Hegseth Warns Troops Against Insider Prediction Market Bets

Defense Secretary Pete Hegseth has ordered military personnel and Pentagon civilians not to place prediction-market bets using nonpublic information, warning that such wagers can tip off foreign adversaries to U.S. troop movements, Ars Technica reported.

The October 20 memo, titled "Do Not Compromise Military Operations for Personal Financial Gain," went to senior Pentagon leadership, Combatant Command leaders and Defense Department field activity directors, according to the memo, which was published by CBS News and cited by Ars Technica.

What Does the Pentagon Memo Say?

Hegseth's memo says any financial transaction informed by nonpublic information is barred, whether that information is classified or unclassified, and whether the bet is placed directly or through a third party. The prohibition covers "all financial platforms," including traditional betting services and prediction markets such as Polymarket and Kalshi, per the memo.

Hegseth argued the risk goes beyond leaking operational details. "Beyond operational security, financial stakes can warp judgment," he wrote, according to Ars Technica. "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."

"The lives of our Service members often depend on the enemy not knowing what is coming." — Defense Secretary Pete Hegseth

What Prompted the Warning?

Hegseth's memo follows a case in April, when a U.S. Army soldier was arrested and charged with using confidential information to place $410,000 in Polymarket bets on the timing of the military's capture of Venezuelan President Nicolás Maduro, Ars Technica reported.

The Associated Press reported a day earlier, on October 22, that the White House had already issued an internal warning after accounts on Polymarket made "highly specific, well-timed bets," according to Ars Technica's account of the AP report.

How Big Is the Prediction Market Betting Problem?

An August report from the Anti-Corruption Data Collective identified 152 suspicious wallets that placed longshot bets on military and defense-related markets, winning a combined $8 million, Ars Technica reported.

What Happens to Violators?

Hegseth's memo says violations "may result in administrative, disciplinary, and, where appropriate, criminal action under the Uniform Code of Military Justice and/or applicable federal law," according to Ars Technica.

Kalshi and Polymarket both already prohibit insider trading on their platforms. Criminal exposure under military and federal law is a steeper deterrent than a platform ban.

Timeline of the Prediction-Market Warnings

• April 2026: Army soldier charged over $410,000 in Polymarket bets tied to the Maduro capture timeline.
• August 2026: Anti-Corruption Data Collective flags 152 suspicious wallets with $8 million in winnings on military-linked markets.
• October 20, 2026: Hegseth signs the memo barring insider betting by Defense Department personnel.
• October 22, 2026: CBS News publishes the memo; AP reports a prior White House warning.
• October 23, 2026: Ars Technica reports on the memo's contents and context.

What Are Prediction Markets?

Prediction markets let users bet real money on the outcome of future events, including political and military developments. Polymarket and Kalshi are two such platforms named in Hegseth's memo. Payouts depend on whether the predicted event occurs, which critics say creates incentives for people with inside knowledge to trade on it before the public finds out.