Pentagon Memo Bars Staff From Bets on Classified Military Events

Defense Secretary Pete Hegseth issued a memo on October 20 ordering military personnel to stop using nonpublic information to place bets on prediction markets. The directive, titled "Do Not Compromise Military Operations for Personal Financial Gain," aims to prevent adversaries from tracking American military movements through financial transactions.

The memo was distributed to senior Pentagon leaders, Combatant Command heads, and directors of Defense Department field activities. CBS News published the document on October 22. Hegseth stated that when service members or intelligence professionals make financial transactions tied to military outcomes, they create a signal that hostile foreign intelligence services can aggregate and exploit to anticipate targets and timing.

The prohibition applies to all financial platforms, including traditional betting services and prediction markets such as Polymarket and Kalshi. Personnel are barred from making any financial transaction informed by nonpublic information, regardless of whether that information is classified or unclassified. Hegseth wrote that the lives of service members depend on the enemy not knowing what is coming, adding that those who carry the flag into harm's way deserve a force that protects them rather than one that exposes them for personal gain.

The directive follows a criminal case from April in which a US Army soldier was arrested and charged with using confidential information to make $410,000 in Polymarket bets. The soldier wagered on the timing of the military's capture of Venezuelan President Nicolás Maduro. This incident prompted a broader review of how private markets intersect with military operations.

Concerns about the practice extend beyond that single case. An August report from the Anti-Corruption Data Collective identified 152 suspicious wallets that placed longshot bets on military and defense markets. Those wallets won a combined $8 million in profits. The report highlighted the scale of potential insider trading risks within the sector.

Hegseth framed betting as a threat to operational judgment in the memo. The message to commanders is that personal financial stakes in military outcomes can compromise operations and put troops at risk. The directive seeks to align financial behavior with the operational security requirements of the Defense Department.