Defense Secretary Pete Hegseth warned military members and department personnel that using nonpublic information on prediction markets is not only illegal but poses national security risks.
In a letter dated Oct. 20, 2026, Hegseth, the secretary of the Department of Defense, known as the Department of War under President Donald Trump’s second administration, reminded the Pentagon and all department personnel that they are prohibited from engaging in financial transactions using nonpublic information, either directly or through a third party.
The ban applies to all financial exchanges, including prediction markets, as well as sports betting platforms.
Inside Information: The Threat of Geopolitical Betting
According to Hegseth, foreign adversaries are tracking prediction markets for insider trading patterns that might reveal upcoming US military operations.
Make no mistake why this matters. Our enemies watch movements in these markets,” Hegseth said.
“When an American service member, intelligence professional, or other Department civilian engages in a financial transaction on a military outcome, they create a signal. That signal can be aggregated, correlated, and exploited by hostile foreign intelligence services to anticipate our movements, targets, and timing,” Hegseth wrote.
The defense secretary says such signals put US military service members at heightened danger.
“The men and women who carry our flag into harm’s way deserve a force that protects them—not that exposes them to the enemy for personal gain,” the secretary said.
Hegseth said that beyond operational security, a financial stake warps judgment and dilutes the “warrior ethos.”
“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. Not entertainment. Not a payout,” Hegseth concluded.
Trading on Confidential Secrets
Hegseth’s warning follows the Justice Department in April charging a US Army Special Forces soldier with using classified military secrets to profit $409,000. The federal indictment against Master Sgt. Gannon Ken Van Dyke alleged that he made several perfectly timed trades totaling $33,000 on when Venezuelan leader Nicolás Maduro would be out as president.
The federal government alleges that Van Dyke participated in the planning and execution of the US military operation to capture Maduro. The charges claim Van Dyke used his access to classified information to personally profit by trading on the Polymarket prediction market.
In August, the Anti-Corruption Data Collective flagged 152 prediction market accounts for trading on event contracts tied to US military operations suspected to be using nonpublic information. The accounts in question recorded a remarkable win rate of 97.2%, profiting $8 million on $2 million in trades.
