Defense Secretary Pete Hegseth has told Pentagon personnel not to use nonpublic information to place bets on prediction markets, warning that the wagers could give enemy countries important clues.
The memo is dated October 20. Its subject line reads "Do Not Compromise Military Operations for Personal Financial Gain." It went to senior Pentagon leadership, Combatant Command leaders (the heads of the military's regional and functional commands), and the directors of Defense Department field activities.
Prediction markets are platforms where users buy contracts that pay out if a specific event happens, and the prices are widely read as crowd-sourced odds. That is what makes the Pentagon's worry different from ordinary insider trading. In a stock scandal, the harm falls mostly on other traders who lacked the inside knowledge. Here, the position itself is the problem. A large, well-timed bet on a military event is visible to anyone watching the market, including foreign governments, and it can signal that someone with access to plans or timing expects something to happen.
The memo also frames the issue as one of judgment and duty rather than market fairness. Personal financial gain, in the memo's own subject line, is set against the integrity of military operations. Sending it to the top of the chain, rather than to rank-and-file troops, suggests the department sees the people with the most access as the main concern.
For anyone who trades on these platforms, the practical point is that a market price is public, and a bet placed on classified knowledge can leak that knowledge to the very people it was meant to be kept from.