The Pentagon instructed personnel that they are prohibited from engaging in financial transactions while using nonpublic information, arguing it impacts operational security and staff judgment.
All Department of Defense personnel are forbidden from such financial transactions either directly or through a third party when using insider information, according to a memo signed last week by Defense Secretary Pete Hegseth.
“The lives of our service members often depend on the enemy not knowing what is coming,” Hegseth wrote in the memo. “The men and women who carry our flag into harm’s way deserve a Force that protects them — not one that exposes them to the enemy for personal gain.”
The memo comes six months after a U.S. soldier involved with the capture of ousted Venezuelan President Nicolas Maduro was charged with using insider information to win $400,000 by betting on his removal through the prediction market Polymarket. The soldier, a master sergeant with U.S. Army Special Forces, later pleaded not guilty, and his criminal trial is slated for early December.
The same month, individuals across the globe used Polymarket to place bets on the rescue mission of Dude 44 Bravo, one of the airmen who ejected from a U.S. Air Force F-15E Strike Eagle that was shot down over Iran by enemy fire during Operation Epic Fury.
Polymarket later took down the wagers, saying it didn’t meet the site’s integrity standards, but other war-related markets users can bet on were created before and after the Iran war began, causing concern over national security among lawmakers and experts.
Another instance of an individual betting on military operations involved an anonymous Polymarket account making $550,000 off of trades on the first day of strikes in Operation Epic Fury, wagering on the U.S. strikes against Iran and the removal of Iran’s Supreme Leader Ayatollah Ali Khamenei, who was killed by Israeli air strikes on the war’s first day.
The recent memo, which was shared with senior Pentagon leadership, combatant commanders, defense agencies and field activity directors, reinforces federal law that prohibits government employees from using nonpublic information from their work for personal financial gains.
The ban extends to all financial platforms, including betting platforms and prediction markets, with the directive pointing to Polymarket and Kalshi as specific examples.
The memo first publicly circulated on the unofficial Facebook page Air Force amn/nco/snco. A Defense Department official shared a copy of the memo with Military Times, confirming the authenticity of the one circulating on social media.
The directive asserts that signals are generated when personnel engage in a financial transaction on a military outcome. The signal can then be watched by adversaries in these markets and exploited by hostile foreign intelligence services to anticipate American movements, targets and timing.
“The memorandum from the Secretary of War regarding predictive markets is a reminder that engaging in financial transactions using nonpublic information, and using nonpublic information to further private interests, is prohibited and may result in punitive action,” the Pentagon official told Military Times.
“The Department takes this misconduct seriously and will take appropriate action, to include coordinating with the Department of Justice, to ensure anyone who engages in this misconduct is held accountable,” the official concluded.
Violations can result in administrative, disciplinary or criminal action under the Uniform Code of Military Justice or applicable federal law, the memo says.
Alongside operational security unease, Hegseth argues in the memo that financial stakes can negatively impact judgment and weaken the “warrior ethos” as personnel become invested in certain outcomes.
“We are restoring lethality, discipline, and singular focus on fighting and winning our Nation’s wars, and nothing should distract us from that sacred mission,” Hegseth writes. “Not entertainment. Not a payout.”
