Defense Secretary warns military personnel against using nonpublic information in prediction markets

New Directive on Prediction Markets

Defense Secretary Pete Hegseth has issued a memo to military personnel, senior Pentagon leadership, Combatant Command leaders, and Defense Department field activity directors. The memo, titled "Do Not Compromise Military Operations for Personal Financial Gain," prohibits the use of nonpublic information for financial transactions on prediction markets and other financial platforms.

Security Concerns Highlighted

Hegseth stated that hostile foreign intelligence services monitor these markets. Financial transactions made by military or intelligence personnel using nonpublic information can generate signals that adversaries could aggregate, correlate, and exploit to anticipate military movements, targets, and timing. This poses a direct threat to the safety of service members.

Scope of the Prohibition

The directive applies to all financial platforms, including traditional betting services and prediction markets like Polymarket and Kalshi. It specifically forbids Defense Department personnel from making any financial transaction informed by nonpublic information, regardless of whether that information is classified or unclassified.

Prior Incidents Prompt Action

This warning follows previous incidents, including the arrest of a US Army soldier in April who was charged with using confidential information to make $410,000 in Polymarket bets. Additionally, an August report by the Anti-Corruption Data Collective identified 152 suspicious wallets that won a combined $8 million from longshot bets on military and defense markets.