Hegseth Restricts Pentagon Staff From Betting On Outcomes

Defense Secretary Pete Hegseth has issued a directive barring military and Department of Defense personnel from making financial bets on prediction platforms when informed by nonpublic information. The prohibition, detailed in a memo, extends to all financial services and applies regardless of whether the information used is classified or unclassified. This restriction aims to prevent sensitive operational details from being leaked through financial transactions.

The directive explicitly prohibits service members, intelligence professionals, and other civilians from engaging in financial transactions related to military outcomes if they possess nonpublic information. This rule covers all platforms, specifically naming prediction markets like Polymarket and Kalshi. Hegseth stated that engaging in such transactions creates a signal that can be exploited by hostile foreign intelligence services to anticipate movements, targets, and timing.

Hegseth wrote that the lives of service members often depend on the enemy not knowing what is coming. He emphasized that the men and women who carry the flag into harm's way deserve a Force that protects them, not one that exposes them to the enemy for personal gain. The subject line of the memo read: "Do Not Compromise Military Operations for Personal Financial Gain."

The memo, dated October 20, was sent to senior Pentagon leadership, Combatant Command leaders, and Defense Department field activity directors. It was published by CBS News on October 22. This action comes amid growing scrutiny of betting activities involving military personnel and the potential for such actions to reveal sensitive information.

Concerns about this practice have been raised previously. 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. This incident highlighted the potential for personal financial gain to be linked to classified military operations.

Further evidence of suspicious activity was found in an August report by the Anti-Corruption Data Collective. The group identified 152 suspicious wallets that placed longshot bets on military and defense markets. These wagers won a combined $8 million, raising questions about the source of information used for such bets.

Hegseth's memo also addresses how such bets can influence military personnel. The directive states that betting can warp judgment, creating a potential conflict of interest. The use of nonpublic information for personal financial gain is prohibited, regardless of its classification status.

The next steps involve the dissemination and enforcement of this policy across all levels of the Department of Defense. Personnel are expected to adhere to the prohibition on making financial transactions informed by nonpublic information. The directive aims to protect military operations from being compromised for personal financial gain.

The restriction applies to all financial platforms, including traditional betting services and prediction markets. The policy is effective immediately and covers all military and civilian personnel within the Department of Defense. This move is intended to safeguard sensitive information and protect service members from potential exposure to enemy forces.