US Defense Secretary Pete Hegseth Bans Pentagon Staff from Wagering on Military Operations Using Nonpublic Information

US Defense Secretary Pete Hegseth has instituted a strict ban barring all Pentagon staff from using undisclosed information to place wagers on upcoming military action, including on popular prediction market platforms such as Kalshi and Polymarket.

The directive was formally issued in a memo sent to senior Pentagon and defense agencies. In the communication, Hegseth outlined that all Department of War personnel are strictly prohibited from engaging in financial transactions using nonpublic information. This sweeping prohibition applies to both classified and unclassified information, drawing a sharp line against any speculative behavior tied to official duties.

“Make no mistake why this matters. Our enemies watch movements in these markets,” Hegseth wrote in the memo, emphasizing the severe national security implications of speculative financial activity. “The lives of our Service members often depend on the enemy not knowing what is coming.”

Beyond the immediate risks to operational security, Hegseth pointed to the corrupting influence that financial incentives can introduce into military planning and analysis. He warned that allowing personnel to maintain a financial stake in geopolitical outcomes fundamentally compromises objective decision-making and operational integrity.

“Beyond operational security, financial stakes can warp judgment. 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,” he stated, highlighting how personal financial motives could potentially interfere with professional responsibilities.

This decisive policy shift follows a series of high-profile legal cases involving military personnel exploiting insider knowledge for personal financial gain on decentralized prediction markets. Among the most notable incidents occurred in April, when a US Army soldier was indicted for allegedly leveraging classified information to secure massive profits on prediction platforms.

The soldier, identified as Gannon Ken Van Dyke, was accused of using confidential details surrounding the operation to capture Venezuelan leader Nicolás Maduro to make more than $400,000 on Polymarket. Prosecutors allege that Van Dyke was directly involved in both the planning and execution of the high-stakes operation. According to court documents, he subsequently used his advance knowledge of the mission’s parameters and timing to wager on outcomes related to Maduro’s removal from power. Legal proceedings have since moved forward, with Van Dyke having pleaded not guilty to all charges brought against him.

The Venezuelan operation incident is part of a broader international pattern involving defense personnel and prediction markets. Earlier in February, international security concerns were amplified when Israeli authorities arrested and indicted a military reservist and a civilian. The two individuals were accused of using classified intelligence to place bets on Polymarket regarding impending Israeli military strikes against Iran.

The convergence of military intelligence, national defense, and decentralized prediction markets has sparked intense legal and regulatory debates. As prediction platforms grow in popularity and liquidity, regulators and government officials have increasingly scrutinized how insider trading laws and operational security protocols apply to these novel financial instruments. The Commodity Futures Trading Commission (CFTC) and legal experts have actively debated the interpretation of prediction markets, particularly regarding how speculative wagers on geopolitical events intersect with federal regulations and ethical standards for public servants.

With the release of Hegseth’s new memorandum, the Pentagon is drawing a definitive boundary for all defense personnel, effectively criminalizing or subjecting to severe disciplinary action any attempt to monetize confidential military knowledge. By cutting off access to prediction markets for anyone possessing nonpublic operational details, the Department of War aims to safeguard mission integrity, protect the lives of service members in the field, and restore absolute trust in the objectivity of military intelligence and logistics.