Defense Secretary Pete Hegseth has barred service members from using nonpublic information to bet on prediction markets, citing enemy signals and warped judgment that put troops at risk.
In a one-page memo dated Tuesday, Hegseth told American service members, intelligence professionals, and other Department of Defense civilians they may not use classified or unclassified but nonpublic information to trade on platforms such as Polymarket and Kalshi.
The Associated Press reviewed the directive and reported that violators could face administrative punishment and criminal charges under the Uniform Code of Military Justice or federal law. The move comes months after federal prosecutors charged a Special Forces soldier over high-stakes bets tied to a sensitive military operation.
Hegseth framed the ban as a matter of operational security and basic integrity. He made clear that markets move in ways adversaries can read, and that personal money on the line can pull a logistician or analyst off true north.
The memo does not say much about who is watching. Hegseth wrote that market activity itself becomes a tip-off.
Hegseth stated in the memo:
"Our enemies watch movements in these markets,"
He continued that any financial transaction by a service member, intelligence professional, or Department civilian on a military outcome creates a signal. Breitbart reported the fuller warning that such a signal can be aggregated, correlated, and exploited by hostile foreign intelligence services to anticipate movements, targets, and timing.
Hegseth drove the point home on the human cost:
"The lives of our service members often depend on the enemy not knowing what is coming. The men and women who carry our flag into harm’s way deserve a force that protects them, not one that exposes them to the enemy for personal gain."
That is the core of the order. Prediction markets are not treated as harmless side bets when the people placing them sit inside the planning loop.
Hegseth went beyond the spy problem. He argued that cash stakes warp judgment inside the force itself.
The memo put it this way:
"Beyond operational security, financial stakes can warp judgment,"
He spelled out the conflict with plain examples:
"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."
Under the directive, that kind of interest is now off-limits when it rests on nonpublic information. A defense official, asked about the new policy, said the Pentagon had nothing to add beyond the memo itself.
The order fits a broader pattern of Hegseth asserting tighter control at the Pentagon, including earlier pushback when outside reports claimed he was on the way out and Hegseth called replacement speculation completely false.
The ban did not appear in a vacuum. In April, federal prosecutors and federal regulators charged 38-year-old Master Sgt. Gannon Ken Van Dyke, a U.S. Special Forces soldier, over bets tied to the military operation to capture then-Venezuelan President Nicolás Maduro.
Authorities said Van Dyke used classified information about the mission and his access as a Special Forces member to place a series of bets totaling more than $32,500 on when Maduro might be removed from power. The federal complaint described those wagers as running between Dec. 30 and Jan. 2, with the vast majority coming the night of Jan. 2, just hours before the first missiles would fall on Caracas.
Reporting on the case also stated he was charged with using classified information about the mission to win more than $400,000 on Polymarket. The new memo arrives months after that charging decision and draws a bright line for everyone else in uniform and at the Department.
Accountability inside the building has already produced high-level turnover, including the period when Army Secretary Dan Driscoll resigned after clashes with Hegseth over military leadership.
April also brought parallel warnings outside the Van Dyke case. A group of new Polymarket accounts racked up hundreds of thousands of dollars in profits on bets tied to a U.S.-Iran ceasefire after President Donald Trump announced the ceasefire.
The same day that report surfaced, the White House warned its own staff against using private information to trade on prediction markets. Separately, Kalshi fined and suspended three congressional candidates the company said had wagered on the outcome of their own elections.
Those episodes sit beside the soldier case as evidence that nonpublic information and political or military outcomes do not mix cleanly on open betting platforms. Hegseth’s directive now applies that lesson department-wide to troops and Defense civilians.
Leaks and insider edges have already drawn hard lines from the top, including when Trump threatened prison for leakers after contested reports involving Camp David and munitions questions.
The one-page memo is short on ceremony and long on consequence. It covers classified information and unclassified but nonpublic information alike. It names the platforms in plain terms. And it puts administrative punishment and criminal exposure on the table under the Uniform Code of Military Justice or federal law.
CBS News reported the document earlier; the Associated Press later reviewed it. Together the public record shows a Defense secretary closing a loophole that enemies can read and that personal financial interest can exploit.
Even as some Republicans have pressed him on other fronts, from open questions about Pentagon leadership during the Iran conflict to War Powers disputes over casualty figures, the prediction-market order is a straightforward defense of operational security and the warrior ethos.
Service members who carry the flag into harm’s way should not have to worry that a colleague’s side bet is broadcasting the plan. Hegseth’s directive treats that risk as what it is: unacceptable.