Defense Secretary Pete Hegseth issued a directive on October 20 prohibiting U.S. military personnel, intelligence professionals, and Department of Defense civilians from using nonpublic information to place bets on prediction markets related to military operations. The memo, obtained by CBS News and reviewed by The Associated Press, explicitly names platforms like Polymarket and Kalshi as prohibited.
The directive follows the April arrest of U.S. Army Master Sgt. Gannon Ken Van Dyke, who federal prosecutors allege placed over $32,500 in bets on the prediction market Polymarket regarding the timing of Nicolás Maduro’s removal from power ahead of a January military operation. Van Dyke, who was involved in the operation, entered a not guilty plea in New York federal court. His bets reportedly yielded more than $409,000 in winnings.
Part 1: Immediate Action & Core Facts
Defense Secretary Pete Hegseth’s directive bars the use of classified and unclassified but nonpublic information for financial transactions on military-related prediction markets. The memo warns that such activity could compromise operational security and signal sensitive military movements to adversaries.
The Pentagon’s enforcement mechanism includes potential administrative disciplinary action and criminal charges under the Uniform Code of Military Justice or federal law for violations. A defense official confirmed the memo as the only available statement on the policy.
Part 2: Deeper Dive & Context
Policy Rationale and Security Concerns
Hegseth’s memo emphasizes that foreign intelligence services could analyze betting patterns to infer timing, targets, or movements of U.S. military operations. The directive states that financial stakes may influence judgment, citing concerns that personnel with financial interests in outcomes could compromise objectivity.
Recent Case Highlights Risks
The directive comes after the arrest of Master Sgt. Gannon Ken Van Dyke, who allegedly used classified information about a Venezuelan operation to place bets on Polymarket. Federal investigators allege his bets, placed between December 30 and January 2, totaled $32,500, with winnings exceeding $409,000. The operation, which resulted in Maduro’s capture, was announced by President Trump on January 2.
Legal and Administrative Consequences
Violations of the directive may result in administrative punishment under military regulations or criminal prosecution under federal law. The memo does not specify additional guidance beyond the prohibition, leaving enforcement details to existing legal frameworks.
Broader Implications for Prediction Markets
Prediction markets like Polymarket and Kalshi have faced increasing scrutiny over their use by military personnel to bet on sensitive operations. The Pentagon’s move aligns with concerns that such platforms could inadvertently reveal classified or operationally sensitive information through financial activity. The directive does not address whether civilian participation in these markets is restricted beyond military personnel.