Defense Secretary Pete Hegseth has directed U.S. troops not to use “nonpublic information” when placing bets on prediction markets.
“Our enemies watch movements in these markets,” Hegseth wrote in a Tuesday memo reviewed by The Associated Press. He warned that when a service member, intelligence professional or other Defense Department employee makes a financial transaction tied to a military event, “they create a signal.”
The one-page directive, first reported by CBS News, follows the case of a U.S. Special Forces soldier accused of exploiting classified information about an operation to capture then-Venezuelan President Nicolás Maduro. Prosecutors say the soldier used that information to earn more than $400,000 on the prediction market Polymarket.
The memo makes clear that the prohibition covers both classified material and unclassified information that has not been made public. Personnel are barred from using such information to trade on platforms including Polymarket and Kalshi, and violators could face administrative discipline or criminal prosecution under the Uniform Code of Military Justice and federal law.
Hegseth also cited the risk that financial interests could influence military decision-making. “Beyond operational security, financial stakes can warp judgment,” he wrote. “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.”
A Defense Department official, asked about the new policy, said the Pentagon had no additional information to provide beyond the memo.
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The directive comes after federal prosecutors and regulators charged 38-year-old Master Sgt. Gannon Ken Van Dyke in April. Authorities allege that the Special Forces member used his military access to place a series of wagers, totaling more than $32,500, on when Maduro would lose power.
According to the federal complaint, Van Dyke placed the bets from Dec. 30 through Jan. 2. Most were made on the night of Jan. 2, only hours before the first missiles struck Caracas.
Concerns about public officials or government employees using privileged access to trade on prediction markets extend beyond the Pentagon.
In another case, a group of newly created Polymarket accounts placed unusually precise and well-timed wagers on whether the United States and Iran would agree to a ceasefire shortly before President Donald Trump announced one in April. The trades generated hundreds of thousands of dollars in profits for the new users.
The White House cautioned its staff against using private information to trade on prediction markets on the same day the report was published.
Kalshi likewise fined and suspended three congressional candidates in April after the company said they had bet on the outcomes of their own elections.