Defense Secretary Pete Hegseth ordered troops to stop using nonpublic information to bet on prediction markets because, as he warned, enemies watch those markets for clues.
Story Snapshot
- The Pentagon banned using classified or nonpublic information for prediction-market bets.
- The rule cites national security risks and names platforms like Polymarket and Kalshi.
- Violations may bring military discipline or federal criminal charges.
- A recent federal case shows how insider bets can be charged under current law.
Pentagon clamps down after warning that adversaries read the odds
The Pentagon issued a directive telling service members they cannot use nonpublic information to trade or bet in prediction markets. The Associated Press reported that Defense Secretary Pete Hegseth wrote, “Our enemies watch movements in these markets,” and he barred using both classified and unclassified but nonpublic information on sites like Polymarket and Kalshi. The memo warns that troops who break the rule face administrative punishment and possible prosecution under the Uniform Code of Military Justice or federal law.
The order lands amid a surge in public interest and money flowing into markets that bet on real-world events. These platforms post odds on wars, elections, and policy decisions. Traders try to read signals before others do. The Pentagon’s concern is simple and sound: if a soldier’s “edge” comes from privileged knowledge about a pending mission, any trade can tip off patterns or timelines. That is not theory for a seminar. That is operational security.
A live case shows how prosecutors can already act
Federal prosecutors charged Army soldier Gannon Ken Van Dyke with using classified information to profit from prediction market bets tied to a U.S. operation, dubbed Operation Absolute Resolve, concerning Nicolás Maduro. The Justice Department alleged he had access to sensitive, nonpublic, classified details and placed about $33,034 in related wagers during the period leading up to the operation. Prosecutors listed crimes including theft of nonpublic government information, commodities fraud, wire fraud, and an unlawful monetary transaction.
That charging sheet matters for two reasons. First, it shows the government does not need to invent new crimes to address insider betting. Second, it shows how the law can fit the conduct even though many prediction contracts are not securities. The case is still an allegation, not a conviction. But the legal path is clear enough to put troops on notice that misuse of government information can draw serious charges.
Where the new directive bites hardest
The memo targets a narrow and vital line: information that the public does not have. That includes both classified details and unclassified but still restricted facts about plans, timing, logistics, or readiness. A soldier who reads open news and forms a view can still trade like any citizen. A soldier who hears a real date in a briefing cannot. That split echoes American conservative values on duty, trust, and personal responsibility. Public risk-taking is fine. Profiting from privileged access is not.
The directive also names platforms. That is smart signaling. Polymarket and Kalshi run markets that can touch defense and policy. Clear examples help commanders brief the force and help troops avoid gray areas. Citing potential penalties further sharpens the edge. A policy with teeth beats a policy with vibes. The Pentagon is saying, “This is not a suggestion.” That tone deters and also protects honest troops from bad actors in their units.
The bigger question: can markets and military secrecy coexist?
Prediction markets promise sharper forecasts by pooling many views. Some economists even claim that insider trading can make the odds smarter by pulling hidden knowledge into prices. That idea collides with the military’s core job to keep plans quiet until execution. When lives and missions are on the line, the only winning price is the one the enemy never sees. The Justice Department’s case and the Pentagon’s rule both push toward a tight boundary that respects freedom but defends the mission.
Pentagon bans troops from betting using insider information
Hegseth announced the ban this past week in a memo titled “Do Not Compromise Military Operations for Personal Financial Gain.” The directive bars department members — civilian staff or uniformed troops — from using… pic.twitter.com/m0rtYK3hOo
— Armed Forces Press (@AFP_press) October 24, 2026
Enforcement now moves from policy to practice. The Pentagon flagged criminal and administrative tools, which include the Uniform Code of Military Justice, fraud statutes, and rules against misuse of government information. Investigators can already subpoena records and follow money when they see red flags. Commanders can counsel, restrict, or refer cases. This is not about policing normal investing. This is about blocking a simple path for leaks to show up as odds on a screen.
