Hegseth bans military personnel from betting on defense outcomes

Defense Secretary Pete Hegseth issued a directive on October 20 instructing senior Pentagon leaders and Combatant Command heads to prevent their personnel from using nonpublic information to place bets on financial platforms. The memo, titled "Do Not Compromise Military Operations for Personal Financial Gain," was published by CBS News on October 22. It explicitly covers all financial platforms, including traditional betting services and prediction markets such as Polymarket and Kalshi.

The core argument in the memo is that financial transactions tied to military outcomes create a detectable signal. Hegseth stated that when a service member or intelligence professional executes a trade based on insider knowledge, hostile foreign intelligence services can aggregate and correlate that data. This allows adversaries to anticipate American movements, targets, and timing. The memo notes that the lives of service members often depend on the enemy not knowing what is coming next.

The directive prohibits any financial transaction informed by nonpublic information, whether that information is classified or unclassified. Hegseth argued that troops who carry the flag into harm's way deserve a force that protects them, rather than one that exposes them to the enemy for personal financial gain. The memo emphasizes that personal financial stakes in military outcomes can compromise operational judgment and put troops at risk.

This policy follows a specific criminal case that drew attention to the issue earlier this year. In April, a US Army soldier was arrested and charged with using confidential information to make $410,000 in bets on Polymarket. Those wagers concerned the timing of the military's capture of Venezuelan President Nicolás Maduro. The arrest highlighted how individual bets could reflect broader operational details.

Data from the Anti-Corruption Data Collective further supports the concern that the practice is not isolated to a single incident. An August report from the group identified 152 suspicious wallets that placed longshot bets on military and defense markets. These wallets won a combined total of $8 million. The finding suggests that a network of actors may be actively trading on nonpublic defense information.

The memo was sent to directors of Defense Department field activities along with senior leaders across the department. It serves as a formal warning that the use of prediction markets for personal gain is no longer a private matter. By linking individual financial actions to national security risks, the directive aims to stop the flow of information from the battlefield to the trading floor.

Hegseth's message to commanders is that the financial stakes of individual personnel must not influence operational decisions. The memo reinforces the idea that every transaction made with inside knowledge is a potential leak. It establishes a clear rule for the next phase of military operations: no betting on outcomes that depend on classified or unclassified intelligence.