Pentagon memo cites $8 million in suspicious bets to ban insider wagers

Defense Secretary Pete Hegseth has banned military personnel from placing bets on prediction markets using nonpublic information, a move designed to stop adversaries from reading American military moves through financial transactions.

The directive, dated October 20, was distributed to senior Pentagon leaders, Combatant Command heads, and directors of Defense Department field activities. CBS News published the document on October 22. Hegseth wrote that when a service member or civilian makes a financial transaction tied to a military outcome, they create a signal that hostile foreign intelligence services can aggregate and exploit to anticipate U.S. movements, targets, and timing.

The memo specifically names Polymarket and Kalshi, prohibiting all financial platforms from being used for trades informed by nonpublic data, whether classified or unclassified. Hegseth argued that personal financial stakes in military outcomes can compromise operations and put troops at risk. He stated that the lives of service members often depend on the enemy not knowing what is coming, and 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.

This policy shift follows a specific incident that drew attention to the issue earlier this year. In April, a U.S. 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. That case highlighted the potential for insider knowledge to translate directly into profit.

Broader concerns about the practice emerged in August when the Anti-Corruption Data Collective released a report identifying 152 suspicious wallets. These wallets placed longshot bets on military and defense markets and won a combined $8 million. The group's findings suggested that a pattern of suspicious wagers existed beyond the single criminal case involving the Army soldier.

The memo serves as a formal warning to all department personnel. It instructs that no financial transaction informed by nonpublic information is allowed. The goal is to ensure that private financial gain does not dictate or reveal the timing and nature of military operations.

Hegseth’s message to commanders is clear: personal stakes in war outcomes create vulnerabilities. By banning these wagers, the Defense Department aims to close the gap between private financial activity and public military strategy.