The Pentagon issued a memo on October 20 prohibiting Department of Defense personnel from using nonpublic information for financial transactions on prediction markets. The directive applies to all platforms, including Polymarket and Kalshi, and covers both classified and unclassified data. Officials warn that such bets create signals that hostile foreign intelligence services can exploit to track military movements and targets.
The memo follows several high-profile incidents involving insider trading. In April, a US Army soldier was charged with using confidential information to win $410 000 on Polymarket regarding the capture of Venezuelan President Nicolas Maduro. Additionally, an Anti-Corruption Data Collective report identified 152 suspicious wallets that collectively profited $8 million from military-related bets.
Internal warnings have been issued previously, including a White House notice following reports of specific, well-timed bets on a US-Iran ceasefire. Another instance involved a Trump administration aide who reportedly earned $100 000 on Kalshi by betting on the content of prepared remarks. Violations of the new Pentagon order may lead to administrative, disciplinary, or criminal actions.
The administration maintains a light-touch regulatory approach toward prediction markets, currently challenging state-level attempts to regulate these platforms. The government argues that the Commodity Futures Trading Commission holds exclusive jurisdiction. The debate over state authority to impose restrictions on these betting services remains a subject of ongoing legal dispute.
