War Secretary Pete Hegseth has barred service members and War Department personnel from using “nonpublic information” to place bets on online prediction markets. The directive warns that violators could face disciplinary action or criminal prosecution.

Hegseth announced the prohibition in a memo titled “Do Not Compromise Military Operations for Personal Financial Gain.” The order applies to uniformed troops and civilian employees throughout the department.

The directive specifically blocks personnel from using military insider information to wager on prediction markets such as Kalshi and Polymarket. It applies whether the information involved is classified or unclassified.

The memo does not impose a complete ban on participating in prediction markets. Instead, it focuses on the security risks created when personnel use information obtained through their military or department duties for financial gain.

“Our enemies watch movements in these markets. When an American Service member, intelligence professional, or other Department civilian engages in a financial transaction on a military outcome, they create a signal,” Hegseth wrote in the memo.

“That signal can be aggregated, correlated, and exploited by hostile foreign intelligence services to anticipate our movements, targets, and timing.”

The Oct. 20 memo was first reported by CBS News. According to the document, anyone who violates the order could be disciplined under the Uniform Code of Military Justice or federal law.

Hegseth’s warning draws a direct connection between personal financial transactions and operational security. Even if the underlying information is not classified, wagering based on military knowledge can produce activity that other nations or organizations may monitor.

The memo also addresses how personal financial interests could affect decision making inside the military. It says having a specific financial stake in the outcome of an operation can “warp” a person’s judgment.

The source of the timing behind Hegseth’s directive remains unclear. The order, however, follows several high stakes wagers involving U.S. military operations earlier this year.

In April, a Special Forces soldier was arrested and indicted by federal authorities for allegedly betting on when U.S. forces would attack Venezuela. Master Sgt. Gannon Ken Van Dyke was accused of using knowledge connected to planning the raid to place the wagers.

Authorities alleged that Van Dyke placed roughly $33,000 in bets on the timing of the attack through a prediction market. Those wagers resulted in more than $400,000 in winnings, according to the accusations described in the source.

Another warning arrived in August, when the Anti-Corruption Data Collective released a report examining military related betting on Polymarket. The report said dozens of accounts made $8 million in such wagers through the platform.

The collective raised security concerns similar to those cited by Hegseth. Public visibility into transactions, it warned, could allow hostile governments or intelligence services to detect activity tied to confidential military information.

“Because every Polymarket trade is visible on a public blockchain in real time, an insider betting on confidential military information is effectively broadcasting that information to foreign adversaries.”

Hegseth’s directive makes clear that personnel cannot treat access to military information as an opportunity to chase prediction market profits. The prohibition covers both classified and unclassified material when that information comes from inside the military.

The memo also puts personnel on notice that consequences can extend beyond an internal reprimand. Depending on the circumstances, violations may lead to action under military justice procedures or federal law.

The core warning is straightforward: A bet placed for personal gain can create a detectable signal about U.S. military activity. For troops, intelligence professionals, and civilian personnel, that signal may carry consequences far beyond the bettor’s account balance.

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