Pentagon Memo Bans Insider Bets After $8 Million in Suspicious Wagers

The Department of Defense now bans military personnel from using nonpublic information to place wagers on financial platforms. The new rule aims to prevent insiders from betting on the timing or outcome of operations that have not yet been made public.

Defense Secretary Pete Hegseth issued the directive in a memo dated October 20. The document, which CBS News released on October 22, was sent to senior Pentagon leaders, Combatant Command heads, and field activity directors. It carries the subject line, "Do Not Compromise Military Operations for Personal Financial Gain."

Hegseth argued that financial transactions tied to military outcomes create a detectable signal for adversaries. He wrote that hostile intelligence services can aggregate and correlate these signals to anticipate American movements and targets. The memo states that service members deserve a force that protects them rather than one that exposes them for personal gain.

The prohibition applies to all financial platforms, including traditional betting services and prediction markets like Polymarket and Kalshi. Personnel may not make any financial transaction informed by nonpublic information, whether that data is classified or unclassified.

The order follows a criminal case from April of this year. A US Army soldier was arrested and charged with using confidential information to make $410,000 in bets on the timing of the military's capture of Venezuelan President Nicolás Maduro. This case brought wider attention to the practice of trading on inside defense knowledge.

An August report from the Anti-Corruption Data Collective identified 152 suspicious wallets that placed longshot bets on military and defense markets. Those wallets won a combined $8 million. The report suggested that the issue extends beyond the single criminal case and represents a broader pattern of insider activity.

Hegseth’s memo also frames personal financial stakes as a threat to operational judgment. The directive instructs commanders to ensure that department personnel do not hold positions that could compromise military operations or put troops at risk.