Defense Dept. Bans Betting on Military Operations with Nonpublic Data

Defense Secretary Pete Hegseth has prohibited Department of Defense personnel from using nonpublic information to bet on U.S. military operations, according to a memorandum dated October 20. The ban applies to both classified and unclassified information and includes prediction markets like Polymarket and Kalshi.

What Happened

Defense Secretary Pete Hegseth issued a memorandum on October 20, banning Department of Defense (DoD) personnel from using nonpublic information for betting on U.S. military operations. This directive was sent to senior Pentagon leadership and combatant commanders, as reported by CBS News. The prohibition covers both classified and unclassified information and explicitly names prediction markets such as Polymarket and Kalshi as included under the ban.

Hegseth warned that financial transactions on these prediction markets could potentially expose sensitive military movements to foreign adversaries and place American troops at risk. He stated, “Our enemies watch movements in these markets,” and that such transactions by U.S. service members, intelligence professionals, or other DoD civilians create a “signal” that foreign intelligence services could analyze to anticipate American military actions, targets, and timing. Violations of this directive could lead to administrative disciplinary actions or criminal prosecution under federal law or the Uniform Code of Military Justice, according to the memorandum.

Key Details

• Defense Secretary Pete Hegseth issued a memorandum on October 20, 2026, banning DoD personnel from using nonpublic information for betting on U.S. military operations, according to CBS News.
• The ban applies to both classified and unclassified information and specifically includes prediction markets such as Polymarket and Kalshi, as detailed in the memo.
• Hegseth cautioned that betting activity on military outcomes could create signals analyzable by foreign intelligence services, potentially endangering American troops, CBS News reported.
• Violations may result in administrative disciplinary or criminal action under federal law or the Uniform Code of Military Justice, according to the memorandum obtained by CBS News.
• The directive follows the arrest of U.S. Army Master Sgt. Gannon Ken Van Dyke in April, who allegedly wagered over $33,000 on Polymarket and won more than $409,000 after betting on Venezuelan leader Nicolas Maduro’s capture before public announcement, as reported by CBS News.

Why It Matters

This directive from the Defense Secretary underscores concerns about national security vulnerabilities potentially arising from personnel participation in prediction markets. The explicit mention of specific platforms like Polymarket and Kalshi highlights a regulatory response to perceived risks within these emergent financial instruments. The ban aims to mitigate potential intelligence exploitation by foreign adversaries who could analyze betting patterns to discern sensitive military information, thereby impacting operational security and troop safety. The associated legal ramifications, including potential criminal charges, reflect the seriousness with which the DoD views these activities.

The memorandum’s issuance follows recent incidents, such as the charges against U.S. Army Master Sgt. Gannon Ken Van Dyke, which exemplify the alleged misuse of nonpublic information on prediction markets. This case, involving a soldier betting on military outcomes related to Venezuelan leader Nicolas Maduro’s capture, illustrates the concrete implications that prompted the Defense Department’s policy change. The prohibition represents a proactive measure to address the intersection of financial markets and national security, particularly as digital prediction platforms become more accessible.