Hegseth Orders Halt on Military Wagers Over Insider Risk

Defense Secretary Pete Hegseth issued a directive on October 20 that restricts military personnel from using nonpublic information to place bets on financial platforms. The memo, released by CBS News on October 22, warns that such activity creates detectable signals that adversaries can exploit to anticipate American military movements, targets, and timing.

The core of the directive targets the intersection of insider knowledge and public betting markets. Hegseth stated that when a service member or civilian performs a financial transaction tied to a military outcome, they generate a signal that hostile intelligence services can aggregate and correlate. This process allows foreign entities to predict operational details that should remain hidden. The memo explicitly covers all financial platforms, including prediction markets like Polymarket and Kalshi, as well as traditional betting services.

The ban applies to any financial transaction informed by nonpublic information, regardless of whether that data is classified or unclassified. Hegseth emphasized that the lives of service members depend on the enemy not knowing what is coming next. He argued that troops deserve a force that protects them from exposure rather than one that reveals their positions for personal financial gain. The directive was sent to senior Pentagon leaders, Combatant Command heads, and directors of Defense Department field activities.

This policy follows a specific criminal incident that drew attention to the practice. In April, a US Army soldier was arrested after 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 made approximately $410,000 in profits. The case served as a concrete example of how nonpublic data can be converted into financial gain through prediction markets.

The issue is not limited to that single soldier. An August report from the Anti-Corruption Data Collective identified 152 suspicious wallets that placed longshot bets on military and defense markets. These accounts collectively won about $8 million in profits. The data suggests a pattern of behavior where individuals use specialized knowledge to gain advantages in public betting environments.

Hegseth framed the prohibition as a measure to protect military judgment and operational security. The memo states that personal financial stakes in military outcomes can compromise operations and put troops at risk. By limiting the use of nonpublic information in betting, the department aims to reduce the visible digital footprint that adversaries can track. The directive seeks to ensure that financial decisions do not leak operational secrets.

The memo underscores the growing concern over how modern financial tools interact with traditional military secrecy. As prediction markets become more popular, the department is moving to formalize rules that prevent service members from leveraging their professional knowledge for private gain. The October 20 document sets a clear standard for all department personnel, ensuring that financial activity does not undermine the operational advantage of US forces.