Defense Secretary warns military personnel against betting on prediction markets over operational security risks
A Department of Defense directive orders service members and civilian staff to halt trading on non-public defense information, warning that betting signals on platforms like Polymarket can be exploited by foreign adversaries.
Technology news
Secretary of Defense Pete Hegseth issued a high-priority policy memorandum on Friday warning all active-duty military personnel, defense contractors, and Department of Defense civilian employees that participating in decentralized financial prediction markets creates catastrophic operational security vulnerabilities for the United States Armed Forces. The directive, titled “Do Not Compromise Military Operations for Personal Financial Gain,” was distributed across Combatant Commands and defense agency directorates following high-profile incidents of military insider trading.
The Pentagon’s warning centers on the explosive growth of real-money prediction platforms such as Polymarket and Kalshi, where global traders wager millions of dollars on geopolitical outcomes, carrier strike group deployments, and military strikes. In the memorandum, defense officials underscored that foreign adversary intelligence agencies actively monitor liquidity flows and sudden volume spikes across defense-related betting pools. Even relatively small wagers placed by service members stationed on naval vessels or staging airbases generate aggregate transaction signals that adversaries exploit to deduce mission timings, operational targets, and force deployments.
The memorandum cited an April criminal prosecution in which an active-duty US Army soldier was arrested and indicted for using classified operational briefing materials to place over $410,000 in lucrative Polymarket wagers predicting the timing of specialized military operations. Furthermore, a recent forensic analysis by the Anti-Corruption Data Collective uncovered more than 150 pseudonymous crypto wallets that systematically placed winning longshot bets across military contracts and geopolitical crises, netting over $8 million in suspect profits.
Under the new Pentagon directive, all defense personnel are strictly prohibited from engaging in financial transactions on prediction markets or traditional betting platforms that involve any defense matters, troop movements, or national security forecasts informed by non-public information. Crucially, the order specifies that the ban applies universally across both classified and unclassified internal operational knowledge, warning that violators will face immediate court-martial, termination of security clearances, and federal insider trading prosecutions.