops at risk.

The order follows a criminal case from April in which a US Army soldier was arrested. The soldier was charged with using confidential information to make $410,000 in bets on Polymarket regarding the timing of the military's capture of Venezuelan President Nicolás Maduro. Hegseth cited this incident as evidence that insiders were exploiting their positions for profit.

A broader pattern of suspicious activity was documented in an August report by the Anti-Corruption Data Collective. The group identified 152 wallets that placed longshot bets on military and defense markets. These wallets collectively won $8 million in gains. The findings prompted the Department of Defense to formalize its ban on insider wagering.

Hegseth emphasized that the lives of service members depend on the enemy not knowing what is coming. He wrote that those who carry the flag into harm's way deserve a force that protects them rather than one that exposes them for personal gain. The memo frames the betting practice as a direct threat to operational security and force protection.