Hegseth Bars Pentagon Staff From Betting On Military Operations

Defense Secretary Pete Hegseth has barred Pentagon personnel from using non-public information to place bets, with Polymarket and Kalshi named in the order. The memorandum is dated October 20, 2026, and was reported this week by CBS News and DefenseScoop, both of which obtained a copy.

The message went to senior Pentagon leadership, combatant commanders, and the directors of Defense agencies and field activities. It prohibits Department of Defense personnel from wagering with the help of non-public government information, whether that information is classified or unclassified.

The ban covers traditional betting platforms and prediction markets. Polymarket and Kalshi are both named in the text, according to the two outlets that reviewed it. Violations can lead to administrative or disciplinary action, and where appropriate criminal action under the Uniform Code of Military Justice or federal law.

The Reasoning

Hegseth framed the problem in two parts. The first is operational security. He wrote that adversaries watch activity in these markets, and that a service member, intelligence professional or Department civilian who trades on a military outcome creates a signal. 

Foreign intelligence services, the memo warned, could study that activity to anticipate American movements, targets and the timing of an operation.

The second is judgement. Hegseth argued that a financial stake in an outcome gives officials an interest in that outcome. His example was a logistician with money riding on a strike date, who would then have a reason to care about that date. He called that a dilution of the warrior ethos the Department has tried to remove.

How The Issue Reached The Pentagon

The order follows a run of cases tying military information to prediction-market positions. In April, the Department of Justice charged Master Sgt. Gannon Ken Van Dyke, a senior enlisted soldier assigned to U.S. Army Special Operations Command, over bets on the capture of Venezuelan leader Nicolas Maduro. 

CBS reported that investigators believe he wagered more than $33,000 on Polymarket within hours of President Donald Trump announcing the capture in January, winning more than $409,000. DefenseScoop put his profit at nearly $410,000.

Van Dyke pleaded not guilty in federal court in New York and was released on bond. DefenseScoop also noted that CNN reported in August that more than 150 Polymarket wallets may have traded on military insider information, and that Reuters reported Polymarket had referred dozens of possible military insider-trading cases to the Justice Department.

What It Means For Bettors & The Markets

The memo is an internal personnel rule. It does not change who can trade on Polymarket or Kalshi, and it does not restrict ordinary customers. Its reach is limited to people who hold sensitive government information and then use it to bet. 

For the platforms, it adds to a growing list of integrity questions that regulators are already working through; the CFTC's advisory committee recently debated insider-trading referrals, and prediction markets are also fighting state regulators in court, as our coverage of Polymarket and the states shows.

Operators are expected to keep tightening monitoring around event contracts tied to government decisions. Anyone using a regulated US sportsbook or a prediction market should note that trading on material non-public information can bring civil and criminal exposure, not just a lost account.

The memo does not appear to create a public enforcement mechanism of its own, so the next signals will be disciplinary cases under the Uniform Code of Military Justice and the outcome of the Van Dyke prosecution. Watch also for whether Polymarket and Kalshi adjust their rules on military contracts in response.