Pentagon Policy: Hegseth Cracks Down on Military Prediction Market Bets

The U.S. Department of Defense has moved to restrict how its personnel engage with prediction markets, issuing a directive that warns against using nonpublic information to place financial bets. This latest guidance aims to close a perceived gap in security where wagering activities might inadvertently reveal strategic military plans to hostile foreign intelligence services. The memo was released on October 20 and made public by CBS News on Wednesday.

The directive, titled Do Not Compromise Military Operations for Personal Financial Gain, was distributed to senior Pentagon leadership, Combatant Command leaders, and directors of Defense Department field activities. It establishes a broad prohibition that applies to all financial platforms. This includes traditional betting services as well as modern prediction market sites such as Polymarket and Kalshi. The rule states that no Defense Department employee should conduct any financial transaction based on information that has not been made public, regardless of whether that information is officially classified or simply unclassified.

Hegseth argued in the memo that these markets serve as a surveillance tool for adversaries. He noted that enemies closely monitor market movements to detect anomalies. When a service member, intelligence professional, or civilian employee bets on a specific military outcome, they create a financial signal. Hostile foreign intelligence agencies can aggregate and correlate these signals to predict U.S. movements, targets, and timing. The secretary emphasized that operational security often relies on the enemy being unaware of upcoming actions, and that service members deserve a force that protects them rather than one that exposes them for personal financial gain.

This policy shift comes following a series of high-profile incidents involving military personnel and prediction markets. In April, a U.S. Army soldier was arrested and charged with using confidential information to place bets on Polymarket. The soldier wagered on the timing of the military’s capture of Venezuelan President Nicolás Maduro and reportedly gained $410,000 from the transactions. Prior to that, an August report by the Anti-Corruption Data Collective identified 152 suspicious digital wallets. The group found that these wallets had placed longshot bets on military and defense markets, resulting in combined winnings of $8 million.

The new memo reinforces the idea that betting on military events can warp professional judgment. By creating a formal prohibition, the Department of Defense seeks to align its workforce with stricter standards of operational security. The guidance does not ban all financial activity, but it specifically targets transactions driven by nonpublic data that could indicate future strategic decisions or operational timelines.

Military leaders will now be responsible for ensuring their units adhere to these new guidelines. The policy covers a wide range of personnel, including active duty troops, intelligence specialists, and civilian employees across the department. As prediction markets continue to grow in popularity, the Pentagon aims to mitigate the risk that individual financial interests could compromise national security objectives.

No immediate enforcement actions have been announced beyond the existing cases. However, the memo signals a stricter posture for future audits and investigations into financial behavior within the department. Leaders are expected to communicate these expectations to their teams to ensure compliance with the new standards.