Defense Secretary Pete Hegseth has prohibited Defense Department personnel from using nonpublic information to place bets on U.S. military operations, according to a memorandum obtained by CBS News. The Oct. 20 directive applies to classified and unclassified information and specifically names prediction markets including Polymarket and Kalshi.
Hegseth warned that financial transactions on prediction markets could expose sensitive military movements to foreign adversaries and endanger American troops. In the memo, he emphasized that foreign intelligence services could analyze betting activity to anticipate American military movements, targets and timing of operations. "When an American Service member, intelligence professional, or other Department civilian engages in a financial transaction on a military outcome, they create a signal," Hegseth wrote. "Our enemies watch movements in these markets." Violations could result in administrative disciplinary or criminal action under federal law or the Uniform Code of Military Justice.
The ban follows a high-profile case involving a U.S. Special Forces soldier. In April, a soldier involved in a military operation that captured Venezuelan leader Nicolas Maduro was arrested after allegedly betting on Maduro's removal from office before news of the raid was made public. Federal investigators determined that U.S. Army Master Sgt. Gannon Ken Van Dyke made bets exceeding $33,000 on Polymarket within hours of President Trump's announcement in January that Maduro had been captured. Those bets generated winnings of more than $409,000. The soldier entered a not guilty plea in New York federal court.
The directive represents an attempt to close a gap in Defense Department rules as prediction markets have become more accessible to ordinary traders. For service members and department civilians, the ban means financial penalties and potential criminal charges if they use any nonpublic military information for betting purposes, regardless of how they obtained it.