Pentagon Bans Troops from Betting on Military Ops with Inside Information

Defense Secretary Pete Hegseth banned U.S. troops and Pentagon civilian employees on Oct. 20, 2026, from using inside information to gamble on military operations through online prediction markets like Polymarket and Kalshi.

Pentagon Order Targets Prediction Market Bets

The memorandum issued to senior Pentagon leaders and combatant commanders prohibits military personnel and Department of Defense civilians from engaging in financial transactions using nonpublic information, either directly or through third parties. The directive aims to prevent operational security breaches and conflicts of interest. Hegseth wrote that financial stakes can warp judgment and create a signal that foreign intelligence services can exploit to anticipate American military movements and the timing of operations.

Federal rules already bar government personnel from utilizing privileged workplace insights for financial gain, yet this fresh directive specifically zeroes in on wagers involving military missions and forecasting platforms. Anyone who breaks these rules faces criminal charges through the Uniform Code of Military Justice or federal law, as well as disciplinary or administrative penalties.

Previous Incidents Spark Internal Warnings

The directive follows several incidents involving prediction markets. In April, Army Master Sgt. Gannon Ken Van Dyke, a Special Forces soldier, was arrested and accused of using classified information about the January operation that resulted in the capture of Venezuelan leader Nicolas Maduro to win more than $400,000 on Polymarket. Van Dyke pleaded not guilty to charges including wire fraud, commodities fraud, and misuse of confidential government information.

Furthermore, a collection of newly created Polymarket profiles placed exceptionally precise, well-timed wagers concerning a prospective U.S.-Iran ceasefire right before President Donald Trump formally announced the agreement in April, generating hundreds of thousands of dollars in gains. A Trump teleprompter aide also reportedly made $100,000 on Kalshi by betting on what Trump would say in prepared remarks.

Regulatory Friction and Enforcement Stakes

Prediction markets have flourished under the Trump administration’s light-touch approach to regulation. While platforms like Kalshi and Polymarket prohibit insider trading, criminal charges are a bigger deterrent than being banned from the platforms.

The administration has sought to prevent state governments from regulating these markets, arguing that state laws are preempted by the Commodity Futures Trading Commission’s exclusive jurisdiction. Meanwhile, state governments want the Supreme Court to uphold their right to impose restrictions on prediction-market gambling as courts reach differing conclusions.

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Make no mistake why this matters. Our enemies watch movements in these markets.

Pete Hegseth