Pentagon Bans Military Personnel From Trading on Prediction Markets

Defense Secretary Pete Hegseth has issued a formal directive prohibiting all Department of Defense personnel from using nonpublic information to place bets on prediction markets such as Polymarket and Kalshi. The policy covers both active-duty service members and civilian employees, barring the exploitation of classified or unclassified internal data for personal financial gain. Officials underscored that wagering on military movements creates severe operational risks and undermines national security.

The Pentagon policy follows federal charges brought against U.S. Army Master Sgt. Gannon Ken Van Dyke, who was accused of misusing classified military intelligence to trade on prediction platforms. Prosecutors alleged that Van Dyke placed approximately $33,000 in bets regarding Operation Absolute Resolve, an operation connected to Venezuelan leader Nicolas Maduro. The trades reportedly generated more than $400,000 in illicit profits, triggering intense scrutiny across defense and intelligence agencies.

The incident in the United States mirrors similar security controversies that have emerged overseas as decentralized forecasting platforms gain traction. In Israel, authorities recently brought charges against a military reservist and a civilian accused of leveraging confidential operational data to bet on strikes against Iranian targets. Defense planners internationally have expressed alarm that speculative financial platforms are becoming unintended vectors for intelligence leaks.

In his memorandum, Hegseth cautioned that foreign intelligence organizations actively monitor online betting markets for statistical anomalies and sudden shifts in volume. When individuals with privileged operational knowledge place large or coordinated wagers, they inadvertently generate actionable data patterns. Hostile adversaries can aggregate these financial market signals to infer the timing, scope, and targets of upcoming operations before troops even deploy.

Pentagon leadership also warned that financial wagering distorts the core warrior ethos and introduces dangerous conflicts of interest into military command chains. Personnel with financial stakes tied to the date of an assault or the outcome of a diplomatic standoff face competing incentives that could compromise operational judgment. Defense officials noted that even minor delays or leaks caused by financial speculation could directly imperil the lives of service members in combat zones.

The new directive establishes a comprehensive ban on trading across both decentralized crypto platforms and regulated domestic prediction exchanges. Personnel are barred from conducting transactions directly, delegating trades to family members, or sharing nonpublic insights with third-party syndicates. Compliance offices across the armed services have been instructed to update ethics training modules to reflect the expanded restrictions.

Violators of the directive face severe disciplinary actions under both civil and military legal frameworks. Servicemembers who breach the rules face court-martial proceedings and punitive measures under the Uniform Code of Military Justice, while civilian employees risk termination and loss of security clearances. Serious infractions involving the compromise of classified data will be referred to the Department of Justice for federal criminal prosecution.

The Pentagon order comes amid broader regulatory pressure on prediction platforms, which have expanded rapidly by listing contracts on real-world political, economic, and geopolitical events. While platform operators argue that prediction markets deliver valuable forecasting data through collective intelligence, critics have consistently raised alarms regarding insider trading vulnerabilities. Federal regulators and lawmakers continue to debate whether contracts tied to armed conflict and international diplomacy should be permitted at all.

Moving forward, military investigative agencies and internal audit teams are expected to coordinate with market surveillance units to monitor potential breaches of the policy. Pentagon officials emphasized that protecting mission integrity must take precedence over emerging financial technologies and speculative markets. As defense agencies implement the new guidance worldwide, commands will monitor whether additional statutory protections will be required to preserve operational secrecy.