Hegseth warns Pentagon personnel against prediction market trading

US Defense Secretary Pete Hegseth has reminded Pentagon and Department of Defense personnel that they are barred from conducting financial dealings based on confidential information, whether they act alone or via an intermediary, according to a letter dated 20 October 2026. The prohibition covers all financial exchanges, including prediction markets, and sports betting platforms.

Hegseth said foreign adversaries track prediction markets for insider trading patterns that could reveal upcoming US military operations. In the letter he said a service member, intelligence professional or other department civilian who carries out a financial transaction on a military outcome creates a signal that hostile foreign intelligence services could gather, link together and turn to their advantage in order to anticipate US movements, targets and timing. Hegseth said such signals put US military personnel at heightened danger.

Hegseth said that beyond operational security, a financial stake affects judgement and weakens what he described as the warrior ethos. He said the department is restoring lethality, discipline and focus on fighting and winning the nation's wars, and that nothing should distract from that mission, including entertainment or a payout.

The letter followed an April action by the Justice Department, which accused a US Army Special Forces soldier of exploiting classified military secrets for a $409,000 gain. According to the federal indictment, Master Sgt. Gannon Ken Van Dyke placed a series of well-timed trades worth $33,000 on whether Venezuelan leader Nicolás Maduro would leave the presidency. Prosecutors say Van Dyke helped plan and carry out the US military operation to capture Maduro, and that he drew on his access to classified information to make money on the Polymarket prediction market.

It was reported that the Anti-Corruption Data Collective in August identified 152 prediction market accounts trading event contracts linked to US military operations that were suspected of relying on nonpublic information. Those accounts posted a 97.2% win rate, earning $8 million from $2 million in trades.