Pentagon cracks down on insider betting – AP

US Secretary of War Pete Hegseth has reportedly warned that wagers on military outcomes could expose operations and distort the troops’ judgment

US troops have been warned against using inside information to bet on prediction markets, the Associated Press has reported, citing a directive issued by US Secretary of War Pete Hegseth, who said such wagers could expose military plans and influence operational decisions.

The memo, dated Tuesday and reviewed by AP, covers platforms such as Polymarket and Kalshi, where users wager on real-world events, including elections and military action.

The directive bars the use of both classified material and other official information unavailable to the public, with violators facing disciplinary action or criminal charges under military or federal law.

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

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He also warned that personal financial interests could compromise professional judgment, arguing that “a logistician with money riding on a strike date has an interest in that date” and “an analyst with a position on an outcome has an interest in that outcome.”

The directive follows the prosecution of a US Special Forces soldier accused of profiting from advance knowledge of the January operation to kidnap Venezuelan President Nicolas Maduro.

Prosecutors allege that Master Sergeant Gannon Ken Van Dyke used information obtained through his involvement in planning and executing the raid to place more than $32,500 in Polymarket bets, earning over $400,000.

Most of the wagers were allegedly placed on January 2, hours before the attack on Caracas. Van Dyke has pleaded not guilty.

The controversy has extended beyond the military. Newly created Polymarket accounts placed suspiciously timed bets shortly before Trump announced an April US-Iran ceasefire, generating hundreds of thousands of dollars in profits. The White House later warned staff against trading on confidential information.

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Trump’s former teleprompter operator was separately ordered to surrender more than $107,500 in profits and pay a $65,000 fine after regulators found he used advance access to presidential speeches to bet on which words Trump would say.

The scandals have intensified scrutiny of prediction markets, which several US states have accused of sidestepping gambling laws and consumer protections. The Trump administration, however, has argued that the platforms should remain regulated by federal financial authorities rather than under individual states’ gambling laws.

The president’s family also has business ties to the industry. Donald Trump Jr. serves as a strategic adviser to Kalshi and holds an investment in Polymarket through his venture firm, 1789 Capital.