Pentagon memo bars troops from insider bets on Polymarket, Kalshi

Defense Secretary Pete Hegseth has told the military that inside knowledge cannot be used to place bets. His Oct. 20 memo bars Defense Department personnel from any financial deal shaped by nonpublic information, whether it is classified or not, Ars Technica reported.

The rule reaches every financial platform, from traditional betting services to prediction markets such as Polymarket and Kalshi, according to Ars Technica. The memo warns that breaking it could bring administrative, disciplinary or criminal action under the Uniform Code of Military Justice or federal law.

Key facts

• Hegseth's Oct. 20 memo bans trades informed by nonpublic information, classified or unclassified, Ars Technica reported.
• Ars Technica said the ban applies to all financial platforms, including Polymarket and Kalshi.
• The memo says violators may face administrative, disciplinary or criminal action, according to Ars Technica.
• Ars Technica reported that the rule covers service members, intelligence staff and Defense Department civilians.
• Ars Technica said CBS News was first to publish the memo.

What the memo says

The memo carried the subject line "Do Not Compromise Military Operations for Personal Financial Gain," according to Ars Technica. It went to senior Pentagon leaders, the heads of combatant commands and directors of Defense Department field activities, the outlet reported.

The ban is broad. Ars Technica said the memo covers trades made using nonpublic information either directly or through a third party. The Associated Press, which reviewed the memo, said the directive tells troops they may not use nonpublic information to bet on prediction markets.

Hegseth's main concern is security. Ars Technica reported that he argued such bets send signals that foreign spy services can use to predict U.S. movements, targets and timing. The AP reported that Hegseth wrote, "Our enemies watch movements in these markets."

He also said money can cloud judgment. Ars Technica reported that Hegseth gave the example of a logistician whose bet on a strike date gives that person a stake in the date itself.

Background

The memo follows a criminal case. In April, the Justice Department charged Army soldier Gannon Ken Van Dyke with using classified information about the operation to capture Maduro to place bets on Polymarket. CBS News reported that a Special Forces soldier who took part in the raid on Venezuelan leader Nicolas Maduro was later arrested, accused of betting that Maduro would be removed before the public knew of the raid.

Prosecutors allege that Van Dyke wagered about $33,034 and made a profit of about $409,881, according to the Justice Department. CBS News reported that federal investigators believe Master Sgt. Van Dyke bet more than $33,000 and won more than $409,000. Those figures are allegations, and Van Dyke has pleaded not guilty.

The concern goes beyond one case. Ars Technica reported that an August report from the Anti-Corruption Data Collective flagged 152 suspicious wallets that bet on military markets and won $8 million combined.

Who is affected

The memo applies to a wide group. According to Ars Technica, it covers service members, intelligence professionals and Defense Department civilians. That means the rule reaches people well beyond troops in uniform.

What it means for you

For people who work in or for the Defense Department, the message is that trading on what they learn at work can carry real penalties. Ars Technica said violations may lead to administrative, disciplinary or criminal action.

For other users of prediction markets, the platforms' own rules already apply. Ars Technica noted that Kalshi and Polymarket both already ban insider trading. It is not known whether either company will change its policies because of the memo.

The Pentagon has not said how it will monitor or enforce the ban.

What happens next

The criminal case is moving ahead. CBS News reported that Van Dyke has pleaded not guilty in federal court in New York.

Ars Technica argued that the threat of criminal charges is likely a stronger deterrent than being barred from Kalshi or Polymarket, since both already prohibit insider trading.

FAQ

Does the ban cover all betting by troops? No. Ars Technica reported that it bars trades informed by nonpublic information on all financial platforms, including Polymarket and Kalshi.

What happens if someone breaks the rule? The memo says violations may bring administrative, disciplinary or criminal action under the UCMJ or federal law, Ars Technica reported.

Why does the Pentagon care about prediction market bets? Ars Technica said Hegseth wrote that foreign intelligence services can read betting signals to anticipate U.S. moves.

Who first published the memo? Ars Technica said CBS News first published the Oct. 20 memo.