Pentagon Memo Bans Insider Bets on War Outcomes

Defense Secretary Pete Hegseth issued a memo on October 20 that prohibits military personnel from using nonpublic information to place bets on prediction markets. The directive warns that such financial transactions create observable signals that adversaries can exploit to anticipate American military movements, targets, and timing.

CBS News published the memo on October 22. It was addressed to senior Pentagon leaders, Combatant Command heads, and directors of Defense Department field activities. The subject line of the document reads, "Do Not Compromise Military Operations for Personal Financial Gain." Hegseth stated that when a service member or intelligence professional makes a financial transaction tied to a military outcome, they create a signal that hostile foreign intelligence services can aggregate and correlate.

The prohibition applies to all financial platforms. This includes traditional betting services and specific prediction markets such as Polymarket and Kalshi. Department personnel may not make any financial transaction informed by nonpublic information, regardless of whether that information is classified or unclassified. Hegseth wrote that the lives of service members often depend on the enemy not knowing what is coming, and that troops deserve a force that protects them rather than one that exposes them for personal gain.

The directive follows a criminal case from earlier this year. In April, a US Army soldier was arrested and charged with using confidential information to make $410,000 in Polymarket bets on the timing of the military's capture of Venezuelan President Nicolás Maduro. The case highlighted how insider knowledge could be converted into private profit at the expense of operational security.

Concerns about the practice extend beyond that single incident. An August report from the Anti-Corruption Data Collective identified 152 suspicious wallets that placed longshot bets on military and defense markets. Those wallets won a combined $8 million. The report suggested that a pattern of such activity could indicate broader insider trading within the defense sector.

Hegseth's memo frames betting as a threat to operational judgment. The Defense Secretary told commanders and department leaders that personal financial stakes in military outcomes can compromise operations and put troops at risk. The memo instructs leaders to ensure their personnel understand that financial gain should not come at the cost of military secrecy.