Pentagon Slaps New Rule on Service Members: No Betting With Inside Info

Defense Secretary Pete Hegseth rolled out a one‑page directive on Tuesday that puts the kibosh on any service member, civilian employee, or intelligence analyst who might be tempted to use nonpublic knowledge to wager on the outcome of military events. In plain language, you can’t take a secret about a planned strike and turn it into a cash‑cow on a prediction market.

“Our enemies are watching what moves in these markets,” Hegseth wrote in the memo, which the Associated Press reviewed. “When an American Service member, intelligence professional, or other Department civilian engages in a financial transaction on a military outcome, they create a signal.” The tone was unmistakably firm – the Pentagon is not about to let insider information become a trading commodity.

The order specifically names platforms such as Polymarket and Kalshi, both of which have attracted attention for allowing users to bet on everything from elections to geopolitical developments. Hegseth makes it clear that both classified material and unclassified but nonpublic data are off‑limits. Anyone caught breaking the rule could face administrative discipline, a court‑martial under the Uniform Code of Military Justice, or even federal criminal charges.

Why the sudden crackdown? It comes on the heels of a high‑profile case involving a Special Forces soldier who, armed with classified intel about a covert operation to capture former Venezuelan President Nicolás Maduro, reportedly netted more than $400,000 on Polymarket. The bets were placed in a narrow window – just before missiles were slated to launch toward Caracas – and the profit margins raised eyebrows across the defense establishment.

Earlier this year, another Special Forces member, Master Sgt. Gannon Ken Van Dyke, was charged for using his clearance to wager over $32,000 on when Maduro might be ousted. The federal complaint alleges that Van Dyke made a flurry of bets between Dec. 30 and Jan. 2, timing them to the exact moment when the operation was set to unfold.

These incidents aren’t isolated to the military. A separate investigation uncovered a cluster of newly created Polymarket accounts that placed razor‑sharp bets on whether the United States and Iran would seal a cease‑fire – right before former President Donald Trump announced the deal in April. The payoff for those accounts ran into the six figures, prompting the White House to issue its own warning to staff about the dangers of trading on privileged information.

Even the private sector is feeling the heat. Kalshi, another prediction‑market platform, recently fined and suspended three congressional candidates after discovering they had placed wagers on the outcomes of their own elections. The message is clear: no one, regardless of rank or office, is immune from scrutiny when it comes to insider trading in the realm of geopolitics.

When pressed for comment, a Pentagon spokesperson said the department could not elaborate beyond the memo itself. “We are simply reiterating the principle that misuse of privileged information is unacceptable and will be prosecuted,” the official said.

Beyond the obvious security concerns, Hegseth warned that financial stakes could 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 wrote. In other words, the temptation to profit could unintentionally influence operational decisions – a risk the military can’t afford.

For now, service members are being reminded to keep their wallets far from any betting platform that could be fed by the very intel they handle every day. The new directive serves as both a warning and a reminder that the line between public speculation and illicit profiteering is thinner than many realize.