Hegseth Orders Pentagon to Stop Insider Bets on Prediction Sites

Defense Secretary Pete Hegseth issued a directive on October 20 requiring military personnel to halt financial transactions based on nonpublic information. The memo targets bets placed on prediction markets and traditional betting services. It aims to prevent adversaries from tracking market activity to anticipate American military moves.

The order was sent to senior Pentagon leaders, Combatant Command heads, and Defense Department field activity directors. CBS News published the document on October 22. The memo carries the subject line "Do Not Compromise Military Operations for Personal Financial Gain." It applies to all financial platforms, including Polymarket and Kalshi.

Hegseth argued that financial transactions create signals that hostile foreign intelligence services can exploit. He wrote that these services aggregate and correlate such data to predict US targets and timing. "The lives of our Service members often depend on the enemy not knowing what is coming," the memo stated.

The directive follows a specific criminal case from earlier this year. In April, a US Army soldier was arrested for using confidential information to place bets on Polymarket. The soldier wagered on the timing of the military's capture of Venezuelan President Nicolás Maduro. He made $410,000 from those trades before being charged.

Broader concerns about insider trading in defense sectors emerged in August. The Anti-Corruption Data Collective released a report identifying 152 suspicious wallets. These accounts placed longshot bets on military and defense markets. The group calculated that the wallets won a combined $8 million.

The memo states that department personnel may not make any financial transaction informed by nonpublic information. This includes both classified and unclassified data. Hegseth wrote 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 new rules take effect immediately for the groups listed in the distribution. The directive covers all service members, intelligence professionals, and department civilians. It remains in force until further notice is issued by the Department of Defense.