Pentagon Memo Cuts Off Insider Bets On Defense Outcomes

A Pentagon directive is closing the door on personnel profiting from secret knowledge about upcoming military operations.

Defense Secretary Pete Hegseth circulated a memorandum on October 20 to senior Pentagon leadership, Combatant Command leaders, and Defense Department field activity directors regarding prohibited conduct. The subject line reads "Do Not Compromise Military Operations for Personal Financial Gain." The document was made public this week. In it, Hegseth warns that enemy nations monitor betting fluctuations on these platforms. He notes that any financial transaction regarding a military outcome by an American Service member, intelligence professional, or other Department civilian generates a signal that can be aggregated, correlated, and exploited by hostile foreign intelligence services to anticipate our movements, targets, and timing. The lives of our Service members often depend on the enemy not knowing what is coming.

The directive establishes a firm ban on any financial transaction informed by nonpublic information. This rule applies across all financial platforms, covering both traditional betting services and prediction markets such as Polymarket and Kalshi. Hegseth specified that personnel cannot trade based on nonpublic information, regardless of whether that data is classified or unclassified. The memo asserts that the men and women who carry our flag into harm’s way deserve a Force that protects them, not one that exposes them to the enemy for personal gain.

Concerns regarding insider trading in this sector are not new. In April, a US Army soldier was arrested and charged with using confidential information to make $410,000 in Polymarket bets on the timing of the military's capture of Venezuelan President Nicolás Maduro. Additionally, an August report by the Anti-Corruption Data Collective stated the group found 152 suspicious wallets that placed longshot bets on military and defense markets. Those wagers won a combined $8 million.

Looking ahead, Pentagon officials are expected to monitor compliance with these new restrictions regarding financial platforms. The prohibition is intended to prevent the creation of exploitable signals that could endanger Service members.