Pentagon Memo: Insider Bets on War Could Reveal US Military Plans

Defense Secretary Pete Hegseth issued a new directive on October 20 that forbids military personnel from using inside information to place bets on prediction markets. The order aims to stop service members from creating digital signals that foreign adversaries could use to predict US military actions.

Hegseth told senior Pentagon leaders that financial transactions tied to military outcomes act as a beacon. He argued that hostile intelligence services track these platforms to aggregate data and anticipate American targets and timing. The memo explicitly covers all financial platforms, including traditional betting services and major prediction markets like Polymarket and Kalshi.

The ban applies to any transaction based on nonpublic information, whether that data is classified or unclassified. Hegseth stated that the lives of service members depend on keeping operations hidden from the enemy. He wrote that troops deserve a force that protects them rather than one that exposes them for personal financial gain.

The directive follows a specific criminal case that exposed the vulnerability. In April, a US Army soldier was arrested for using confidential details to make $410,000 in bets on Polymarket. The soldier wagered on the timing of the military's capture of Venezuelan President Nicolás Maduro.

Broader analysis suggests the practice is more common than the single arrest implies. An August report from the Anti-Corruption Data Collective identified 152 suspicious digital wallets. These accounts placed longshot bets on military and defense markets and collectively won $8 million.

Hegseth framed the new rules as a safeguard for operational judgment. The memo warns that personal financial stakes in war outcomes can compromise the clarity of military operations. The order was sent to Combatant Command heads and directors of Defense Department field activities.

CBS News published the full text of the memo on October 22. The document serves as a formal warning that personal trading on defense news is no longer a private matter but a national security concern.