Defense Secretary Bars Military Personnel from Betting on Prediction Markets Using Nonpublic Information

Defense Secretary Pete Hegseth has issued a new directive prohibiting military personnel from using "nonpublic information" to make bets on prediction markets. The memo, dated Tuesday, aims to prevent service members, intelligence professionals, and Department of Defense civilians from creating "signals" that could be exploited.

"Our enemies watch movements in these markets," Hegseth stated in the directive 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 directive comes after a U.S. Special Forces soldier was charged in April for allegedly using classified information about the operation to capture Venezuelan President Nicolás Maduro to win over $400,000 on the prediction market Polymarket. The soldier, Master Sgt. Gannon Ken Van Dyke, 38, was charged by federal prosecutors and regulators with using his access to place bets totaling more than $32,500 on when Maduro would be removed from power. The complaint stated the bets were placed between December 30 and January 2, with most occurring the night before military action began.

Hegseth's memo specifies that troops are forbidden from using both classified and unclassified but nonpublic information to make trades on platforms such as Polymarket and Kalshi. Violators could face administrative punishment and criminal charges under the Uniform Code of Military Justice or federal law.

"Beyond operational security, financial stakes can warp judgment," Hegseth 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 official stated that the Pentagon had no further information to provide beyond the memo when asked for comment.

The issue of government officials and employees using insider information for prediction market bets has extended beyond the Pentagon. Shortly after the report on the Special Forces soldier, new accounts on Polymarket made highly specific, well-timed bets on whether the U.S. and Iran would reach a ceasefire before President Donald Trump announced it in April, resulting in significant profits for these accounts. The White House also issued a warning to its staff against using private information for such trades on the same day.

Furthermore, Kalshi reportedly fined and suspended three congressional candidates in April for allegedly wagering on the outcomes of their own elections.