Defense Secretary Pete Hegseth has issued a new directive telling troops they cannot use “nonpublic information” to make bets on prediction markets.
“Our enemies watch movements in these markets,” Hegseth wrote in a memo dated Tuesday and reviewed by The Associated Press. “When an American Service member, intelligence professional, or other Department civilian engages in a financial transaction on a military outcome, they create a signal.”
The one-page document, which was reported earlier by CBS News, comes months after a U.S. Special Forces soldier involved in the military operation to capture then-Venezuelan President Nicolás Maduro was charged with using classified information about the mission to win more than $400,000 on the prediction market Polymarket.
The memo stresses that troops are forbidden from using both classified and unclassified but nonpublic information to make trades on platforms like Polymarket and Kalshi. It says violators could be subject to administrative punishment and criminal charges under the Uniform Code of Military Justice or federal law.
“Beyond operational security, financial stakes can warp judgment,” Hegseth said in the memo. “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.”
When asked about the new policy, a defense official said the Pentagon had no other information to offer beyond the memo.
In April, 38-year-old Master Sgt. Gannon Ken Van Dyke was charged by federal prosecutors and federal regulators with using his access as a Special Forces member to place a series of bets that totaled more than $32,500 on when Maduro might be removed from power.
According to the federal complaint in his case, he placed those bets between Dec. 30 and Jan. 2, with the vast majority occurring the night of Jan. 2 — just hours before the first missiles would fall on Caracas.
However, the issue of government officials and employees using their access to place bets on prediction markets is not confined to the Pentagon.
A group of new accounts on Polymarket made highly specific, well-timed bets on whether the U.S. and Iran would reach a ceasefire just before President Donald Trump announced it in April, resulting in hundreds of thousands of dollars in profits for the new customers.
The White House warned staff against using private information to trade on prediction markets the same day the report came out.
Kalshi also fined and suspended three congressional candidates who the company said wagered on the outcome of their own elections in April.
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